It’s obvious that 2020 hasn’t exactly been business as usual. A global pandemic, shaky economy, and contentious politics have all set the scene for a turbulent 2021, especially for law firms and litigants. Here are some of the emerging litigation trends we’ve been seeing and what law firms can expect to experience in 2021.
1. There will be a lot of work to do
If current litigation trends continue, we can expect to see a flood of cases in 2021. And here’s why:
Many potential litigants held off on pursuing legal action due to the COVID-19 pandemic. In fact, even as late as the fall of 2020, more than two-thirds of individuals put off resolving their legal problems during the pandemic. This cohort is waiting until either they believe law firms are safely operating again or until their legal needs become too great to ignore.
The COVID-19 pandemic had a huge impact on companies’ abilities to meet their contractual obligations — supply chains are still broken, fulfillment is still hamstrung, companies are still going bankrupt and agreements are still going unhonored. As a result, litigation is increasing.
As businesses ramp back up, new agreements have to be made and old agreements need to be renegotiated. The pandemic showed everyone that their contract portfolio wasn’t as protected against risk as they thought. With greater attention paid and more rigid requirements being applied to contracts, counterparties may pursue litigation to escape contracts they perceive as overly restrictive.
2. Legal departments are going to be spending more
Since there is going to be so much more litigation in the market, legal spend on outside counsel will necessarily increase as well. In fact, a report by BTI Consulting predicts that outside counsel spend will increase by more than 5 percent, which marks the largest increase in the last decade. Larger, established firms will of course take a larger piece of the pie, but as we’ll see, this still marks a new opportunity for mid-sized firms.
3. Up-and-coming firms will gain a seat at the table
Recency bias — the cognitive bias in which the mind assigns excessive weight to recent events — affects everybody, in-house counsels included. Coupled with excessive risk aversion, legal departments often stick with the outside counsel they had most recently worked with, even if their performance was mediocre. Too often, the cost of onboarding a new law firm and the relative safety of working with “the devil you know” makes it difficult for new firms to break in.
But the increased litigation and legal spend in the 2021 market is going to force legal departments to give the new guys a shot. The added pressure means that some under-performing but sticky firms will finally get the boot, or that there will be simply too much work for a given legal department’s preferred partner. Mid-sized firms with a promising history may get the chance to forge long-lasting partnerships.
4. Despite demand, there may still be a lot of competition
There will likely be plenty of work to go around, but just because cases and spend are going to increase doesn’t mean that law firms won’t be desperate to outcompete one another. There’s still enough uncertainty in the economy that many law firms will want to take up as much work as possible to ensure survival.
In fact, according to one report, more than half of lawyers are concerned about the performance of their firm, and a little more than a third are concerned about being able to make a living. This will likely translate into aggressive competition among law firms, especially if there is another COVID-19 spike or economic indicators remain concerning.
5. Expect a high demand for employment litigation
An unsurprising litigation trend for 2021 will be cases between employers and employees. With issues stemming from shut-down orders, remote work, furloughs, bankruptcies, layoffs and more, nearly every organization is dealing with high volumes of employment litigation. There will, of course, be plenty of cases related to breaches of contract and other, more complicated commercial litigation, but employment litigation is likely to be among the most common.
6. Ongoing transformation will continue
Though it is less of a litigation trend for 2021 and more of an ongoing event, the legal industry will continue to become more agile, more technologically sophisticated and more open to innovation. There are a few factors leading to this evolution, both from 2020 specifically and from previous years.
First, the 75 million members of the Baby Boomer generation are retiring, a massive demographic shift whose impacts will be felt in all industries, including the legal industry. Their absence will spur greater innovation, both because of the younger generation stepping into leadership roles and the need for technology to fill in the gaps left behind.
Second, the COVID-19 pandemic has forced a change in law firm operations. In order to do more with less, law firms have embraced legal technology, alternative legal service providers and other novel approaches to law firm operations. Staff layoffs, remote work and other requirements have forced law firms to change at a far more rapid pace than they would have absent external forces. If the pandemic continues to disrupt legal operations in 2021, we can expect this rate of change to stay strong. And even if the pandemic quiets down, many law firms will have come around to the idea that experimentation, failing fast and continuous improvement are preferable to the status quo.
Adapting to these litigation trends won’t be easy, but the law firms that do will have become more robust and resilient against change come end-2021. Download our tip sheet “The Litigation Floodgates Are Open” to learn more about what you can do to prepare for 2021’s litigation trends.