2020: New decade, new challenges

Nikkie Kitching
Apr 12, 2020
11 min read

New year, new me? *Insert cheesy inspirational quote* Come to think of it, it's possible that this quote could apply to us all. Covid-19 and other events this year have inevitably shaped our society's overall thinking. The way we work. The way we move. Even the way we take our next steps. To many, 2020 has already been their challenging year to date. For the first time, we are faced with a virus that has affected every single human on the planet, directly or indirectly (even though many millennials will deny that fact). As we enter a new decade, many are left in a state of constant questioning. What else could happen? What awaits us in the future?

The occurrence of the virus has ultimately led all industries to undergo a drastic change. The legal sphere is no exception. In times like these, many industries will be turning to lawyers for advice on what steps to take going forward. This can be quite taxing, particularly when the rate and cure for the virus remains unknown. In addition, law firms should not only focus on the virus but also any current cases they are dealing with that have been disrupted or are at a standstill.

Beyond the virus, this blog aims to look at three main challenges that UK law firms will need to take into account in this new year and decade:

Brexit
Data Protection
Legal Tech

- Brexit -

Background: Ah yes, the 'B' word. Just because we've replaced the 'B' word with the 'C' word (Covid-19), doesn't mean that Brexit has disappeared forever. Those who follow the ins and outs of Brexit will know that 31 January 2020 is the date the UK officially left the EU. Since then, the UK and EU have been in what we call a "transition period". During this period, both bodies will continue conversations on a range of matters from travel, freedom of movement and most importantly, a UK-EU free trade deal. If the UK wants to continue trading with the EU, they will need to negotiate a deal which is fair and allows them to trade without tariffs (a tax on imported goods).

Before Brexit, the UK abided by the laws set out in the European Communities Act 1972 (ECA 1972). Now that the UK has left, this act has been repealed by the European Union (Withdrawal) Act 2018. An amended version was then passed to create the European (Withdrawal Agreement) Act 2020. The agreement essentially helps both bodies tie up any loose ends and provides a timeframe to discuss further. During this period, the UK will still be a member of Europe's single market and customs union. They will also continue to abide by EU rules and what is stated in the Withdrawal agreement even though they are technically no longer a member state.

If a deal is not struck by the end of this year, the UK will need to trade in accordance with the terms set out by the World Trade Organisation. This will mean that the majority of UK goods will have tariffs. For how long this goes on or whether the UK will have a second change at agreeing a deal is still uncertain. According to the EU (Withdrawal Agreement) Bill, an extension is not allowed on the transition period.

The end of the transition period is 31 December 2020.

What can law firms do?: As negotiations go ahead behind the scenes, there is a difficulty for law firms to predict their next steps. It will be wise for firms to pay attention to the areas of law they specialise in and how each will be affected by Brexit, as it will ultimately affect every area of law. For example, a firm that deals predominantly in real estate will need to take a closer look at the property market. If your client has invested in property in London, a hub for some of the most expensive properties in Europe, how will this affect buying and selling? What about if your firm deals with human rights law. Will the UK still abide by the European Convention on Human Rights (ECHR)? It will also be wise for your firm to conduct prior due diligence. This includes analysing existing contracts with any EU businesses and services, how Brexit can affect the contract and if it does, check to see if it requires amending or renegotiating.

Other steps going forward is also largely dependent on the current legislation and how this affects companies. For example, if we are to look at English business law, this is governed by the Company Act 2006 which is legislation created by the UK and largely doesn't affect EU legislation. However, if we look at the area of equity and finance, the UK equity capital markets are partly covered by EU Directives and is applied in the UK.

The UK has made a name for itself for being the second largest legal services market in the world. Now that it is leaving the EU, law firms fear a dip in profitability and also in the talent pool. Lawyers who are currently hiring have put many applications on hold and this has caused people to apply to other places, including outside the UK as well. As interest is shifted towards other firms in the EU, less people are more inclined to apply for legal jobs in the UK. HR and recruitment teams will need to figure out a plan to hire talent at the right time.

