Challenges Facing the Legal Sector in 2020

challenges facing the legal sector

The legal profession has been faced with many obstacles over the past decade, with many changes and new law reforms being introduced. Legal Aid cuts, the introduction of the Jackson Reforms, and new fixed costs regimes, which came into force at the beginning of the decade, have posed a massive financial threat to many UK law firms. Solicitor firms in the UK have had to adapt to these changes by introducing new business models, cutting staff numbers, and sadly, we have witnessed the closure of a number of legal service businesses. For some, the legal market struggle is not over yet, and there are likely to be many more challenges facing the legal sector in the 2020s.

There have been plans to introduce fixed costs into more areas of law, such as for Clinical Negligence. The introduction of fixed costs in further areas of law could tip the balance for a number of law firms to close their doors.

Challenges facing law firms this year are not limited to changes within the legal sector, in fact, the first half of this year has brought some of the biggest challenges facing businesses as a whole, which have all been the result of issues outside of the legal industry. Brexit and Covid-19 have already created a plethora of financial issues for all types of businesses. With the oncoming recession as a result of the Coronavirus, the situation could be set to get worse.


Fixed Costs 


The Ministry of Justice, alongside the Department of Health, are planning to introduce fixed costs for lower value Medical Negligence claims. The reason for this proposal is to reduce the costs incurred by the NHS Resolution in defending these types of claims. These plans have been criticised by campaigners who believe that the introduction of fixed costs could lead to many law firms becoming insolvent. Lord Falconer stated the following regarding the proposed changes:

“The government proposals would likely backfire as established firms on the Claimant side would exit the sector and be replaced by unregulated claim management companies.”

Some struggling Solicitors have responded to this by exiting the clinical negligence market by selling their WIP files so that they can focus on more profitable areas of law.




Britain’s exit from the European Union will inevitably bring changes to the legal and professional services industry. Brexit will bring many changes to legislation, altering some areas of law completely. This will, of course, cause a lot of uncertainty for Solicitors and their clients. The impact of Brexit on the legal industry is still unclear. Some legal departments, such as those in employment law, may see a rise in work as a result of employers searching for legal advice regarding the changes to employment law. However, others, such as those involved in cross-border transactional work, may see a decline in profits as a result of the ambiguity caused by Brexit.



The Coronavirus pandemic which reached the UK at the beginning of 2020 has brought some of the most unexpected challenges facing the legal sector. This global pandemic brought chaos to businesses of all shapes and sizes throughout the world. Although the UK Government responded well by providing short-term financial relief to businesses through grants and their furlough scheme, we are now beginning to witness the longer-term impacts of Covid-19 on the economy. This month, the UK fell into recession for the first time since 2009. It should come as no surprise that a recession will bring redundancies and closure of many law firms due to financial difficulties. Some law firms may need to cut down on overheads and exit from specific legal markets to save costs and focus on more profitable areas.

On a more positive note, Covid-19 has meant that many law firms have had to adapt to an ever-changing world. The use of legal technology has helped law firms to introduce more flexible working conditions, with a large proportion of legal staff being able to work from home throughout the pandemic. It could be argued that this flexibility could lead to a better work-life balance for legal professionals, which could lead to improved mental health for staff. 


How Can Recovery First Assist?

Recovery First understands the challenges facing the legal sector in 2020. We offer a positive solution to any law firm by helping them exit certain legal sectors and sell off WIP files whilst remaining solvent, maintaining their cash flow, and ensuring the maximum possible WIP is recovered.

The benefits of selling Work in Progress files mean that you can exit a certain market, such as personal injury, or clinical negligence, whilst focusing more on the more profitable areas of work and ensuring these areas of expansion are properly funded.

Typically, those exiting a legal market are forced into selling their WIP in bulk to a single purchaser, often at a heavy discount. At Recovery First, we offer an alternative approach to ensure you retain 100 % of the value of your WIP in a fully outsourced, managed, and compliant run-off manner.

To find out how we assisted firms and insolvency specialists, such as Delta Legal and Quantuma, take a look at our case studies section on the website.

If this is something that could benefit your firm, get in touch to find out if we can assist your firm.


It's never too late to speak to Recovery First. Contact us now in the strictest confidence

Sally Dunscombe:

David Johnstone:


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