Management Consulting and Legal Services to Decline Further in 2021
The Management Consulting and Legal Services markets are expected to shrink further in 2021, as the demand for such services remains weak with the major economies still struggling to reach the pre-COVID thresholds, according to Beroe Inc.
The global management consulting industry declined in 2020 by about 15 percent. That trend line is expected to deepen in 2021 with a subsequent contraction, which will take the industry valuation from $241 billion to $204 billion.
The legal services industry will follow suit. Valued at $724 billion in 2020 – a fall of 0.8 percent from the previous year – the legal services market size is expected to decline further to reach the $718 billion mark in 2021.
Interestingly, the latest developments have brought urgent and imminent adoption of newer technologies. This will benefit both industries in the long-run. The technology already makes up one-third of the management consulting market. That size is expected to remain steady in 2021 with a possible increase in the following years.
With the application of virtual mediums – which paves the way to higher efficiency, flexibility, and swift execution – consulting firms stand to benefit tremendously. They are expected to win government contracts, as well as play a pillar in their clients’ scaling efforts.
Management consulting firms help businesses save time and money by leveraging in-house experts – and a pool of real-world data – in outlining strategies and assisting in the implementation of those strategies. With effective communication, collaboration, and knowledge-sharing, they help their clients achieve higher productivity wherein decision-making is prompt and cost-effective. On the back of their end-to-end solutions, these firms enable the growth of organizations. North America enjoys the largest regional market share of the industry, followed by the EU, APAC, and the rest of the world.
In the legal services market, owing to the higher inter-departmental needs for efficacy, Virtual Legal Assistants (VLAs) or AI-powered chatbots are expected to have wider adoption. The need for legal technology experts will surge as well with 33 percent of corporate legal departments expected to hire more of such dedicated professionals by 2023 to support in-house workflow automation. In addition, more law firms are aggressively adopting technology to unlock better results and a competitive advantage. This will continue in the upcoming years.
For many businesses, hiring law firms over having an in-house legal team has traditionally been preferred. Even those who have in-house professionals, regularly outsource expertise and work with third-party teams in different matters. This is usually because the law firms have a large team of professionals who have their respective specializations. Working with specialists in the legal department – who offer tailored services – adds efficiency to the process, providing organizations more opportunities for cost-saving and better outcomes.
In addition to the current economic contraction that will result in the decline of both the management consulting and legal services industries, there are several constraints that each are expected to overcome. Among those, profitability is a big one. Due to higher competition that allows clients even more options, firms in these industries are ought to price their services more aggressively, which comes in the way of profit-making. Evolving clients’ demands and a high number of new market entrants are other constraints that management consulting firms, as well as legal services firms, will deal with in 2021 and the coming years.
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