Trending commercial issues to know about in 2024

Commercial awareness is a vital skill for all lawyers. For candidates applying for vacation schemes and training contracts, becoming commercially aware involves building an understanding of how law firms and their clients work as businesses, and how the wider world impacts them. This guide rounds up a range of commercial stories and talking points from 2023 and considers their impact on the year ahead. 

Reading time: 12 minutes 

Keeping up with current affairs and thinking critically about what you watch, listen to and read are important habits to develop. Solicitors need to know what’s going on in the world to consider how it might affect their firm and clients. As an applicant, you’re not expected to be an expert, but you must be prepared to hold a conversation with a panel of partners in an interview. 

Politics 

Although the UK did manage to create some stability by retaining the same prime minister for the whole of 2023, it’s been another whirlwind political year. However, with elections around the corner, policy U-turns and backpedals, a battle for the White House and escalating military action in both Ukraine and Gaza, 2024’s political sphere will be vastly complicated.  

Elections 

Let’s start by looking ahead to what could be. 2024 is set to be the biggest global election year in history, with more than 60 countries holding elections, including Bangladesh, India, Pakistan, Russia, South Africa, South Korea, the US and, of course, the UK. 

Technically, the latest possible date for the UK’s next general election is January 2025; however, this would occur only if Prime Minister Rishi Sunak failed to call for an election before 17 December 2024, meaning parliament would be automatically dissolved. Sunak has indicated that an election is likely to take place in the second half of 2024. However, it’s in the Conservative Party’s interests to hold off until it can maximise its chance of success. Several factors tend to determine a reigning prime minister’s chance of winning a general election. These include: 

• the economy; 

• delivery of key pledges; 

• the broader political context; and 

• the opposition’s performance.  

When the economy is suffering, the chances of the current government being re-elected decline. Sunak has achieved his pledge to halve inflation in October 2023, although the Bank of England has predicted that there’s a 50% chance that the UK enters a recession in 2024. When it comes to key pledges, as part of his top five priorities for 2023, Sunak had promised to half NHS waiting lists and “stop the boats”. However, waiting lists continue to grow, industrial action by doctors remains persistent and the government’s Rwanda policy was ruled unlawful by the Supreme Court. Before calling for an election, it’s wise for Sunak to either make meaningful progress on these pledges or pivot from them, drawing attention elsewhere. According to YouGov, as of 3 January 2024, voting intention polls show the Conservatives holding just 22% of the vote (down 2% from 19-20 December) and Labour holding 46% (up 3%).  

The battle for the White House 

Across the pond, elections in the US are looming. In April 2023, former US president Donald Trump made history as the first-ever US president to be arrested. Despite this, according to The Economist, he has a one-in-three chance of regaining the presidency in 2024. Trump will compete for the White House, while simultaneously battling 91 criminal charges in four jurisdictions: another historical first.  

The unique image of a presidential candidate commuting between campaign rallies and courtrooms is either tremendously humorous or worryingly morbid – only the result of the election can determine which. For Trump, re-election to the White House may be his only get out-of-jail free card. The election is also being described as the first ‘AI election’, meaning a significant risk of deepfakes being used to amplify a crisis of trust and spread false information. Trump is already guilty of claiming his legal troubles are part of a “deep state” conspiracy, attempting to utilise such conspiracies for his own political advantage.  

The results of this election will be global, impacting everything from US climate policy to military support for Ukraine and Israel. In fact, Tom Standage, editor of The Economist’s The World Ahead, has stated that: “Election-rigging in Russia may mean Vladimir Putin’s fate depends more on American voters than Russian ones.” 

Conflict in Gaza 

The battle for the Gaza strip was escalated on 7 October 2023, when Hamas launched an attack on Israel killing 1,200 people and taking 140 hostages. As of 7 January 2024, Gaza’s Ministry of Health (MoH) states “at least 22,835 Palestinians” have been killed by Israeli military efforts, with an estimated 70% being women and children. An additional 7,000 are reported missing and presumed dead. As the MoH is run by Hamas, Israel has questioned the validity of these figures; however, the MoH’s track record of reporting on conflicts has generally been consistent with other sources such as the United Nations (UN) and even Israel itself.   

The conflict between Israel and Palestine began long before October 2023, dating back to 1947 when Palestine was first divided into Jewish and Arab states as part of the UN’s partition plan. In May 1948, the state of Israel was formed creating the first Arab-Israeli war, which ended with 750,000 Palestinians being displaced. Today, we’re witnessing “the most significant escalation of the Israeli-Palestine conflict in several decades”, with both sides trading daily rocket fire.  