EU lawyers who happen to be working in the UK should consult the government website where there are guidelines. This will be largely dependent on how a lawyer has qualified. For example, those who qualified in England, Wales or Northern Island will not be able to take action. However, those who qualified from countries like Norway or Iceland may need to either re-qualify as a UK lawyer, register as a Registered Foreign Lawyer or work under the supervision of a UK lawyer

- Data Protection -

Background: Building upon Brexit, we can further venture into data protection; two words that continue to carry more importance over the years. This has been especially apparent ever since the enactment of the General Data Protection Regulation (GDPR), Europe's new law on how to process and protect data. The introduction of GDPR has kept companies on their toes to ensure that the information they have is kept secure and safe. Should data be breached in any way, regulators have the authority to issue warnings, substantial fines or in some extreme cases, both. Any data breach that does occur should be recorded accordingly. Should companies fail to do this, they could be in trouble.

Even though the UK has now left the EU, they will still need to abide by GDPR during the transition period. The GDPR doesn't just cater to organisations in the EU. It also applies to organisations that may not make a presence in the EU but also to companies that are supplying goods and services to the EU or who have offices in the EU. Therefore, if a UK based company sells products in the EU, they would still abide by GDPR. In the same year that GDPR was passed, the UK also passed the Data Protection Act (DPA). It was passed to ensure that GDPR is also incorporated in UK businesses. Both GDPR and DPA applies to UK businesses during this time.

The main question will be whether the EU will be satisfied with the adequacy of the UK's new data protection regulations with regards to personal data being transferred from the EU to the UK. Adequacy in this context is governed in Article 45 GDPR. This states that "a transfer of personal data to a third country...may take place where the Commission has decided that the third country...ensures an adequate level of protection". Essentially, the EU will consider the UK an adequate country if the UK can show their new data protection rules are pretty much equivalent to EU GDPR and allows the easy flow of EU data. They will need to come up with their own style of GDPR that is compliant with EU laws; a UK-GDPR if you will.

In alliance with this, Article 46 GDPR then goes onto state that "a controller or processor may transfer personal data to a third country or...only if the controller or processor has provided appropriate safeguards...". These safeguards can be stated in many ways such as "standard data protection clauses" or other approved documentation such as certifications and codes of conduct. Should the UK not prove itself to be 'adequate', they will need to prove that the safeguards they have implemented are enough to comply. If no agreement is made, the DPA would be in place which will hopefully grant them adequacy when handling EU data transfers. This is provided that the laws governed in this act are robust and compliant with EU data.

What can law firms do?: In terms of advice to UK Law firms, there are a few suggestions that they can take into account.

Firstly, they will be in a stronger position if they identify any data flow they have between the UK and EU and analyse their existing contracts in advance. From here, they could consider including a "standard contractual clause" in contracts. This type of clause can assist in relation to data transfers between EU and non-EU countries. If this is not found in the contract, European parties may have the right to refuse any sharing or using of any such data.

Secondly, it may be worth appointing a representative or professional to deal with matters specifically to data protection and how to best safeguard any information. Some firms have employed Data Protection Officers to ensure that their company is compliant to GDPR. Whilst this is not mandatory for some companies, it would worth having the extra protection if the company can afford it. A DPO may be able to assess the organisation and see if it is subject to any data protection breach and conduct any relevant risk assessments.

Lastly, it will be wise for UK law firms to keep an eye on any new data protection laws and how it can affect them as a business. The ICO will most people’s first point of contact.

- The emergence of legal technology -

Background: The advancement of technology has taken our generation to new heights. More access, more communication and more time to focus on the important things. Under current circumstances, technology has played an integral part in the movement of business. Covid-19 has compelled many professionals to work remotely. From home, we can email, video chat through Zoom and even live stream court cases.

For other companies, another result of the virus is that smaller firms who work with local businesses or have very few employees have had to shut down. This has left many employees redundant or in furlough. Whilst this is unfortunate, this could be a lesson for other thriving firms to incorporate alternative measures in the workplace. During this uncertain time, companies have time to think about future strategies and have started asking themselves how they can meet the demand of their clients.

Due to the demanding environment, amount of work and money lawyers have to generate, lawyers are looking for ways they can work more flexibly and still create the same results. A lot have turned towards legal technology to assist them in this time. This is an umbrella term for technology that helps us with legal services. This can be anything from legal apps that clients can access to case trackers.

