Posted by: johnocunningham | May 15, 2014

Legal Service Trends: Good News, Bad News…

The results of The 2014 Law Firms in Transition Survey were released this week by consulting firm Altman Weil, offering a revealing look at the continuing changes that law firm leaders see in the legal services marketplace.

The survey is based on polling of managing partners and chairpersons at 803 law firms with 50 or more lawyers, roughly 40 percent of whom filed complete responses, and the answers of respondents suggest there is good news and bad news for law firms in general. Parts of the survey also include scores from Chief Legal Officers of clients based on a separate poll, which are also revealing.

What jumped out at me from this survey is the client score on “how serious law firms are about changing their legal service delivery model to provide greater value to clients” other than through reducing rates. Clients gave law firms a median score of just 3 (on a scale of 1 to 10, with 10 being most serious) and law firm leaders gave their own firms an uninspired score of 5 for being serious about providing greater value to clients.

This clearly means that there is abundant opportunity for improvement, and thus, any law firm that steps up its game on process improvement, better use of technology, and better training and development (all factors in productivity and value enhancement) will have a chance to rake in plenty of business from clients who are thirsty for more “value” in legal services delivery.

The survey also reveals that less than 40 percent of firm leaders believe their own firms have “significantly changed in strategic approach to efficiency of legal service delivery.” That too leaves enormous room for improvement, and a chance to rake in more business through deployment of any significant and effective change in efficiency.

It is interesting to note that barely more than 60 percent of firms were doing anything to increase efficiency through more effective use of technology to reduce human time, or through better knowledge management to reduce research and delivery redundancies. Furthermore, a shockingly small portion of firms, less than 30 percent, are paying any attention to re-engineering their work processes, something that corporate clients do constantly.

So once again, there is abundant opportunity to stand out in this crowd of service providers by daring to do what clients do daily – adopting new technologies, re-engineering workplace processes, and making better use of existing institutional knowledge.

But the window may be closing soon, as law firm leaders grasp the urgency of needed change. The Altman Weil survey reveals that in just the last five years, these leaders have dramatically improved their recognition of the challenges in the marketplace. Roughly just one quarter of respondents thought that alternative billing and increased commoditization of legal work were permanent trends in 2009, but well over 80 percent of leaders now recognize those trends to be permanent. Similarly, 94 percent now see price competition as a permanent part of the landscape, whereas only 42 percent held that view in 2009.

For law firm leaders, the biggest stumbling block to effecting institutional change that meets client demands may be the partners themselves. Leaders rated their partners’ awareness of the new legal market at a median score of only 6 (on a scale of 1 to 10) and they gave the same score to their partners for “adaptability” in general.

Lawyers, the good news here is that the stubbornness of your competition should make it easy to step ahead of them in the competition to deliver value. The bad news is that you might have trouble convincing your own partners to take the necessary steps forward !

 

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