Insights into the Legal World of 2024: AI, Elections, and International Expansion

This article covers a number of topical matters relating to the legal world, including the unexpected announcement of an early general election in the UK, the rising importance of artificial intelligence (AI) in legal practice, and salary increases, mergers, and expansions in the legal sector. It also emphasises the growing interest of UK law firms in Texas due to its booming energy sector.

The General Election

In an unexpected move, U.K. Prime Minister Rishi Sunak announced on May 22 that a general election will take place on July 4, much earlier than anticipated. This has prompted lawyers to prepare for the possibility of advising clients on what could be the country’s first government transition in 14 years. Subject to the outcome of the elections and the policies of the new government, some of the key areas of impact may include changes in financial regulations, corporate governance, and compliance requirements. Similarly, a government with a strong focus on public sector and infrastructure investment may lead to significant legal work in public procurement, construction law, and project finance. Meanwhile, a government prioritising environmental issues might introduce new environmental regulations and sustainability initiatives, leading to an uptick in matters relating to environmental compliance, renewable energy projects, and related areas. 

Artificial Intelligence

The significance of AI continues to be paramount in industry, and the example of Nvidia (technology company) illustrates this. Nvidia’s overall revenue grew by 262% to $26.04 billion. Its shares are up 92% this year and 200% over the last 12 months. Nvidia is the bedrock of the artificial intelligence revolution, with Google, Amazon, Meta, and Microsoft estimated to be spending $200 billion buying up its AI chips.

The importance of AI is also notable in the legal sector. Research from PwC has found that lawyers with AI skills could earn significantly more, with U.S. vacancies offering a 49% wage premium and U.K. positions offering a 27% premium. The report highlights the value of AI skills like machine learning and neural networks across various sectors, including professional services, information and communication, and financial services. PwC’s ‘barometer’ report delves into AI’s impact on the workplace, noting that increased labour productivity from AI can drive economic growth, higher wages, and better living standards. It points out that sectors with high AI adoption see nearly fivefold greater labour productivity growth.

In the legal sector, many top U.K. law firms are starting to develop AI capabilities, using platforms like Harvey, and exploring generative AI technologies such as ChatGPT since late 2022. This has sparked significant interest in AI from law firms. The report also notes that Singapore leads in AI-related job vacancies. However, the full impact of AI on the legal market is still uncertain, as most firms have not yet fully integrated the technology, especially in lucrative transactional and litigation work.

Further developments in London’s legal market relating to AI also include Travers Smith’s AI division becoming an independent business, set to offer its services to the broader legal market. The new company, Jylo, will be headed by Shawn Curran, the firm’s former director of legal technology, who is leaving Travers Smith to focus on Jylo. According to a statement from Travers, Jylo allows users to “easily explore, organize, and interpret findings” through a combination of analysis and chat features.

Salary Increases and Domestic & International Developments

Some of the most eye-catching developments in the London legal market have been the increases of salaries for newly qualified associates (NQs) which include the likes of Linklaters and Freshfields, which have both increased NQ salaries from £125,000 to £150,000, an increase of 20%. Similarly, Quinn Emanuel increases its NQ salaries from £152,000 to £180,000, a rise of 18%

Relating to domestic and international expansion, Allen & Overy and Shearman and Sterling have officially completed the long-awaited merger to become A&O Shearman on the 1st of May 2024. Meanwhile, since its rapid growth in London in recent months, Paul Weiss continues to push on with expansion plans as the firm sets its eyes on Latin America with former Willkie Farr Partner, Maria-Leticia Ossa Daza, who will be spearheading these efforts. Similarly, set on expansion is Seattle-founded firm, Perkins Coie, which announced that it will open in London, with a six-lawyer office led by former White & Case private equity co-head, Ian Bagshaw. The office will focus on corporate matters for European technology-focused clients, including startups through the life cycle of a company.

Looking across to mainland Europe, Eversheds Sutherland decides to close its Berlin office, leaving the firm with German bases in Dusseldorf, Frankfurt, Hamburg, and Munich. Meanwhile, also in Germany, Latham & Watkins have also lost four partners which are set to join rival US law firms Willkie Farr & Gallagher and White & Case in the country.

On the other hand, looking to the U.S, Texas is becoming a key focus for U.K. law firms due to its robust oil-rich economy and the energy transition boom. Major players like Vinson & Elkins and Baker Botts dominate the market. In Q1 2024, deal-making in Texas’s energy and power sector reached $145.7 billion, an 80% increase from 2023. Key U.K. companies with significant presence include the likes of BP and law firms Clifford Chance and Linklaters, which have competitive energy and infrastructure practices. Clifford Chance launched in Houston last year, hiring 10 partners, emphasising energy transition as a priority. A recent trade pact between the U.K. and Texas aims to leverage expertise in new energy solutions, life sciences, and professional business services.

Prequin predicted infrastructure assets would reach $1.87 trillion by 2026, making it the largest real asset class. Kirkland & Ellis played a major role in guiding Global Infrastructure Partners’ $12.5 billion acquisition by BlackRock. Interest from U.K. firms is growing, with Freshfields Bruckhaus Deringer showing intent to enter the Texas market. The challenge is for these firms to compete effectively in the energy transition sector, where private equity is increasingly focused.

Summary Remarks

In reflecting on the legal market developments of 2024 so far, it’s evident that significant shifts are underway, both domestically and internationally. The upcoming general election in the UK introduces an element of uncertainty for law firms, particularly concerning potential regulatory changes that could impact various sectors. Meanwhile, the rise of AI continues to shape the legal landscape, with notable increases in demand for AI-skilled lawyers and the emergence of independent AI ventures like Jylo from Travers Smith.

Internationally, law firms are strategically expanding their presence, with Perkins Coie’s entry into London and A&O Shearman’s recent merger being notable examples. Moreover, Texas has emerged as a focal point for UK firms due to its thriving energy sector and opportunities in the energy transition. Despite challenges, such as navigating new markets, firms in London are actively positioning themselves to capitalise on these evolving trends, signalling a dynamic year ahead for the legal industry.