A Closer Look At The U.S Legal Market

A Closer Look At The U.S Legal Market

The U.S. legal market is the largest in the world, representing more than half of the total sector size worldwide. Valued at $901.8Bn in 2021, it is expected to continue to grow at an annual rate of circa 5.3% during the period of 2022 to 2030.

Revolutions in the U.S legal market

The legal sector in America has seen a marked uptake in AI technology, with software increasing the efficiency with which law firms can operate and allowing fee-earners to focus on profit-generating activities rather than performing more mundane tasks. AI software allows for the automation of many key processes, including the creation and review of many routine documents.

The U.S. is no stranger to technological breakthroughs and employs them widely where they will add value, reduce expenses, increase profits and improve productivity.?

The U.S legal sector is strictly regulated but over the coming years, some U.S jurisdictions look set to explore the possibility of relaxing some of the regulatory requirements with which legal service providers in the country must comply. Known as "regulatory sandboxes", the intent is to test the effectiveness of non-lawyer ownership of certain firms; fee sharing agreements with non-lawyers; to implement appropriate technology-assisted services, including the use of paraprofessionals; and to relax some advertising regulations.

The UK has a more liberal approach to legal corporate services, with the Alternative Business Structure allowing non-lawyers to have ownership of law firms. It is believed that this will serve as a blueprint for the U.S. to follow in implementing regulatory changes and liberalisation.?

Challenges facing the sector

Despite the advances detailed above, the sector in the U.S. still faces some considerable challenges which, unless overcome, will have a long-term effect on firms' profitability and staff progression.

Staff recruitment and retention is as much a challenge for U.S. firms as it is for their counterparts in the UK, with the cost of securing talent rising in correlation with soaring inflation rates and the increased cost of living. This has been compounded by mental health issues plaguing many high-performing attorneys.?

With a shortage of new legal talent entering the profession, many firms attempt to poach top talent from rivals with promises of greater opportunities, increased salary and a more varied workload. Whether these promises will come to fruition remains to be seen and will vary from organisation to organisation.

The odds of becoming a partner have decreased in the face of stiff competition and declining demand for legal services across a number of sectors. A disparity in growth has been noted in recent years, with those firms specialising in transactional practices being more vulnerable to economic headwinds and thus seeing a sharp decline as clients became more risk-averse.

Other legal services sectors have seen a paradigm shift as cash-strapped clients move their custom away from firms that command a high price tag due to their premier reputation, engaging lower cost competitors in a bid to extract greater value from their legal expenditure.

Predictions

The greatest growth is anticipated in the corporate legal services sector, with demand for services associated with intellectual property rights, patent infringement and copyright violations expected to grow as businesses and individuals take fierce measures to protect their investments, products and services in the face of an uncertain economic climate.

Summary

Success in the U.S. legal market over the coming years will be dependent on the ability of firms to collaborate and innovate, apply technology effectively and focus on solving the challenges of the corporations that they represent.?

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