Hi-tech ways of working due to the pandemic are here for the long term for Scotland's law sector

Given the healthy level of deal activity and the optimism felt by many lawyers at the relative speed at which transactions got under way again in the second half of 2020, now is a good time to look ahead to see what can be done differently to effectively address a range of challenges.

One of the big trends of the next 12 months is set to be the increased used of new technologies by solicitors and their clients. Even before the pandemic, technology, including AI, was becoming a bigger priority for lawyers, and this was intensified by the necessity to communicate virtually.

The legal sector, which can be traditional in its approach, is becoming increasingly aware that it has to embrace technology for its own benefit and for its clients. And with cybercrime becoming an even greater threat for businesses and all organisations following high-profile incidents such as the cyber attack on the Scottish Environment Protection Agency (Sepa), firms know they must have systems in place that will protect both themselves and their clients.

Peter Lawson, chairman at Burness Paull, says: “The legal market is evolving quickly due to the impact of technology. We’ve already benefited as a firm from that shift with the early adoption of new software solutions and process change, and we’ll continue to innovate in the interests of our clients and our people.”

Andrew Chalmers, managing partner at Davidson Chalmers Stewart agrees that there is a huge opportunity to capitalise on the innovations developed through home working to maximise efficiencies, both internally and in terms of client service.

And Murray McCall, managing partner at Anderson Strathern, says: “We’re living in a time of such fast-paced technological change that we need to be sure that we are providing our services in ways our clients want.”

He refers to an app recently launched by his firm that allows clients to share information needed to allow work on their will or power of attorney to be started, even on the go and out of office hours. He adds: “There are so many technologies to choose from, but the real opportunity and benefit is finding the right tech for your clients that will deliver them real tangible benefits, be that in efficiency or cost saving.”

It’s the view of Barry McCaig, partner and head of office, Glasgow at Pinsent Masons, that major consolidation of legal firms has been done and the next big challenge for the profession is how it responds to technologies, such as AI, to increase efficiencies.

His feeling is that larger clients want better, simpler and easier relationships with law firms and leaner more fit-for-purpose panels. He says adopting new tech and introducing innovative working practices to suit the changing market are strong differentiators in winning new business.

Steve Dalgleish, head of technology at Shepherd and Wedderburn, says that in recent times law firms have toughened the defences around their digital assets. Heavy investments have been made in suites of security tools covering such “old favourites” as anti-virus and malware, as well as more recent concepts covering the likes of anomalous behaviour detection and email security.

He adds that as more services move to the cloud, increasing resource is spent validating third-party risk (suppliers) and fourth-party risk (suppliers’ suppliers). This means that it is vital for all communications to be verified.

Other areas affected by changes during Covid-19 are working practices and the importance of health and well-being. It is expected that some changes made out of necessity are here to stay.

Claire Armstrong, managing partner of Dentons in Scotland, says: “Supporting and nurturing the talent we retain in the firm has been vitally important but also the most challenging aspect of working remotely during the pandemic.

“Client demands have increased so it’s been essential to check in with the team, particularly more junior colleagues, to understand where people may need help and support. We have all had to adapt to a new way of working and some have found it harder than others.”

She adds that her firm has invested more time in encouraging an open conversation about issues, from the impact on mental health of the pandemic to struggles with the menopause, and other more personal issues.”

Allan Wernham, managing director CMS (Scotland), says: “While we’re seeing some sectors returning to near-normal working, managing the return to work will present an opportunity for many businesses to adopt new models which can enhance efficiency and employee retention levels.”

And the fallout from the pandemic is not expected to vanish overnight, not least as governments tighten the purse strings to try to recoup some of the expenditure during the worst times.

Euan McSherry, partner at Aberdein Considine, says: “The furlough scheme ended in September but many government protections for businesses remain, such as the extension of the irritancy period in commercial leases to 30 March, 2021.

“We are seeing a slight increase in company-led liquidations and administrations, but any significant increase in insolvency and restructuring activity is likely to depend in large part on how the government deals with the repayment of Covid loans.”

Lawson says: “We have been very fortunate not to have seen dramatic drops in activity levels in any specific area.

“One sector that has been more affected than others is commercial property, mainly due to the impact that the pandemic has had on office and retail space. That slowed down some developments and transactions initially, but the market is adapting and returning along with the return to the office.

“We have seen clients in certain sectors directly affected by Brexit and we are supporting them through the challenges of adapting to the new regulatory landscape.

“However, as a firm we have seen no reduction in international deal flow as a result of Brexit so far – quite the opposite. There continues to be a strong appetite for cross-border transactions in our markets. We are optimistic that will continue to be the case.”

Others share that positive outlook, but point to the continuing shadow of Covid-19 and Brexit. Chalmers says: “As the economy continues to open and more businesses find their feet, I expect to see further increases in transactional activity as a consequence of pent-up demand and the volume of money which is flooding into the market and seeking a decent return.

“We do, however, have a number of major challenges to contend with, all of which threaten the current economic bounce – labour shortages, rising costs of materials and rising fuel prices will create a lot of uncertainty and potentially put a significant brake on recovery.”

The other big topic that is set to dominate this year and beyond is climate change, particularly with COP26 being held in Glasgow.

Wernham says: “In the wake of COP26, there will be significant opportunities to support clients as the UK accelerates the transition towards net zero carbon emissions.

“While we’ll continue to support business in taking a leading role in this ambition, it can’t be expected to carry the full burden on itsown – governments and,crucially, individuals will need to step up if we’re to create a lasting legacy.”

This article first appeared in The Scotsman’s Legal Review 2021