As of 12 January 2024, the UK and US launched missile strikes on Yemen, targeting Yemini militia group Houthis. The Houthis is backed by Iran and has pledged its allegiance to Hamas in the war in Gaza. South Africa has also become a key player in Gaza news stories recently, after bringing a case to the UN in which it’s accused Israel of genocide. South African lawyers have claimed Israel’s Prime Minister Benjamin Netanyahu has frequently expressed “support for genocide”, with his armies chanting “no uninvolved citizens”. South Africa has called on the court to call for an immediate ceasefire, which, even if unsuccessful in its efforts, will undoubtedly shift international opinion.  

The economy 

2024 has been dubbed “the year the UK turns a page” by accountancy firm PwC. Its economists have highlighted that despite consumer prices and housing costs remaining high, inflation levels, regional growth and worker incomes all point to positive signs. The 2024 economy will be impacted by everything from volatility in global energy prices due to the conflict in the Middle East, to the general election and even the Olympic Games in Paris. According to PwC, the good news is: 

• the UK is set to be the fourth best performing G7 economy, outperforming France, Japan and Germany; 

• low-income households will see an improvement to their living standards due to a rise in the National Living Wage, easing inflation on food and energy and a third cost-of-living payment; and 

• for the first time since 2021, more households can expect to be better off in 12 months’ time, than worse off.  

Despite these positive predictions, two key issues that remain are consumer costs and rent prices. Even with falls in inflation, consumer prices are predicted to remain approximately 25% above those in 2021. Additionally, the average rental prices on London properties are continuing to rise with average monthly rent expected to hit more than £2,000, rising 20% since March 2023. Outside of London, rent is also expected to increase by 5% in 2024. 

Law firm impact 

But what does all of this mean for the legal industry? First off, firms will need to mitigate a decline in revenue due to a significant slowing of growth within the legal sector. LexisNexis has suggested that the demand for legal services will grow by just 2% in 2024, four percentage points behind its growth in 2023. This slow in growth is due to a number of reasons, including geopolitical uncertainty, the aftermath of the pandemic and regulatory complexities. To combat revenue decline, firms may have to optimise new ways to grow such as embracing AI or other legal tech to combat costs or expanding the range of services they offer. 

Breaking into the US market is another way UK firms are looking to grow. The merger of Allen & Overy LLP with Shearman & Sterling LLP has highlighted the opportunities open to law firms through combining resources. The new pair reach a combined revenue of $3.4 billion. It’s predicted that 2024 will see more firms looking to break into the US market through M&As to ensure continued growth.  

One final change, that had already begun to take hold in 2023, is the decline of the ‘billable hour’. With the cost-of-living crisis causing economic uncertainty, clients have begun to seek alternative fee arrangements to the standard billable hour model. Labelling the method as “encouraging inefficiency”, both clients and lawyers alike are opting for fixed fees to maintain profits, while reducing hours. One UK lawyer, who spoke to LexisNexis, argued that under the billable hour model, “people who work more efficiently are unduly penalised” owing to them billing less than someone who works slowly to produce the same result.  

Georgia Dawson, senior partner at Freshfields Bruckhaus Deringer LLP, insisted the focus should be on the quality of work that firms produce, rather than time spent on a matter. Dawson said: "If you focus on outputs rather than the inputs, then people are able to manage their work in a way where they're completely focused on the quality and the value of the output for the client." 

 
Migration 

Migration was a key talking point in 2023 and is guaranteed to remain a hot topic for the year to come. Migration is a broad, complex and often emotional topic. With that in mind, it’s important to cut through the noise and understand what 2024 may hold. To do this, we’ve laid out the key talking points you should be aware of. 

Minimum salary threshold 

In December 2023, the UK government announced plans to drastically increase the salary threshold for those looking to sponsor a visa application. The minimum income is set to more than double, from £18,000 to approximately £38,700. This change has come under significant scrutiny, particularly due to its disproportionate impact on women. At current, just one-quarter of women in the UK earn enough to meet the new threshold. There are also concerns for those on lower salaries due to living outside of London, with the median average salary for full-time UK workers in 2023 sitting at £33,000. Graduate visa’s that allow graduates to stay in the UK for two years following graduation will also come under review early this year, with discussions predicted to continue into late 2024.