Summary: In a time of increasing economic change, how can law firms keep up?
Bloomberg BNA discusses what is becoming a well-known fact in the legal world—that if law firms want to stay open, they’re going to have to make some changes.
A recent survey of CLOs taken by Altman Weil demonstrates that almost half—40 percent—of law departments are planning to decrease the amounts they spend on outside counsel in 2016. Though this is not a surprise to many, what is surprising is how the firms are working toward such a goal.
Instead of simply redistributing funds, these firms are rethinking the needs of the firm at a fundamental level. Many Chief Legal Officers have determined that some legal work is not even necessary anymore.
In addition, Citi’s Q3 report on law firm performance demonstrated a 0.6 percent demand growth for the first nine months of the year, lower than the 0.9 percent growth seen in the first half of 2014. The market has simply been stagnant for a few years.
Many firms and attorneys, of course, remain hopeful that the market will return to a period of demand growth, largely due to the good numbers the market saw at the end of 2014.
- See How Will Law Firms Increase Growth? for more information.
However, these numbers were largely due to structural, not cyclical, changes in corporate legal buy. Therefore, firms are looking for opportunities while protecting the market share they already control. Each firm has to essentially rethink its role in the market place to continue providing valuable services to clients.
Many firms have responded by entering mergers with big firms. However, some suspect that a high bar for value creation will be seen. After all, currency fluctuations on international firms have had a significant impact. What it boils down to is that each firm must discover its own route to success. What works for one firm may bankrupt another.
- See Law Firm Mergers: Why Law Firms Join Forces for more information.
In a separate article by Bloomberg BNA, the authors explain why law firms also need to change their marketing priorities. They explore legal project management, or LPM, programs that “[connect] the dots between the client experience and the service approach,” Jennifer Manton, the head of marketing at Kramer Levin, explained. So far, the firm has seen improved client communication, more accurate pricing, and increased client satisfaction. Clearly, keeping clients happy is one way to stay in business during tougher economic times.
LPM usually requires coaching, which is often provided by marketing departments. Some firms have also created LPM coaching programs to facilitate greater client satisfaction. According to the American Bar, LPM methods help identify the best ways to scope a matter, the strongest communication methods, how to manage a budget, and how to evaluate progress. Of course, these practices are only successful when attorneys think it will help and are willing to change their practice. There are several ways to get attorneys to warm up to the idea, such as encouraging them to improve one part of their practice, to keep training concise and tailored to the attorneys’ practice areas, and rewarding success.
Source: Bloomberg BNA