The 2010s: The Decade of Disruption Continues
Over the past few years, “disruption creates opportunities” has been the unofficial mantra of TAGLaw and TAG Alliances. Our colleagues around the world who are affiliated with international legal networks likely know this mantra to be true. Whether the disruption is driven by the economy, technology, changes to the profession, or geo-political issues, law firms within international networks maintain a superior level of independence and agility to capitalize on the disruption and to create opportunities for their firms and their clients. The independence and local knowledge of our firms allows for “white glove”, personal, seamless, and cost-effective service in the local jurisdiction where our clients are operating.
Economic Disruption & Opportunities
In 2018, global markets experienced significant fluctuation resulting from changing conditions and uncertainty. Years of continual economic growth in some regions has appeared to evaporate as fears of inflation, unstable governments, trade disputes, and rising interest rates caused investors, industry leaders, and financial institutions to adjust and prepare for a possible global economic slowdown.
Looking ahead, it is likely that there will be a rise in insolvency, bankruptcy, and restructuring matters. Given the cross-border nature of a number of today’s businesses, members of international networks are well poised to assist due to their local jurisdictional knowledge and connections, competitive fees, and models built on agility and independence.
Technological Disruption & Opportunities
The rise of artificial intelligence, machine learning, and automation impacts clients, but also law firms. Our members are embracing the changes to their industry and are becoming leading experts in these emerging areas of technology. As an alliance of independent firms, we actively leverage our collective buying power to gain access to innovative platforms and solutions in order to provide the highest quality and cost-effective results for our clients.
Other key technological disruptors, such as blockchain and cryptocurrencies, present a number of threats and opportunities across multiple sectors. Blockchain has practical and powerful applicability to the legal profession. We are proud to have, among our members, some of the leading advisors in the blockchain and cryptocurrencies space. As governments and corporations move their platforms to the blockchain, it will be more important for our clients to have competent and skilled advisors who are experts in these emerging fields.
In May 2018, the EU’s Global Data Protection Regulation (GDPR) took effect, imposing a new data privacy standard for companies that target and do business with EU residents. GDPR has led to significant growth opportunities for law firms in advising their clients how to navigate this complex regulatory change in order to avoid enormous financial penalties and potential reputational harm.
Looking ahead to 2019, companies throughout the world will also need to prepare for California’s Consumer Privacy Act (CCPA), which takes effect in January 2020. Similar in scope to the GDPR, the CCPA legislation will lead to numerous additional opportunities for law firms and advisors. In other words, get ready for GDPR 2.0.
Disruption & Opportunities in a Changing Profession
In 2018, the trend of accounting firms moving into the legal sector continued as the Big Four expanded their footprint to include legal services. EY’s acquisition of the international law firm, Riverview, and PwC’s opening of the ILC Legal firm in Washington, DC, are two specific examples of this continued diversification of accounting firms.
There are only a handful of mature multidisciplinary alliances that are poised to offer clients a wide range of multidisciplinary, professional services, while maintaining a model of independence to avoid conflicts. As clients continue to demand more value and expertise from their law firms, the multidisciplinary model brings together experts from a wide spectrum of disciplines and provides one-stop shopping for clients working in multiple jurisdictions with diverse needs. This allows clients to seamlessly navigate global transactions with confidence.
Geopolitical Disruption & Opportunities
Throughout 2018, a trade war played out as two of the world biggest economies, the United States and China, imposed tariffs and restrictions on each other. For now, the current status quo of tariffs and economic sabre-rattling from both sides will continue, with neither side wanting to give an inch. Further trade disputes between the USA and Canada also took centre stage in 2018, culminating in the proposed US-Mexico-Canada Agreement (USMCA), a new version of NAFTA. Additionally, continued US political uncertainty and tension, now that the Democrats have taken back the US House of Representatives, will likely continue in 2019. Consequently, businesses will rely heavily on their professional services advisors for guidance on new tax, transfer pricing, and trade structures.
At the end of 2018, the on-going saga of Brexit, and the uncertainty of the outcome, once again captivated the United Kingdom and the world. Will there be a soft Brexit, hard Brexit, a second referendum or no Brexit? In 2019, it is clear that Brexit remains a significant concern for businesses with trade and operating relationships, both directly and indirectly, with the UK market. The ripple effect, due to supply chains and customers impacted by Brexit, may in turn impact many businesses that currently believe that they are shielded by this disruptive change. As such, the TAG Alliances has been extremely proactive in staying current with the developments of Brexit, continually reassessing potential implications for our clients, and communicating and educating our clients on new regulations during this transition process.
Global geopolitical disruption will continue to significantly impact our clients’ international business transactions, necessitating access to local and multidisciplinary professional services experts within an international network/alliance, who can deliver a seamless collaboration of services.
As we enter the final year of this decade, the only thing that remains certain is more uncertainty and disruption. While this might seem like a negative assessment on its face, the law firms that populate TAGLaw and the top legal networks and alliances in the world, are ideally positioned to navigate these ever-changing times to create opportunities for themselves and for the clients that they tirelessly and passionately serve.