Summary: Law firms face many challenges in the coming year with changes in technology and overall attitudes towards the legal industry.
Every year law firms face new challenges. This year law firms can expect to face many challenges related to money and technology. See seven specific challenges that law firms can expect this year and quite possibly for the next few years.
- Increasing competition from new entrants to the legal marketplace: There are over 300 alternative business structures now that are changing the traditional law firm business models.
- Pricing competition: Clients want efficiency, value, and lower costs. In the end, clients can demand these things because law firms need the business. Expect to see alternative fee arrangements become the norm.
- Technology: The internet is constantly changing and more services are being streamlined so that they can be done online. Automation reduces cost but prevents loyal relationships from being formed between the firm and clients. Technology brings additional risks from hackers and can lead to sensitive client information being stolen.
- Business models: Law firms are changing their business models to drive cultural change - some are even being listed on the stock exchange.
- M&A: Mergers and acquisitions are increasing between law firms. With two or more firms combining, there are always challenges determining the new social structure of the firm and so on. (See Law Firm Mergers: Why Law Firms Join Forces for more information.)
- Social media: With great benefits come challenges as well. Social media is the go to source for everything, so if your firm doesn’t have a strong social media presence or website, it will often be overlooked for a firm that does.
- Jobs: Outsourcing is used in every industry, even legal work. Law firms utilize cheaper options whenever possible to save money. For law firms that don’t have the resources to do this, they will face challenges staying competitive with those that do.
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