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If you have not yet reviewed the 2016 Report on the State of the Legal Market, I highly recommend it. It provides great insight into the trends that are reshaping the legal industry. As a business of law consultant, I found the key takeaways to be all too familiar and all too real. The report reiterates that demand for legal services continues to be flat and has seen significant dips in key areas like litigation and IP law. In addition, it states that although rate increases are at lower levels, clients are still applying rate pressure to their outside counsels thereby continuing the decline in realizations.
To those in the industry, these findings are not a surprise. However, what I found most important within the report were the results of a more detailed survey conducted in September 2015 by Thomson Reuters Peer Monitor. The survey “collected data from 34 Peer Monitor firms on specific operational changes made to respond to client expectations for more efficiency, predictability, and cost effectiveness in the delivery of legal services.1” You can find this information on page 13 within the report. The analysis shows that firms that are performing at high levels had outpaced the lower-performing firms in several important categories including technology, outsourcing, insourcing, strategies, and staff support.
It’s clear that firms that are changing operations, focusing on new strategies, and relying on the counsel of business-minded staff are leading the pack. Firms that are slow to adapt are falling behind. In essence, meeting client demands, adjusting behavioral patterns, tracing new metrics, and implementing new technology can differentiate a firm from its competitors.
Another area the report touches on is the shift in key performance metrics from revenue to profitability. This is not a big surprise to law firm administrators. But it validates the course top-performing law firms are taking when it comes to the business of law. You could analyze trend after trend back to the great recession and draw the same conclusions. Law firms need to start thinking and looking at their business as a business, not merely a profession.
If you would like to discuss how to keep pace with the changing legal landscape, please contact us for examples of some of our products and services.
1The Center for the Study of the Legal Profession at the Georgetown University Law Center and Thomson Reuters Peer Monitor. 2016 Report on the State of the Legal Market.