Why Now Is the Time to Double Down
The International Bar Association’s 2024 Future of Legal Services Report, based on a global survey of legal professionals, highlights the evolving challenges and opportunities shaping the industry. Among the notable shifts is the changing perception of Environmental, Social, and Governance (ESG) concerns.
While last year’s report positioned ESG as a major growth area—on par with financial performance and profitability—this year’s findings suggest a more muted outlook. But does that mean ESG is losing relevance? Not quite.
Although some firms may see ESG slipping down their short-term priority lists, its long-term significance remains undeniable. More importantly, the firms that maintain their ESG focus today are positioning themselves for resilience, client trust, and competitive advantage in the future.
ESG’s Evolving Role in Legal Services
One of the most interesting takeaways from the report is that firms feel more prepared to address ESG challenges than they did a year ago. This is likely due to increased investment in responsible business teams and more structured ESG initiatives. However, while ESG itself may no longer dominate headlines, several related challenges—such as diversity, equity, and inclusion (DEI), mental health and well-being, and climate change’s impact on legal business models—continue to grow in importance. These issues are not isolated concerns but rather core components of a firm’s long-term ESG strategy.
It’s also worth considering the timing of the survey. Conducted in Q3 2023, the data was collected before several major geopolitical shifts, including elections in Europe, the UK, and the US. If the survey were conducted today, the results might look even more different from the 2023 report, where ESG was a top concern. With ongoing regulatory developments and shifting corporate priorities, ESG might seem like a moving target, but one that law firms cannot afford to ignore.
The Business Case for ESG
ESG isn’t just about corporate responsibility—it’s a business imperative. One common mistake is making the case for ESG solely on moral grounds, assuming decision-makers will act out of goodwill. However, managing partners, CFOs, and CEOs must prioritize financial sustainability, making it crucial to translate ESG initiatives into business language.
So, how can legal professionals make a compelling business case for ESG?
One practical approach is using the Sustainability ROI Workbook developed by Bob Willard, a former IBM executive and a leading expert on sustainability-driven business strategies. This free, open-source tool allows firms to quantify the return on investment (ROI) of sustainability initiatives, making it easier to communicate their financial benefits to stakeholders.
Willard highlights real-world examples, such as VeriForm, a steel fabricating company in Canada. Between 2006 and 2008, VeriForm invested just $46,186 in energy-saving measures. The result? A 90% reduction in natural gas consumption, a 58% drop in electricity costs, and a 76% increase in profit. The average payback period for its 42 energy-saving projects was just 6.3 months, with an annual return on investment (ROI) of 190%. This illustrates a critical point: ESG initiatives, when executed strategically, can drive cost savings, operational efficiency, and profitability—a message that resonates with law firm leadership.
The Role of Legal Tech in ESG Strategies
Technology is increasingly critical in how law firms implement and track ESG commitments. Legal tech solutions help firms streamline processes, enhance governance, and measure impact, making ESG efforts more effective and scalable.
- (E) Reducing Environmental Impact: Cloud-based legal practice management solutions like Unity® Practice Management help firms transition to paperless workflows, cutting down on printing, storage, and waste. Digital document management improves efficiency while reducing a firm’s carbon footprint.
- (S) Improving Access to Justice: Legal tech plays a role in the social aspect of ESG by increasing accessibility to legal services. Automation and AI-powered tools allow firms to offer pro bono work more efficiently and expand legal support to underserved communities.
- (G) Enhancing Governance and Compliance: ESG is also about strong governance. Legal tech enables better risk management, automated compliance tracking, and audit trails, ensuring firms meet evolving ESG-related regulatory requirements.
By integrating the right legal tech solutions, firms can streamline operations and strengthen ESG commitments, aligning with client expectations and long-term business resilience.
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The Risk of Pulling Back
Some firms might view the report’s findings as a signal to scale down ESG efforts, assuming that the world is moving on. That would be a short-sighted mistake. ESG is not a passing trend; it’s an evolving expectation from clients, regulators, and talent.
Here’s why pulling back now is risky:
- Regulatory Uncertainty: ESG may seem to fade from the spotlight now, but new regulations, such as the EU’s Corporate Sustainability Due Diligence Directive (CSDDD), are actively reshaping corporate compliance. Firms that scale back today may find themselves scrambling to adapt later.
- Reputational Damage: Firms that pivot away from ESG too quickly may be perceived as insincere, undermining the trust they’ve built with clients, employees, and other stakeholders.
- Competitive Advantage: Law firms that stay committed to ESG even when it’s not the industry’s hot topic will stand out as forward-thinking, reliable partners to clients who prioritize responsible business practices.
What Law Firms Should Be Doing Now
Instead of scaling back ESG efforts, legal professionals should focus on refining and strengthening their strategies.
- Short-Term: Conduct a strategic ESG audit to assess current initiatives and identify gaps. Ensure compliance with evolving regulations and integrate ESG considerations into risk management frameworks.
- Medium-Term: Develop ESG training programs for your teams to deepen expertise. Strengthen internal policies around DEI and employee well-being, aligning them with broader ESG goals.
- Long-Term: Establish leadership in ESG advisory services, helping clients navigate regulatory landscapes. Position the firm as a thought leader through research, advocacy, and engagement in ESG policy development.
As Timothy Wilkins, Global Partner for Client Sustainability at Freshfields Bruckhaus Deringer LLP, put it:
“At the end of the day, every single lawyer has to be an ESG lawyer.”
For law firms looking to operationalize an ESG practice, Harvard Law’s Centre on the Legal Profession offers valuable insights into integrating ESG into legal service delivery.
The Bottom Line
The legal profession has always played a critical role in shaping corporate governance and ethical business practices. ESG may be undergoing a recalibration, but it is far from disappearing. Now is the time for law firms to double down, ensuring they stay ahead of the curve rather than scrambling to catch up when the next wave of ESG urgency arrives.
By maintaining a steady and strategic approach, and taking advantage of the opportunities offered by technology, firms can future-proof their practices, strengthen client relationships, and enhance business resilience—because responsible business isn’t just good ethics; it’s good strategy.
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