The challenge of thriving in today’s economic climate

This post was written by Allison Guidette, managing direct of Large Law Firms

Over the past five years, the legal industry has gone through substantial change and the economics of many law firms have evolved in kind. The credit crisis hit mid-2008 causing a big dip in demand for just about all legal services immediately afterwards. And although the market has recovered in some practices from where it was in 2009, it still is far from where it was pre-2008. Will it be possible to return to those heights or are the changing needs of corporate clients – spurred by shrinking legal budgets, growing volumes of litigation data and the advent of e-billing data and related benchmarks – a more permanent reality for law firms of the future?

We do believe that corporate clients, for the foreseeable future, will be laser-focused on not only the quality of the legal advice they are given by outside counsel, but on the value of the engagement with their legal services provider. This creates interesting new opportunities and challenges for law firms: how to accurately budget staffing and time needs for new matters, especially when you are “bidding” the work and may be held to the budget; how to improve the business development skills of partners; when to consider outsourcing work; how to educate young attorneys on practical legal skills quickly and effectively; how to help lawyers adapt age-old workflows to maximize efficiency and use of new technologies; how to communicate all of the value-driving activities at the firm to clients; and much more!

Looking at the Peer Monitor Index (PMI), a few things jump out at us. First, there is excess capacity (too many lawyers) in many law firms and this will keep pressure on rates for the foreseeable future. Second, firms are easing up just a bit on some expenses. When we speak with firms, we learn that they have held off on key software upgrades or other investments in business development or practice management software for long enough. To meet client demands for efficiency, firms need to make mindful investments.

Of course, just buying the tool or system doesn’t deliver the efficiency. It’s critical that firms also implement a change-management process into a revised workflow. Good vendors should be willing and able to help you with this.

I am excited about the evolution of the legal market – by its very nature, it has evolved with client needs since the very beginning, and that change doesn’t stop now. It will look different, no doubt, but with advances in technology what we will see is a more efficient, nimble and effective legal world.

If you have any suggestions of topics you’d like covered or issues you’d like us to address, please e-mail us at llfsocialmedia@thomsonreuters.com and keep your eye out for next week’s blog, which will feature  Litigation Marketing Director Jeff Friedman, who will look at key trends in eDiscovery.

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