Law Firm Leaders Forum: Large law firm model health check
Large law firms, and the legal industry, have seen a significant impact on economic performance over recent years magnified by the Great Recession. As many firms and legal service providers continue to adapt, some have dissolved while others have thrived. At the 19th annual Law Firm Leaders Forum hosted by Thomson Reuters last week, a panel discussed legal-market driving trends, alternative service providers, technology, client behavior, and how firms are changing.
Moderated by co-chair of the event, Brad Hildebrandt, the panel featured: Dan DiPietro, chairman, Law Firm Group, Citi Private Bank; Greg Jordan, general counsel and head of regulatory and government affairs, PNC Financial Services Group Inc.; Aric Press, senior vice president and editor-in-chief, ALM Media Properties LLC; and Maurice Watson, chairman, Husch Blackwell LLP.
The discussion opened around how large law firms are global – whether that is through their office locations, the clients they serve or the work they perform. As the legal market has become more global, the market also has grown. But not all the growth has gone to firms and that increase is not being shared equally as some firms are doing very well, many are doing ok, and others are not doing well at all.
The disparity amongst work distribution is and will lead to consolidation or an adjustment in their services as some firms are having difficulty competing. Firms have received a portion of the growing legal market, but alternative service providers (ASP) have taken a significant portion of legal work as well. Additionally, the panel noted that corporate legal departments are ASPs, which, depending on your market in the global enterprise, may also include LPOs and the Big Four professional service providers. As technology continues to advance and improve, ASPs are facing pressure as technology could make them irrelevant causing many to explore the next level up of legal services, thus impacting another portion of a firm’s business.
Global legal market-driving trends impacting large law firms focused on the imbalance of supply and demand, client behavior as legal departments continue to expand, multiple competitive forces, and technology. These factors are forcing firms to evolve with many firms making adjustments through upselling to drive more organic growth, reinforcing value, and revisiting practice area mix. Additionally, firms are exploring advantageous lateral hires and mergers, and evaluating internal efficiencies which can be staff reduction, contract attorneys, and technology implementation.
The panel openly discussed one of the biggest challenges they see for lawyers and firms: adapting. They mentioned everyone knows they have to adapt, but lawyers are typically not very good at it. There is a worry that lawyers and firms may not learn to adapt fast enough to thrive and succeed. In an effort to drive greater value and breed more success, a few suggestions were offered for lawyers and partners: differentiate themselves on industry focus; make investments (firm and lawyers) to increase depth and understanding of area(s); attend business events to understand clients; get in front of business leaders of your clients such as the CIO and CFO; and understand opportunities and challenges of the business of your clients.
As the panel closed, Jordan, who served as global managing partner at Reed Smith for 12 years prior to moving in-house, offered the room of mostly managing partners ten suggestions he wish he knew as a managing partner. To read those suggestions, visit this previous post.