Law Firm Leaders Forum – An Annual Report on the State of the Profession and Business of Law
The 21st annual Thomson Reuters Law Firm Leaders Forum in New York began with a panel discussing recent developments over the past year, a session that traditionally opens the forum each year.
Ralph Baxter, Chairman of the Thomson Reuters Legal Executive Institute, author and advisor, opened with remarks discussing three developments he sees impacting the pace of change. Baxter first noted the Corporate Legal Operations Consortium (CLOC), which has a different mandate from general counsel, and is focused on how legal departments communicate and collaborate with firms. The CLOC is working on creating a standard to measure law firms, metrics to measure performance, dashboards to communicate with clients, legal project management and more.
The ambitious outlook of regional law firms was another element that Baxter called out. Traditionally, the Am Law 50 and Am Law 100 firms generally carried the most prestigious name recognition and brands But times have evolved, Baxter said. The demand for top Am Law firms is down or flat, and a large portion of the demand for legal services is being met by regional law firms. These firms often deliver a high quality of service that can compete with the largest firms at a most cost-effective price.
The third development involves the future of legal services as discussed in a report developed by the American Bar Association. The report looks at how well the legal system is serving citizens and how legal services are delivered. Baxter added that this report will continue to change the conversation and make the legal profession more aware of how technology can enable improved delivery of legal services and change the rules for delivering that service.
The panelists then weighed on with their opinions on these developments. Aric Press, partner, Bernero & Press LLC, stated that based on his history of covering the legal profession, this is the year of the restless client, and Baxter’s reference to CLOC could be viewed as “Exhibit A”. A report released earlier this year stated that an estimated $3 billion of legal work has been moved in-house. In a buyer’s market, there are many clients that are not fully satisfied with their firm. He went on to mention the advent of productized knowledge and rise of the machines – stating a corner has been turned by firms, and more are receptive to exploring the use of artificial intelligence.
Press stated that while the legal services market always has been and is increasingly fragmented market, the rise of the restless client has increased the need for firms to understand their client. Firms need to understand which of their clients are wanting innovation, and which are comfortable with what they are receiving. Clients do not want to have firms lead a marketplace revolution, but lead them through their issues and solve their sets of problems. Press said it is more important than ever for firms to stay close to their clients and understand their needs and how them can best support them.
Beau Grenier, Chairman, Bradley Arant Boult Cummings LLP, agreed that pressures on large firms seems to be accelerating and creating opportunity for regional firms. He discussed that he also clearly sees more work moving in-house and there is much more pressure on using AFAs, particularly in litigation. A firm needs to find their niche, offer that service and provide it well. Many firms are behind the curve in areas such as such as improving workflows and value delivery, and are not making changes fast enough to meet clients’ expectations.
Jami Wintz McKeon, Firm Chair, Morgan, Lewis & Bockius LLP, labelled 2016 as the Year of the “C’s”: continued competition, cybersecurity, collaboration, culture, client service and creativity. She noted that it may be the year of not only the restless client, but also the restless law firm.
Firms are looking at how this change environment is playing out and where everyone will be when it shakes out. McKeon said firms must be able to provide valued advice on complex and global legal issues that clients can’t get from their inhouse team. She added that if firms can meet their clients’ expectations, firm size can be an advantage as more clients are global in scale. But convergence, or the trend towards using fewer outside counsel firms, is something that is starting to be considered again as clients weigh the time spent managing their outside counsel. Client pressures are also impacting firm staffing and training. As clients insist that they will not pay for work by first or second year associates, who will supply the training for these lawyers? McKeon said that there must be way to incentive people to do those jobs and stay in those jobs.
And her final “c” was creativity. She noted that firms need to be creative to look at how they can do things differently to provide greater value to clients.
Baxter wrapped up the panel by noting that firms will adapt and need to change to meet clients’ demands. He added that what will ultimately compel firms to change is that clients are restless. Clients are spending a lot with their firms, but, in turn, expect the quality service they are paying for.
