2021 Highlights: Report on the State of the Legal Market
As the 2021 clock ticks down, Legal Current is looking back at the milestones and key accomplishments from the Legal Professionals business of Thomson Reuters. Today we revisit findings of the 2021 Report on the State of the Legal Market, which showed this year may have been a “tipping point” that accelerated significant changes in the law firm market.
The report examined how the transition to working from home, increased use of technology to improve efficiency and reduce costs, and greater emphasis on work-life balance and employee well-being were affecting the legal market.
In coverage of report findings, Law.com’s Andrew Maloney noted: “Amid the COVID-19 pandemic, firms adopted remote work while cutting overhead and boosting profits. Those lessons will most likely result in bigger technology budgets, more flexible working arrangements, a bigger focus on timekeeping and greater collaboration between firms going forward, according to the 2021 Report on the State of the Legal Market, from the Thomson Reuters Institute and Georgetown Law’s Center on Ethics and the Legal Profession.”
Bloomberg Law’s Roy Strom picked up on the profit growth findings in the report: “the profit is largely a result of an industry-wide push to slash expenses. … This is vastly different from how Big Law has operated since the Great Recession. Cutting expenses has not been a prominent feature; raising billing rates has.”
Several factors identified in the report – including the impact of expenses as well as an increase in technology spending – shaped how the law firm market fared in 2021. Their impact was noted in multiple thought-leadership reports published later in the year.
As Artificial Lawyer’s Richard Tromans noted in coverage of the Q2 2021 Peer Monitor Economic Index report: “spending on tech and knowledge management (KM) has also increased. This report shows that tech spending increased by 3.3% compared to last year, and that KM spending increased by 5.1%. These are not huge increases, but they are certainly healthy and bode well for legal tech vendors – and the law firms.”
And as Karen Sloan from Reuters explained in coverage of the Q3 2021 Peer Monitor Economic Index report, “direct expenses grew more than 7% over the past 12 months, fueled largely by associate raises and bonuses.” Findings of the Law Firm Business Leaders Report also underscored how talent acquisition is threatening law firm profitability; Global Legal Post noted findings showed “[l]eaders have definitively shifted their focus from cost cutting to standing out in a hypercompetitive market and using tech to build value.”
For more on the trends shaping the legal industry, watch for the 2022 State of the Legal Market report in January.