With the introduction of legal tech, this could reduce a lawyer's workload, reduce the paper trail and give them more time to focus on cases. Fast forward to 2020, you're probably thinking "It's 2020. All law firms probably possess the latest state of the art technology to help them with their cases". However, this is far from the truth. Only a small percentage of firms have embraced technology. With law being the one of the oldest professions, there are many firms that stick with the traditional thinking of "we have always done things this way". Of course, this has helped some firms but in the long run, firms will need to adapt in order to flourish.

What can law firms do?: Below, are a few examples of tech companies that have made significant strides in the legal industry, helping some of the UK's top firms as well as in-house teams.

Luminance: Originally founded by mathematicians at Cambridge University, Luminance allows law firms to review legal documents quickly and breaks them down to understand which points are important that are often overlooked. It uses AI and patterns to pinpoint where lawyers should be looking.
Libryo: Libryo is a company that believes in making the complex legal system a little simpler. By investing in Libryo, companies can check for any changes in the law according to your country/jurisdiction and updates them accordingly and at the same time translate for any international firms.
Lexoo: Looking to redefine legal services, Lexoo hopes to better the industry by providing consistent advice and improve administration with efficiency and speed. They have helped big companies such as Asos and Ocado.

Within the legal sphere, other bodies have started looking at how legal technology can be incorporated. SRA (Solicitors Regulation Authority) outlined a strategy where they will be focusing on how technology can aid the legal profession (strategy until 2023). SRA Chair, Anna Bradley, stated that technology "has the potential to help address the problem that far too many people struggle to get the legal help they need." In addition, the SRA collaborated with a foundation called Nesta Challenges and held a competition called The Legal Access Challenge. This is where competitors develop a technology that can aid acess to legal services. Currently eight finalists have been awarded £50,000 each to develop their products. This will then be narrowed down to two finalists who will receive a further £50,000 each to further invest in their product.

Outside the legal sphere, law firms have found themselves in competition with accountancy firms such as The Big 4 who are investing developing new legal services. In an article posted by the Financial Times entitled "Big Four circle the legal profession", Richard Susskind, author of a study called "Tomorrow's Lawyers", stated that the Big Four have the potential to "emerge as market leaders in legal technology."This has made firms take notice and it has been seen a motivator to diversify their services. Representatives from the Big 4 have stated that their intentions are not to go head to head with law firms but rather to provide a different platform that can help law firms.

As people are slowly adjusting to working remotely and using more technology in their daily routine, can we expect to see this continue once we are return to normality? If Fintech has a place, surely there is space for Lawtech, right?

Final thoughts

The UK has a challenging 2020 ahead of them, particularly those who work in the legal profession. If there is one trait that firms should focus on it is that of 'adaptability'. You could have a sharp legal mind and work for the best firm but if you do not possess adaptability, a legal mind and firm reputation can only take you so far. With this in mind, firms can use their adaptability to assess the strengths and weaknesses they possess. This includes how these will likely change once a EU-UK trade deal has been finalised. Speaking to clients and making them aware of any upcoming changes will also help.

As much as the virus has deeply impacted many industries, it has also allowed us to connect in a different way. With the level of uncertainty surrounding the virus, technology has become our friend through these trying times. Legal technology is slowly starting to seep through more law firms and has the capability of taking a firm from traditional to modern. For a lot of remaining firms, the virus has opened up their eyes to how unprepared their company is in terms of the technology present, or lack thereof. Yes, legal technology and data protection measures may be seen as costly but may make up for things in the long run. If you run a smaller firm and may not be able to afford new measures, perhaps think of cost-cutting initiatives to better the company. Have a bake sale or a fundraising event. A little can go a long way.

As the saying goes "it will get worse before it can get better". With this in mind, we need be doing what we can to make the best out of a bad situation. Whilst it may not be so apparent now, the lessons we take from Covid-19 will definitely catapult us into a future of great change as long as we can all work together. So let's go from "New year, new me" to "New year, new us".

For more information on the above challenges, check out the below links:

2020: New decade, new challenges

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