Is the Coronavirus Pandemic a Game Changer for Attorneys in Switzerland?

Numerous business people are currently struggling to assess how the current pandemic crisis might affect their business and/or profession in the future. Attorneys, of course, do the same. Short-term, it would seem to be pretty obvious that the current pandemic crisis has an impact on the legal profession in Switzerland as it has on many other professions and businesses. Not directly, obviously, since Swiss lawyers are not prohibited from exercising their profession and Swiss law firms remain open, unlike restaurants and movie theaters, for instance. But it seems pretty obvious that indirectly Swiss law firms are also impacted by the coronavirus pandemic, since clients put projects on hold, such as acquisitions or bond issuances, try to deal with issues in-house, to reduce external legal spend, etc. The explosion of corona-related legal newsletters, videoconferences, webinars, and other free of charge offers, indicate that Swiss lawyers currently have free capacity and are trying to generate business, presumably with the exception of lawyers who are specializing in labor and rental law. So, while it would appear to be save to state that short-term the current pandemic crisis also has an impact on Swiss lawyers and law firms, it is, of course, much more difficult to make a prediction on whether or not such crisis will have a significant long-term impact on Swiss lawyers and law firms.

All long-term forecasts are extremely difficult, and history has shown time and time again how uncertain and often wrong long-term forecasts were. Hence, my own prediction may be wrong. It may nevertheless be interesting to have an exchange on this topic with hopefully various and differing opinions. Hence, and subject to the mentioned obvious qualification, my personal prediction is that the current corona-crisis will not have an impact in terms of a game changer, but will reinforce and accelerate some already ongoing trends, among them the following three:

(i) Digitization as a secular trend should likely accelerate, also in the legal realm, such as in the form of the Justitia 4.0 project that aims to digitize, in particular, all Swiss courts on the federal and cantonal level. Once all court files are digitized and can be accessed remotely through the Internet, and once all communication with Swiss courts can be done electronically, including all official filings, it is unlikely that the requirement of physical law offices in Switzerland, currently upheld by the Swiss Federal Tribunal, will survive. This should permit the development by law providers of even more innovative and low-cost business cases and offerings, such as fully remote and virtual law firms operating out of low-cost countries, permitting to significantly reduce wage costs, being law firms' most significant cost factor by far. From a technological viewpoint, I would be astonished if the Swiss government would not soon change its current hesitant position vis-à-vis the 5G technology and permit a fast deployment of the required hardware, given the obvious importance of massive transmission capacities for various applications in industry and service companies, which are becoming increasingly important in times of reduced in-person meetings and business trips as well as the ever-increasing flexibility and digitization of work processes (home office solutions, etc.). The quick and large-scale deployment of the 5G technology will then also facilitate all kinds of law-related technological applications, such as the up- or downloading of massive legal files, high-quality videoconferencing, etc. 

(ii) The appearance on the Swiss market of non-traditional legal services providers will probably accelerate. There are more and more new business cases on the Swiss market for legal services, such as, in random order, platform economy-style setups like getyourlawyer or swissanwalt, new legal workforce providers to legal departments referred to as managed legal services, law firms in the form of walk-in stores like ylex, legal advice by telephone via a value-added service number, legal tech applications like, for example, document automation by Weblaw's DocEngine, etc., etc. In a post-pandemic world, which will likely see an increased cost pressure on companies and households, in which inexpensive providers of remote services without physical contact will likely appear attractive, at least to certain customers, and in which the digitization of Switzerland's justice system will go to the next level (see (i) above), the appearance of non-traditional legal services providers will in all likelihood increase, probably even significantly.

(iii) Legal departments of Swiss companies, legal protection insurance providers as well as other legal services providers, including the legal services divisions of the Big Four (E&Y et al.), have significantly grown over the last two decades. All these players are, under Swiss law, allowed to provide all types of legal services, with the only exception being the commercial representation of parties in civil and criminal proceedings. Assuming that the current corona crisis (or other developments) will not put the kibosh on globalization, economic growth, etc., it would seem unlikely that the growth trend of these players will be reversed by the current crisis. To the contrary, taking into account that, among other things, many of the relevant companies have significant financial muscle to invest in legal tech solutions (see (i) above), making them more efficient and competitive.

Assuming that the three above-described trends do indeed gain further momentum in the next years, what does this mean for Swiss lawyers? This is, obviously, very difficult to say, and different persons and organizations will likely reach different conclusions. That said, there is, in my opinion, one likely key impact, being an already very considerable but further increasing pressure to provide ever higher quality and more complex services. All legal work that can be automated, standardized, outsourced to low-cost service providers, some or all of them domiciled offshore from a Swiss perspective, will in all likelihood be automated, standardized and outsourced. All legal issues that can be dealt with by average lawyers will be dealt with by average lawyers. All issues that can be dealt with by support staff such as paralegals will be dealt with by support staff. Hence, in my opinion, the key elements of the independent Swiss lawyer's USP will have to be, in the form of keywords, to be significantly better, more agile and more independent than their competition. In more detail:

(i) The goal must be the highest technical quality as a lawyer, in the respective field. In this respect, there is, in my view, no way around a strong specialization, as I recently explained in a NZZ contribution. Capability to deal with the most complex cases, involving cross-border issues, multiple parties, high volumes of facts and complex legal problems, etc. Willingness and capability to permanently deal with new developments in the respective field of specialization.

(ii) Availability and high flexibility for the clients, with short response times. The times of office hours from 9am - 12 noon and 2pm - 6pm are definitely over. The times of clients willing to wait a week or more for a first feedback are over. The times of clients getting an audience on the attorney's premises are over. Today and tomorrow, lawyers regularly have meetings at their clients' offices and are directly available for their clients, on their cell phones, not filtered by an operator. Also, systematic overbooking that hinders a lawyer to be responsive to valued clients is over.

(iii) Total independence, given that certain competing legal services providers are not as independent. For example, whatever arguments are made to picture in-house counsel as being completely independent from their employer, in-house counsel can structurally not be totally independent, since having only one client, i.e., the employer, represents a classical concentration of risk that likely has an impact on in-house counsel's capability to, for instance, resist pressure from management. Such pressure must not necessarily have the consequences as in the case of the former general counsel of a Swiss private bank, but still, it would, in my opinion (having been an in-house counsel for many years myself), be naive to think that in-house lawyers are not subject to pressures structurally. The client retaining the services of an independent Swiss lawyer must be certain that such person is completely independent, also from his or her clients, which includes, under certain circumstances, providing a client with information that he or she is likely not pleased to obtain. It is this kind of total independence that clients will, in my opinion, look for in the more complex and demanding cases - which are, as mentioned at (i) above, the only cases relevant for independent practitioners -, to ensure that they really get the best possible recommendations that are strictly in their interests, even if, for example, this means strongly advising a client against litigating a case.

I think that the above-mentioned elements will be critical for all independent Swiss lawyers, irrespective of their form of organization, be this a large full-service firm or a small boutique firm, or a solo practitioner. That said, I would think that the smaller the setup, the more crucial these factors are.

Philipp H. Haberbeck, Zurich, 29 April 2020 (www.haberbeck.ch)

The information contained in this post is for general informational purposes only and is not intended to constitute legal advice. Readers of this post should not take any actions or decisions without seeking specific legal advice. Any mandate is subject to the full execution of an engagement letter.