The Impact of Covid-19 on the Legal Industry

COVID-19 has had a significant impact on our day to day lives as we have had to adapt to the ongoing pandemic in a variety of ways, such as working from home and social distancing. It has also left a long term impact on law firms and the legal sector in general as it has been reported that law firms may encounter a 10-20% drop in revenue.

The various lockdown laws that have come into effect have made it much more difficult for law firms to interact with their clients.

Legal functions must understand where they fit into this current climate and how they can adapt their business to be optimised in this current climate. The impact of covid-19 on the legal industry has varied depending on the legal market.

Conveyancing and Property

Conveyancing departments have reported a huge increase in workloads after the housing market reopened. Sales were reported to be up by 52%, which is mainly due to the fact that the stamp duty for houses has been temporarily put on pause by the Government, meaning that buyers are paying less for buying property in the current market.

Whilst an increase in property sales is positive; the current market is not without issues. Many people have reported that they are still having problems obtaining mortgages and experiencing delays with lenders, leading to longer time spent making transactions (sometimes up to 8 weeks).

Employment Law

The employment sector has seen a major increase during the pandemic; employment lawyers have seen a surge in enquiries from employers and employees. The rise in enquiries is expected to have come from the coronavirus JRS scheme (coronavirus job retention scheme), which was originally supposed to begin winding down after a month; however, the scheme has now been extended.

One of the many challenges that employment lawyers face now is that they must keep up to date with the latest developments of the pandemic and how that affects their clients. Katie Hayes of Bowery and Horton stated, “it’s all-new; we’ve all been learning to adjust to the situation at the same time. In a way, it has given us the opportunity to grow closer to our clients as we work together to resolve issues in an efficient and speedy manner”.

With a record number of unemployment claims at an increase of 910%, this particular sector has been expanded tremendously; therefore, many employment lawyers will have seen a rise in new clients and profits.

Commercial and Corporate firms

This area was hit particularly hard during the pandemic as many commercial/corporate firms reported a sharp decline in new enquiries. With the lack of new cases being brought forward, many businesses within this sector could potentially be in jeopardy due to the uncertainty of today’s climate. As business confidence remains low, the reduced amount of new leads is continuing to impact fee income.

With not only the current pandemic but also potential incoming tax changes, the incoming amount of significant activity from potential clients is likely to be sporadic, meaning that these firms will be forced to adapt to the new climate.

Litigation and Personal injury

Many personal injury cases tend to be long-running; therefore, they have been largely unaffected by the pandemic. However, the long-term decline in RTA claims has been intensified by the COVID-19 pandemic.

It remains to be seen what impact the pandemic will have regarding clinical negligence; an example of this is that the public may not take legal action against the NHS given the positive feeling toward them regarding their effects combatting the virus. However, there may be those that claim for clinical negligence against hospitals for issues such as lack of preparation against the pandemic.

It is also likely that the pandemic will influence consumer litigation claims, with an expected rise in employment claims and insurance claims. Another area that may see a rise in litigation is employer’s liability personal injury claims in circumstances where employers have failed to provide a COVID secure working environment, including not supplying adequate personal protective equipment causing employees to catch the virus.

The pandemic has forced certain changes within litigation cases, including remote mediations and hearings and the virtual sharing of court documents.

Insurance Firms

Due to the ever-changing climate, the insurance industry has been left scrambling. Travel insurance firms have been in trouble as countries change between being on and off the UK’s quarantine list, meaning a lot of cancellations from customers, making it extremely difficult for insurance firms to reconcile the claims.

Unfortunately, due to the pandemic, there has been a higher rate of deaths during recent times; the association of British Insurers have reported that there has been an increase of 7000 life insurance claims, and over £90 million has been paid out to families who have experienced a death from COVID-19 in the family.

A high court judgment stated that over 370,000 small companies would receive insurance payouts that struggled or closed during the pandemic. Insurance firms had originally declined to pay claims to customers; however, this changed after these firms became eligible for close to a total of £1.2 billion in payouts.

Family Law

During the pandemic, relationships have inevitably been strained due to the amount of time that people have been forced to spend together during lockdowns and rule changes. This has led to an increase in family-related law matters; an example of this is that divorce lawyers will see a rise in clients as there will be more demand for divorces. This, in turn, has lengthened the timeframe for cases from the average previously being nine months to now being around twelve months to finalise a client case.

The pandemic has also created changes for parents who either have a Court agreement or mutual agreements in regard to their children. The unprecedented situation that we find ourselves in will have forced separated parents to work together with key workers parents or if one parent had contracted the virus.

Another unfortunate area of law that has witnessed a rise in domestic abuse as victims of abuse have been forced to spend more time alone with their abusive partners. Professor Dame Janet Beer of the University of Liverpool stated that “the persistent and pernicious problem of domestic abuse has reached new heights during COVID-19.”

Restructuring and Insolvency

Recently, the UK government passed the corporate insolvency and government act which is thought to be one of the most fundamental changes in insolvency law in UK history. This act has introduced a number of measures that allow companies with financial issues some much-needed flexibility.

This act has brought in a new moratorium which will allow companies more options when they are facing financial difficulty. This new moratorium will allow law firms some time from their creditors if needed whilst they seek out a rescue plan.

Some of the changes included will be a new restructuring plan, changes to wrongful trading, new provisions to protect the supply chain of certain goods and services and amendments to certain statutory demands.

Future Lawyers

For the new generation of graduates or legal trainees, this may prove to be a good time to enter the legal profession as law students wanting to get into the industry will not have to change and adapt to old behaviours and traditional ways of working due to the fact that legal firms have been forced to change their working habits to those such as remote working. This, in turn, may create a new culture in the workplace that uses modern systems and technology that perhaps may have been long overdue.

We will also see more legal firms endorsing flexible working arrangements and a better work/life balance which will be good news for future lawyers who will hopefully be able to balance their home life with work in a way that the legal industry has never seen until now.

Therefore, it could be possible that for future lawyers, law firm hierarchies could become a lot more flexible, giving them a good head start in the industry as they are more likely to use these newer technologies.

This will provide a chance for future lawyers to distinguish themselves technologically and entrepreneurially as they will find creative and effective solutions to client enquiries and solutions to these issues.

The Impact of Covid-19 on the Legal Industry: Summary

The impacts of COVID-19 on the legal sector have been huge. It has been a turbulent time for all sectors of law, and legal firms have had to adapt quickly to the ever-changing climate that we have found ourselves in today as no one could have predicted this situation.

Law firms will now find themselves in a position where they must begin to use modern technology and approaches, or they may become irrelevant in the new climate. A shift in business and firms using more modern techniques has been inevitable for a long time. However, it is clear that the pandemic has shortened this time dramatically.

These firms and sectors may simply recover after the pandemic; however, for some firms that were already struggling before the pandemic, this may have significantly hastened their issues, or it might even force them to close their doors altogether.

The one thing that is clear, however, is that the months following the easing of the pandemic will bring clarity and as-to which firms/sectors will begin to see results similar to those that they had previous to the pandemic and which firms have been left behind as they struggle to adapt.