Automation will replace 67,000 legal services jobs within a generation - but an increasingly productive sector will continue to expand, the Law Society predicts today. Chancery Lane's Legal Services Sector Forecasts also predict that the turnover in the sector will grow only modestly over the next three years.

The forecasts estimate that the adoption of new technologies will double the growth of law firms' productivity (output per person employed) from the current 1.2% per year to 2.4% per year within a decade. This is the long-term rate previously seen in the rest of the economy. Such a growth rate would mean that, by 2038, total employment in the sector will be 20% less than it would have been if productivity growth continued at its current rate. This equates to 67,000 full-time equivalent jobs.

'We’re seeing the first evidence of how AI and automation will transform the sector,' Law Society president Joe Egan said. 'This could lead to 20% fewer jobs - although we expect this to be offset by escalating demand for legal services.'

In the nearer term, the report predicts 'relatively modest' growth in legal services’ turnover over the next three years, suggesting that employment in the sector is likely to continue to decrease. 'We currently expect total employment in the sector in terms of the number of jobs to decrease from 321,000 in 2016 (equal to 291,000 full-time equivalent jobs) to 315,000 in 2019 (287,000 full-time equivalent jobs), but then to stabilise at around 316,000 (equal to 288,000 full-time equivalent jobs) from 2020.'

The report has a bleak outlook for the property market, predicting that the number of housing transactions in England and Wales will drop by over 8% from 925,000 in 2016 to 850,000 in 2017 - and to remain at around that level for the next three years 

Among the factors expected to hit the volume of transactions is the ending of the government's help-to-buy mortgage guarantee scheme. 'Similarly, the proposed ending of the help-to-buy equity loans scheme in 2020 could also have a significant effect on transactions, the report states.

On a brighter note, net exports of legal services could increase in 2017 and 2018 as the depreciation of the pound’s exchange rate makes UK-based law firms more competitive internationally. Meanwhile, over the short-to-medium term Brexit could result in increased legal work.