Clients are prioritising law firms willing to invest in building long-term trusted relationships amidst the economic upheaval caused by the pandemic, a new report says.

The State of the UK Legal Market 2021, published by Thomson Reuters, found that clients are more frequently seeking out law firms willing to look beyond transactional targets and invest in “trusted” long-term relationships during times of upheaval. In addition, nearly half of the 250 surveyed corporate counsel cited a commitment to long-term partnerships as a main way law firms can bring in value in the place of short-term transactional goals.  

According to the report, the ongoing disruptions led corporations and law firms to leverage the changes occurring in the UK legal market throughout the year, giving law firms the chance to re-evaluate how they conduct business to best meet the demands of the altered legal landscape. 

The report also showed the pandemic brought the issue of competitive pricing to the forefront for many in-house lawyers, with the proportion of corporate legal departments citing what they considered to be expensive or uncompetitive pricing rising by 56% from 2019. 

For law firms, financial data gathered from US firms with operations in London demonstrate a chasm between clients wanting high-quality work and wanting firms to be sensitive to heightened budgetary pressures, with the trends showing that firms who were able to act as “trusted” partners for clients fared better throughout the pandemic-ridden year. 

The report also revealed that demand for cross-border legal advice was on the rise last year, with 80% of surveyed UK corporates having actively sought international legal support in the lead-up to Brexit. 

Cross-border collaboration stands out as one of the main issues raised by UK corporate legal departments amid the large-scale shift to remote working due to practical challenges including the IT and knowledge sharing structures required to allow partners to “seamlessly” manage their client’s interests across different markets.

“Law firms, for the most part, successfully adjusted to work-from-home and other pandemic-related disruptions,” commented Lucinda Case, managing director at Thomson Reuters. 

“The complexities of Brexit will mean greater demand for international legal work. However, clients’ concerns over pricing suggest that law firms will need to show they are providing strong value and investing in their relationship with the client,” she said.

Despite the challenges, the report indicated remote working may be here to stay, arguing that the UK legal market managed to embrace the conditions of remote working with “more positivity than most.” 

In total, 65% of the 156 surveyed private practice lawyers said remote working has had a positive impact on their well-being, and 86% said they would like to see certain beneficial aspects of remote working become permanent as the pandemic winds down.

A way for law firms to combine delivering on value propositions and incorporating the positive aspects of remote working lies with the alternative legal service providers market (ALSP), the report suggests. 

Engagement with ALSPs increased by 42% among corporate legal departments and 58% among law firms over the last four years, and the challenges brought by the pandemic validated the sector’s agile, technology-focused and cost-saving efficiencies as clients seek more innovative legal solutions. 

The gravitation towards alternative ways of working also served as a “catalyst” for greater investment in tech and knowledge-sharing platforms by firms, with 74% of surveyed UK partners agreeing that firms should be investing more in tech-enabled solutions and 89% of surveyed corporate lawyers saying their firms should scale up the use of innovative technology. 

In March, Thomson Reuters reported nearly a third of legal departments globally are upping their spend on technology, with 44% increasing their use of tech tools as a direct result of the pandemic.

Earlier this month, a report from EY Law and Harvard Law School revealed fewer than a third of in-house counsel globally believe they have the technology they need to do their jobs effectively, with nearly all legal departments facing challenges to secure budgets for tech investment.