Posted by: johnocunningham | December 27, 2016

2017: A Look Ahead for Law Firms

The year 2017 does not look promising for law firms, according to a recent overview of a business survey report that appeared on Bloomberg Law on Dec. 13, 2016.

Among other things, the cited report noted that:

  • Realization rates (percent of billables that are collectible) declined through 3Q (3rd quarter) of 2016;
  • Demand for law firm services grew by just 0.3 percent through 3Q;
  • Billing rate increases account for most law firm revenue gains, which is not sustainable.

The report cited “the usual suspects” as solutions for these trends, including better expense management and brand differentiation in marketing.

But, as explained in multiple prior postings on this blog, those solutions will not be sufficient to preserve and promote the lasting vitality of any firm. During the intense phase of competition that the legal industry has entered in this millennium, law firms will need more comprehensive and well-devised strategies for competing with or partnering with:

  •  Corporate law departments, which have been cutting into work previously allocated to firms, as the corporate law departments grow in response to 1st year salary bumps and steady overall billing increases that outpace inflation;
  • Technology solutions providers, which are reducing human billable time spent on document review and discovery, and which will proliferate further with the advent of artificial intelligence that can research and analyze terabytes of data much faster and more effectively than humans;
  • Alternative legal service providers, such as accounting firms and consulting firms that often have far better relationships with most of the C-suite officers of large companies, relationships which are being well-leveraged to grab portions of legal work related to such things as quantification of economic damages in complex litigation; and
  • Temporary staffing solutions providers, designed to supply corporate law departments or law firms with lower cost, but experienced lawyers and paralegals when bump-ups in work volume arise.

Firms will need to do all of the following to stay on the leading edge of competition in this era:

  • Shop for, assess, learn and implement the best technologies for saving money and time on legal services;
  • Institute perpetual process improvement practices in order to maximize efficiency, cut costs, and raise quality and consistency of results;
  • Institute project management practices in order to execute large project management functions as well as or better than their in-house and consulting firm competition;
  • Develop, test and implement innovative solutions to recurring client legal problems;
  • Develop cultures that will foster a unified focus on perpetual improvement, better training and obsession with client service.

 

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