As COVID recedes into some type of brooding abeyance and we count the cost of the economic and governance excesses of the era, what next for the legal industry in 2023 and beyond?

Law is a conservative profession in the true sense of the word, and with good reason. The justice system is hardly the place for social experimentation. Yet COVID caused as great a revolution as has been seen in the law for a long while, with courts for a time forced to wholly operate in the digital world, reacting quite literally overnight. It was impressive to witness, and demonstrates that the courts and the legal profession are anything but flat-footed.

Like the rest of the business community, lawyers learnt to work from home and keep the wheels turning both within firms and at the bar.

At the same time, legal services were in demand. Lawyers did well in 2021 and 2022. What with cheap money and contrived economic growth what was there not to love? For a moment we were feeling a bit like Gerry Harvey after a Federal Government announces a tax cut.

So are these trends set to continue or, with the economic storm clouds brewing and potential recession lurking in the shadows, will there be a shift? And what other big trends will we see emerge or continue during 2023 and into 2024? Here are some predictions that may hold true for other industries as well.

Cyber security

The risk of cyber attack remains our number one threat for the foreseeable future. There is only one way this ever-present danger can truly be dealt with and blunted, and that is an all-of-government commitment, federal and state, to work with business in a national approach. While there are infant steps in this direction, we are not yet there, and so the risk to individual businesses remains.

Simple steps can be taken by businesses to significantly counter the risks as I have written about before, however, the threat cannot be entirely negated. The best play at present is to try to exclude the majority of attacks while remaining on a war footing for those that get through. Any business that doesn’t have a game plan for what to do in the event of a successful cyber attack should have that exercise on its 2023 new year resolutions, because the day will inevitably come. Digital cyber attacks are here for 2023 and beyond.

Home or office?

What will become of the work-from-home craze? Read any business or financial publication and you’ll read research and statistics and another set of opinions as to where to next. The majority seem to believe the world has changed irreparably and forever. Is that true, or is this just the latest fad necessitated by COVID but now with legs of its own?

One thing is for certain, as always, the consulting firms aren’t missing out, given the avalanche of research it appears necessary for industry associations and big business to conduct. Employment lawyers in law firms have also been kept busy with these questions and the other novel employment questions thrown up by the COVID. For the legal profession, the perspective depends on what you do.

Courts have returned most contested hearings to the courtroom, as they ought to, given that witnesses in person will always provide a better foundation for evaluation and decision-making than a Zoom or Teams call. Barristers and litigious lawyers are back in court and, outside the usual need to prepare for cases, working from home is gone. Much the same can be said for most litigious practices that need to frequently meet with clients and witnesses. Yes, it can be done remotely, but not nearly as effectively, unless the digital meeting is a substitute for what would otherwise have been a phone call in days past.

Transactional lawyers may indeed enjoy the luxury of working away from the office, but we have realised as a profession, as have many professional services industries, that the real value of the workplace is culture and teaching. My longer-term forecast is that the trend of working from home is likely to diminish as business leaders see workplace culture slipping like so much sand through their fingers.

The lasting outcome of this current ‘freedom’, deemed so attractive to some workers, is the legacy of greater flexibility which is really what employees, and bosses, too, really want.  Allowing flexibility in the workplace addresses not only our wish for greater independence, but allows people with other demands in their life, such as children, older parents, pets, and the odd tradie popping in to fix this or that, to address those needs without needing to perform contortions to fit work life with home life. However, as always, trust is something that is built not given.

Employment law

COVID was a boon for those practising in employment law and related areas, and continues to pose interesting and novel questions of law. But overlaying that, we have a Federal Government seemingly tethered at the hip with the trade union movement, and a Minister of Employment and Workplace Relations evidently determined to make the already not fit-for-purpose Fair Work Act the vehicle to artificially bolster wages for employed Australians.

This year will be another in which business owners and executive managers will turn to the legal profession to ask what an amended Fair Work Act actually means. Years of litigation will follow before we actually know with any certainty how to legally interpret the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill (to become Act) and the economic harm the Australian economy will suffer from it. In an attempt to mitigate the damage and losses that business will suffer, workplace lawyers and consultants will be busy.

Pivoting to the times

Another trend in tougher economic times is a pivot of what lawyers will do in corporate and commercial firms. Typically in times of growth, what we see is the creation and expansion of businesses, the raising of capital, and the acquisition of assets, necessitating commercial transactions conducted by lawyers. These include such things as drafting commercial documents, drawing documents for land, asset, and business acquisitions, negotiating mergers and acquisitions, floating companies and raising capital in other ways.

The moment a recession hits, that type of ‘creative’ commercial work gives way to picking up the broken pieces, and trying to put Humpty back together again. The work of debt collectors and insolvency and corporate recovery practitioners will be on the rise, particularly if the financial commentary around how many zombie companies might actually be out there, gasping their last breaths, is true. Enter the lawyers practising in the fallout of failed enterprises who might (rather unfairly) be likened to the undertakers of the law. The pivot will come both as rates rise and the chances of recession increase. For my money, I have the Australian economy in recession sooner rather than later, having seen it all play out before in the 90’s and following 2008, when insolvency and corporate recovery practitioners last had their big break.

