If you believe that uncertainty is the mother of opportunity, you’ll be feeling pretty good about life right now. As John Pienaar put it in The Sunday Times on 25 October, “We’ve never been better informed, and still left so clueless. Intricate, multi-coloured charts decorate the newspaper front pages and news websites. They come with high-octane expert analysis … yet our future, our direction as a country, our place in the world is anyone’s guess.”
As ads for financial services warn us, past performance is no guarantee of the future.
But the Scottish profession at all levels should be proud of the way it has performed since March. It has stepped up in a big way. Just one example, an email I received from a partner in an Edinburgh firm, typifies its response, and how clients have responded in turn:
I’ve realised that, yes, my clients do appreciate me and will remember that in deepest lockdown I was driving around the city witnessing their Wills through living room windows when they were shielding,or getting them to sign their Powers of Attorney in their gardens. That gave them enormous peace of mind that their affairs were in order when they were worried about the pandemic in the most uncertain of times.
For lawyers in general, the pandemic has been a setback, not a disaster. The overwhelming message I’ve had from many different firms is, “we’re not where we want to be, but it could be a lot worse.” One of the few benefits of this grisly virus is that it has accelerated long overdue change.
No-one doubts now that WFH works. Never again will we spend all our working hours in the office. But firms need to be careful about how they manage the transition. Practicing law is a team sport. Collaboration, constantly exchanging ideas about client work and growing the business, is its lifeblood. Often, what’s discussed informally over a drink or a sandwich is as valuable as formal meetings. Video technology has been transformative. Flexibility in where we work has huge benefits. But as soon as it’s safe, firms should encourage getting the band back together physically as much as virtually.
So far, so manageable, but the headwinds for business next year, and hence for advisers look formidable. Unemployment is predicted to rise sharply, suppressing demand. The Bank of England has warned that corporate cash flow deficits will hit £200 billion. Government underwritten debt has been the saviour this year, but after the party, the hangover.
It’s a clear risk that next year businesses will not have capital to invest and expand once they have serviced borrowings. Regulators are looking closely at changing the rules to encourage investment in unlisted equity. At the moment, it is only 2% of £5 trillion of UK assets under management. If it can be increased to just 3%, it would boost the economy by £50bn.
Despite the obstacles, look closely and there are opportunities. Brexit uncertainty has been a significant drag on investment, and persists at the time of writing, despite the Prime Minister’s masterly negotiating skills and grasp of detail. But whether there is a deal, or we are thrown back on WTO rules, or something in between, business will be coping with an avalanche of regulatory change on trade, immigration, intellectual property, food and drink, financial services, oil and gas. They will need expert guidance on all of it.
Oil and gas lawyers face the need to rapidly adapt, as the drive towards the green economy accelerates. As traditional markets shrink, so new ones grow. Oil companies are going green fast. BP has announced a tenfold increase in its investment in low-carbon energy sources, reaching $5 billion per year by 2030. It is aiming for a twentyfold boost in renewable generating capacity.
Elsewhere, in housebuilding, commercial development and retail, the focus is on sustainable construction, energy efficiency, renewable energy and carbon offsetting, all with complex regulatory requirements, which will need the skills of specialist lawyers.
It’s sad but true that one person’s crisis may be another’s opportunity, so it is no surprise that firms are gearing up their insolvency and restructuring teams. You don’t need to be Nostradamus either to foresee that litigators and employment lawyers will be fully occupied next year.
What of services for individuals? A notable trend since March has been the growth of private client work. People have become acutely conscious of the need to have their affairs in good order. The residential property market has been a roller-coaster: off a cliff in March, booming July-September. Nobody expects recent conveyancing volumes to be maintained, but private client work ought to provide a consistent flow of business for high net worth specialists and the high street.
The latter are often excellent at serving their clients, but less skilled at marketing themselves, even though the digital revolution which has transformed their work also enables them to promote their expertise effectively and with imagination. There is no profit in being a virtuoso on the unblown trumpet.
The legal profession has survived and prospered through world wars, depressions, and human disasters of all kinds, by being adaptable, resourceful and relevant to the needs of those it serves. By the same route it will survive this too.
