COVID-19 has severely affected the entire world, both in terms of life and livelihood. It brought all economic activities to a complete standstill throughout the world, with most countries observing complete lock down for two to three months in an effort to control the pandemic. India too has been very badly affected, but the government is doing everything it can do to contain the virus. Now, economies around the world are gradually opening up, hoping that normalcy would eventually be restored sooner than later. Just like any other business, every corporate law firm in India is gearing up for the post COVID-19 environment.
Challenges posed by this pandemic are unprecedented. From healthcare to employment to the economies at large, every aspect of human life has been tested. No profession has remained unaffected, be it technology, education, medical or law, you just name them. The virus is still evolving, and we get to know about new development almost on a daily basis. To put it moderately, the future, at least in the near term, is uncertain. However, people are slowly learning to live with the virus.
As is the case with any other business, the legal profession is witnessing a paradigm shift in how people work and think. Courtrooms are closed and hearings are taking place remotely. Work from home seems to be the new normal. Also, there is going to be a lot of churning in the legal industry, and for smaller law firms, surviving this onslaught will be a huge challenge. This article tries to understand the effects of COVID-19 on the legal industry.
Experiences from Previous Downturns
Previous experiences seem to suggest that legal practice is less severely affected as compared to the overall economy. Except for the 2008 financial crisis, the legal industry has weathered the storms with resilience. However, there is going to be irregular and unequal demand for lawyers from different practice areas. Litigation and restructuring are expected to be more in demand while business law practice is likely to remain subdued. As the economy slowly craws towards normalcy, with the governments across the world pumping in liquidity into the markets, business lawyers would again be in focus. Further, law firms with large exposure to the global financial market are likely to be hit the hardest, whereas those operating in the local markets would remain rather insulated. Pricing of legal services may witness slight increase, but there would be pressure on collections as well, and because of discounts and write-offs, net collections are likely to fall. New pricing models, such as those based on the outcomes and where clients have some sense of cost certainty, will evolve. There would be more pressure on the traditional law practitioners from alternative legal service providers. Overall, there is going to be pressure on the legal industry with some law firms, particularly the larger ones, performing relatively better.
The most visible impact that COVID-19 has had on the workforce around the world is that a large section of them have shifted to work from home. With so many restrictions around, people have been forced to stay indoors and work from home. The situation is the same across industries, and the legal profession is no exception. No corporate law firm in India would have envisaged such a drastic turn of events. During strict lock down, only the essential court proceedings were being carried out with majority of hearings happening online through video conferencing. Courtrooms across the globe bore a deserted look. Now, with lock down being gradually lifted and offices starting to function, albeit with reduced strength, courtrooms too are witnessing some increased activities.
However, the situation is far from what it was before the pandemic. Lawyers and law firms are still doing most of their work remotely. The sudden change of events has come as a rude shock to them. Working from home is something that lawyers are not used to, and they are finding it quite difficult to adjust to this new way of life.
The Judicial System
Similar to what we have discussed above about remote work, the courts and the judicial systems are also trying to adjust to the new norms of social distancing in all walks of life. To improve justice delivery, it had been suggested in the past by many experts that the entire court system would have to be made completely online. Though, it was never expected to happen under forced circumstances, the judicial system is slowly but surely moving towards digital methods of communication to hear cases and administer justice. At least in the near future, this is how courts are going to function.
With all the disruptions in the market because of COVID-19, client expectations and concerns have shifted far away from the normal. The legal industry is overwhelmed by falling demand in the changed economic environment. Proposed mergers and acquisitions transactions are being re looked into as valuations have plummeted and feasibility of projects are being questioned because of lack of clarity as to what would be the situation post pandemic. With COVID-19 affecting the legal industry massively, law firms are revamping their digital communication infrastructure to stand up to the challenge and fulfil client demand.
Discussed above are some effects of COVID-19 on the legal industry across the globe. India too, has been similarly affected and every corporate law firm in India has accepted that remote working is here to stay, and is preparing to stand up to the demands of the new economic environment.