Labour market changes

With a recession comes the inevitability of increased unemployment. Labour shortages are a worldwide phenomenon, but the dial is turning in the US and it is likely Australia will follow. Globalisation may not be back as before, but the planet is now a connected place again. The movement of people is back. We missed out on a couple of years of migrant workers, at the same time as the Federal Government encouraged artificial growth by handing out free money and putting it on our future accounts.

Unless inflation persists (and it may), that debt must be reckoned for and that means governments will be tightening belts. With a rise in unemployment, all talk of the benefits of a hybrid workplace and having the employment contract tip towards the demands of the worker will ease. The smorgasbord has been eaten and workers want to hold onto their jobs.

Expect over 2023 and beyond a more sober discussion about how law firms and business more generally can make the numbers add up. Labour shortages will eventually ease giving employers more choice, and the first topic minds will turn to will be productivity. The most constructive way for that to play out is in the Hawke Keating approach, where the productivity of business was weighed against the need for employees to win out of the arrangement as well. If 2023 can bring a measured balance of capital and labour, all can bring home the bacon. The clear and present danger to that outcome is a Federal Government kowtowing to the union movement and serving up another industrial relations nightmare. In that case, workers will be the ones to ultimately lose, as unemployment will increase.

Renewable energy

The other area of law and business that is likely rise is anything to do with renewables. Whilst there is little real evidence that the world is going to be saved by renewable energy, it won’t stop business lining up for the generous Federal Government handouts and subsidies that have enabled its growth so far. Tesla is now outselling Toyota, but I doubt we’ve all had an attack of conscience. No, it would likely be the tax breaks. So it is that anything to do with renewables will for a time attract investment and give rise to business opportunities, and commercial lawyers won’t be far behind. A deal’s a deal.

Any business grown on the back of government largesse, however, likely has a lifespan, but that is a problem for another day. Right now there is money to be made courtesy of the Australian taxpayer indirectly having their taxes handed to entrepreneurs braying the necessary platitudes and pocketing the money. Think the childcare industry a few years back. While the green revolution remains largely government-funded, lawyers, like others in the industry, will float on a rising tide.

AI and automation

Read any treatise on the future of the law, and AI and automation will be up there. However, so it has been year in and year out, so it hardly qualifies as a 2023-specific prediction. Real AI is an illusory concept: what is usually being spoken of is, in fact, automation. The capacity of firms to invest in such tech depends largely on size. Big law can afford to invest and experiment. Mid-sized firms remain largely focused on system automation, throughput and process.

As legal tech advances, firms will pick it up, however, it might be best categorised as a continuing evolution rather than any radical leap forward. Remember we’re a pretty conservative bunch. One factor that will tip in favour of investment, though, is increasing labour costs courtesy of unrealistic industrial relations laws. Employers will re-direct workers’ wages to automatise technology to save money. Australian workers can benefit if they work or consult in ITC and related knowledge industries. If your job can be replaced by technology, you’re gone.

Increasing complexity

The final feature of the 2023 landscape and beyond is also one that we have seen already. Whether it be regulatory, inquisitorial or adversarial, legal readings have become longer and more complex. There are several explanations. One is based in technology. Digital search instruments mean we are finding more and more discoverable evidence that enters the courtroom, which has the capacity to add length to hearings. Add to that the heightened level of public scrutiny: no presiding decision-maker has the courage not to dig into the evidence until one can dig no more, in case some detail may be missed and come back to haunt. Thirdly, in order to please the ever-discontented public, governments are calling all nature of inquiries at the drop of a hat. It is difficult to keep abreast of the number of royal commissions we have had in the last few years, but these are just the beginning. Add Coronial inquiries, other types of inquiry, and long adversarial hearings occupying months of court time, and the trend is clear. It also worryingly highlights the haves and have-nots in the justice system, and the continuing unmet legal need. Wealthy people, corporations and funded parties can litigate. The rest struggle to do so, unless in effect funded by a long-suffering lawyer, who supports a person through their litigious journey in the hope of one day being paid.

The missing middle

The complexity of the justice system increases year on year while what governments fund, unlike the health system, remains effectively static. For 2023 and beyond, you can count on many Australians not seeing justice, not having the ability to meet and counter injustice or the wrongs that may be done to them. There will also be a widening gap between those who can and can’t take advantage of our sophisticated legal system, so sophisticated it will increasingly become beyond the reach of a majority of Australians.

Until we change our priorities and either fund or allow to be insured such people, best described as the ‘missing middle’ – those too impecunious to pay for legal services, but too asset rich to qualify for legal aid –  my prediction for this year and the years beyond, is that the law will be as much about the justice system as the ‘injustice’ system.

And a happy new year to you all.

Morry Bailes is Senior Lawyer and Business Advisor to Tindall Gask Bentley Lawyers, past president of the Law Council of Australia and a past president of the Law Society of South Australia.

Disclosure: Morry Bailes is a member of the Liberal Party.