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Eight legal market predictions for 2014

We’ve been gazing into the crystal ball to try and identify the trends that will shape the legal profession in the coming year…

1. A big law recovery

The legal profession is a lagging indicator of changes in economic conditions, with law firms typically feeling the affect of booms and busts around a year after they have hit the market.  Events that followed the 2008 financial crash illustrate this, with transactional workloads at many corporate firms holding up reasonably well during 2009 before they fell sharply in 2010.

Now, after a good year for many businesses, there is an expectation that corporate law firms will enjoy a busy 2014. For example, at this stage in the economic cycle a decade ago, as the UK recovered strongly from the bursting of the dot.com bubble, firms found themselves short of trainees and junior solicitors, and wages spiralled amid fierce competition for talent between firms.

2. A widening of the gap between elite firms and mid-ranking ones

In November top US firm Davis Polk announced that it is to offer the junior lawyers in its new London office a newly qualified (NQ) salary of £100,000, emulating fellow American outfits Bingham McCutchen and Latham & Watkins in paying London NQs a six-figure salary.

Although those firms don't employ anywhere as many trainees as big UK firms – Davis Polk plans to take on six trainees next year, a figure which is dwarfed by the 100-120 trainees hired annually by each magic circle firm – their announcements about market-leading salaries have put pressure on home grown rivals. Top ten UK firms' NQ packages may therefore improve during 2014.

Don't, however, hold out for significant junior lawyer pay rises at firms outside that bracket. Many of the firms in the top 10-50 group remain in a phase of consolidation and re-alignment – with some having either already merged or currently being in the process of looking for a tie-up. Most likely this period will continue at least until 2015.

3. A regional revival

Over the last few years, several City law firms have opened outposts outside London to handle volume work. High-profile examples include the support centres opened by Allen & Overy and Herbert Smith in Belfast, Ashurst's low cost base in Glasgow and Linklaters' joint venture with outsourcing firm Integreon in Colchester. Meanwhile, firms with already strong regional presences, like DLA Piper and Pinsent Masons, have used their non-London offices to help deliver greater value to clients. In a recovering economy, where law firms may soon need to bulk up again, the question turns to where they will focus their growth.

4. Upheaval in the publicly funded branch of the profession to continue

This month hundreds of criminal law solicitors converged on Chancery Lane and voted through a motion of no confidence in the Law Society’s handling of government legal aid reforms. There is uncertainty as to how the Law Society will respond.

The upheaval is set to continue in the new year as criminal barristers prepare to strike for half a day on Monday January 6 in a direct protest at what they perceive as the government's hostile attitude towards them on the legal aid reform issue.

Tensions then look set to continue to ratchet up until justice secretary Chris Grayling makes a final decision on the outcome of the Ministry of Justice's second legal aid consultation – at a still unspecified point in the new year. The hope is that the legal profession and the government can, in the meantime, reach a positive compromise that takes into account both the need to cut costs and ensure access to justice.

5. A window of hope for prospective publicly funded lawyers

Two important 2013 developments could have a significant effect over the following years. The first is the Inns of Courts' announcement in October that they are to subsidise pupillages in chambers specialising in publicly-funded work. The second development is the Solicitors Regulation Authority's (SRA) proposal this month to abolish the limit on the number of trainees that firms can take on.

Both moves are expected to increase the number of pupillages and training contracts that legal aid-funded chambers and firms can offer by effectively making it cheaper for them to develop graduates. What happens when these pupils and trainees reach the qualification stage remains to be seen, and will doubtless be partially determined by the government's decision on its second legal aid consultation. But, until then, at least more students will be allowed to progress their careers in this very important area of law.

6. Greater flexibility in qualifying as a lawyer

The long-awaited Legal Education and Training Review (LETR), published earlier this year, accented gradual change rather than radical upheaval of the system, but its emphasis on opening up more routes into law over the next few years could prove significant. Apprenticeships are already undergoing a revival, with major firms such as Kennedys and Beachcroft partnering with the Chartered Institute of Legal Executives (CILEx) to create new positions for school leavers. More firms could follow this model, although the main thrust of their junior-end recruitment may continue to focus on hiring university graduates.

Routes into the law incorporating a part-time study element also look set to grow, particularly in the publicly funded branch of the profession where firms tend not to fund future trainees' education costs. A greater number of online study options will add to students' options over the coming years as law schools consider new models such as the MOOC (Massive Open Online Course).

7. Diversity filtering through the profession

Statistics released by the Judicial Appointments Commission (JAC) earlier this month revealed that women have been recommended for more judicial posts than men for the first time in history. In 17 selection exercises for court and tribunal posts completed between April and September this year, 280 (52%) of those recommended for appointment were women, compared with 233 men (30 of those recommended declined to identify their gender).

The news follows repeated calls made by the UK's most senior woman judge, Lady Hale, for more diversity at the top amid suggestions that the UK is "out of step with rest of world" when it comes to gender in the judiciary.

Although there is clearly a long way to go, it seems that the positive strides made towards greater diversity at the junior end of the legal profession over recent years may, at last, be reaching the top of the law.

8. The year when a Supreme Court judge joins Twitter

2013 was the year Twitter went mainstream. Top UK lawyers to have joined the social network this year include DLA Piper chief executive Nigel Knowles, DWF managing partner Andrew Leaitherland and former Court of Appeal judge Henry Brooke. Could 2014 be the year when a Supreme Court Justice follows them?