Journalists, bloggers, and industry influencers are interpreting findings of the 2023 Report on the State of the Legal Market, issued last week by the Thomson Reuters Institute and the Center on Ethics and the Legal Profession at Georgetown Law. They’re focusing on findings showing a drop in demand for services, an uncertain economic outlook, lower profits per partner, fewer billable hours for lawyers, and the potential for firm layoffs.

As they weigh in on what it all means for the legal industry, Legal Current shares their perspectives on the report.

In’s Barometer newsletter, Editor-in-Chief Gina Passarella noted how report findings point to a shift in clients’ willingness to pay high-end rates. She explained: “We’ve heard after prior recessions that, while clients will likely rationalize legal spend with lower-cost providers in down times, that hasn’t always come to fruition. But there is evidence to suggest it may already be happening this economic cycle. Just this week, Andrew Maloney reported for The American Lawyer that clients are moving more price-sensitive practices down market to smaller firms, while specialized firms—those with 70% or more of their billable hours in a single practice—have recently outpaced their peers on multiple financial metrics. The findings, coming from the 2023 State of the Legal Market report by Thomson Reuters and the Georgetown University Law Center on Ethics and the Legal Profession, suggest what the authors call a ‘re-segmentation’ of the market.”

In Financial Times, legal correspondents Kate Beioley and Joe Miller’s headline highlighted how the report “… shows pressure on top firms as some start to scale back after pandemic hiring blitz.” They added, “US lawyers are billing fewer hours than they have in decades amid a sharp decline in dealmaking, a survey found, as more law firms announce redundancies.”

Reuters reporter Karen Sloan also emphasized the challenges facing firms: “Falling demand, declining profits and rising expenses have created a challenging climate for law firms in 2023, a new industry report warned, with more layoffs likely as clients tighten their belts and move work to lower-priced firms.”

Reporter Matt Reynolds struck a similar tone in ABA Journal: “Amid economic uncertainty, the legal industry will continue to grapple with shrinking demand and productivity and rising expenses and inflation.”

A blunt headline – The 2023 Report on the State of the Legal Market — Yup It’s Bad – is how blogger Jean O’Grady summarized the report in Dewey B. Strategic. She noted: “Several key drivers of the bad news include the decline in profitability which surged in the pandemic, only to stall as firms absorbed ‘return to the office’ costs. Expenses further ballooned due to inflation. Law firms once again entered into the talent war ‘space race’ which translates to higher unsustainable salaries for young attorneys whose work can’t be billed to clients.”

Download the report for more on what legal professionals can expect in 2023 and the strategies law firm can use to navigate the year ahead.

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