If the past 12 months underlines anything, it is that in the legal sector, despite what many believe, there is rarely a dull moment.
Last year saw mindboggling NQ salaries continue to pepper legal sector news, with “burn out” case studies of frazzled young lawyers soon to follow, economic pressures squeezing firms, AI related challenges, regulatory pressures and of course, a new Government (and incoming new legislation) to boot.
We’ve also seen the continued rise of class actions, a continuation of the Post Office scandal, regional firms flexing more muscle, and pressure on the litigation finance sector.
Throughout, legal services remain a key part of the UK economy.
In 2024, the market was estimated at £47.5billion. Although growth is not believed to be as high as had been predicted, it did come – with areas including corporate, family law and employment law seeing boosts.
But what could the next 12 months have in store? In this article we look at the top trends shaping the sector in 2025.
Class Actions
We’ve seen class actions rise to greater prominence in the UK in 2024 and the indicators are that 2025 will be no different, as many ongoing huge claims roll-over into the new year.
One of particular prominence is Merricks v Mastercard. On the 3rd of December, Mastercard agreed to settle a collective lawsuit in London brought by solicitor Walter Merricks on behalf of 46 million British consumers over card fees. The case was the first approved mass consumer action in the UK in 2021, propelling it in many eyes to the “the one to watch”.
This comes after nearly nine years of litigation, but it isn’t over yet. A day after the settlement agreement, Innsworth said it would challenge the deal calling the agreed sum “both too low and premature”. It was originally believed the claim would be in its billions. The final outcome will be observed closely, with commentators keen to offer their viewpoints on how it could shape this type of litigation going forward.
It’s a trend we’ll certainly see continue next year, with environmental claims, car finance and medical claims all looking to grab attention as class actions firms continue to take on corporate bad actors.
This growth of cases will mean a growing body of work for Magic Circle and other disputes firms which have seen defending deep pocketed multi-nationals – some of them will be long-term clients – against these actions as strong income drivers.
The consumer v corporates battle has always been fierce and attracted political interest. Citing pro-business interests, lobby groups have long campaigned against the growth of what is seen as an untested but momentum-gathering class action regime. With UK companies of all sizes under pressure following the Rachel Reeves Budget, we can expect to see more of this anti-class action narrative and pushback next year. It will mean the battle in the Court of Public – and political – opinion will be key.
Litigation Finance
The litigation finance sector and class actions have long been seen as intertwined, due to the David v Goliath nature of the cases.
While there are more complex uses of litigation funding, it is the funding for group consumer actions which gain the most headlines (not all positive). The spotlight on funding has shone even brighter following its involvement in the Bates vs Post Office case. This thrusted litigation finance beyond just the observation of the legal world and into public discourse, inviting scrutiny.
The 2023 PACCAR ruling, which focused on damages-based agreements and threatened significant elements of the industry, is still in the throes of being overturned via legislation promised by the last Government. The new Government has been urged to get a move on with the reversal.
At the same time, the Civil Justice Council is conducting a review into litigation funding, delving diligently into self-regulation, criticism that funding fuels unmeritorious claims, the potential for further regulation, what slice of the pie funders gets, and other topics.
As with class action firms, funders will recognise a need to engage with the narrative, particularly in the face of powerful business lobby groups and former politicians driving the pro-regulation message. This will mean deployment of strategic communications and messaging, which the world’s largest listed funder, Burford Capital, showed its appetite for at the tail-end of 2024 when its CEO Chris Bogart declared that due to the delays in resolving PACCAR, had started to raise questions about the “suitability of London as a destination of choice for legal issues”.
The rise of “under-one-roof” offerings
As the line between work and life continues to blur, so will legal service offerings. For business owners it can be unclear where work finishes and home starts, and in that vein, clients will be looking for firms that can do it all.
It’s not enough to be a full-service firm, instead in 2025 the question will be how cohesive these firms are. Do the corporate team work closely enough with the wills and estate planning teams to refer work, and can they collaborate on projects when it’s required?
Family businesses, which were hit particularly hard by the Budget will be one key client group looking for holistic support. They’ll be affected by National Minimum Wage and National Insurance increases just like any other business, but they have the added pressure of IHT changes and succession planning to navigate, and they’ll be looking for firms that can manage it all.
Northern firms beyond north shoring
In 2024 we’ve seen an increase in “northshoring”, whereby firms outside of the North have teams of support staff, or junior colleagues in the North to do lower risk, high admin work for a lower price point.
This presents both a challenge and an opportunity for northern firms. Will they partner with firms to provide northshoring support to boost their bottom lines? Or will they stand firm and continue to champion northern skills and expertise and demand the same cost as other firms across the UK?
War for Talent – care needed
Each passing week in 2024 seemed to bring news of higher salaries for Newly Qualified lawyers. Figures were impressive or terrifying, depending on which side of the fence you sit.
But there is very often a sting in the tale. First-hand accounts of young lawyers on high salaries being pushed to the brink by brutal working hours and aggressive management practices peppered the media.
The collective narrative has served as a painful lesson for the legal sector.
Although it is difficult to say it will put off every NQ with an eye on working in a major law firm, there is clearly still work to do in the sector around winning hearts and minds.
This will provide opportunity for some firms offering a different way of life – but it also means the scrutiny on what is real in terms of employee engagement and benefits, will be ever greater in 2025.
It does also seem to be the case that some law firms need to feel they are prepared for the issue.
Research commissioned by The PHA Group and conducted by Censuswide showed that 80% of law firms surveyed felt they were prepared to handle pay demands made by Gen Z employees.
However, in addition to this only 23% of those firms had prepared by way of inclusion in a crisis plan, dealing with scandals on excessive pay amongst senior leaders.
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