Trends That Are Changing the Market for Biglaw
Big firms once dominated the legal field, but new trends in law practice are shrinking the monopoly that large firms once enjoyed. Corporations are now driving the changes by investing more resources in in-house counsel and outsourcing less legal work to large firms they once held on hefty retainers.
Technology plays a significant role in allowing in-house counsel to handle a more substantial portion of a corporation's legal needs. E-discovery, AI-driven document management software and more highly qualified legal staff to manage the legal workload all contribute now to the billions of dollars corporations are pulling from big law firms. In-house legal departments are utilizing technology to increase productivity and achieve better results, meaning there is less need for outside counsel.
Corporations are increasing their budgets to hire more in-house legal staff, spending more on legal technology, and, most importantly, using alternative legal service providers rather than their traditional law firms. It is paying off significantly in reduced legal costs, which continues to drive more corporations to expand their in-house departments and spend less of their legal budget on traditional firms.
Corporations are becoming smarter about the bottom line, and paying exorbitant fees for outside counsel was once considered the price of doing business in the corporate world. Now that way of thinking is changing, and Biglaw is scrambling to keep its share of the market pie.
Other Factors That Contribute to the Loss of Revenue in Biglaw
- In the new digital age, a standardized approach to even complex litigation matters saves time, money, and ensures a better result. When the standardization of legal processes is combined with embracing technology, the amount of time spent on every legal matter is reduced. Solo practitioners and in-house counsels have been forced to adopt this approach to remain competitive, and it is now paying off. Big firms are finding that standardizing as much as possible also facilitates better teamwork.
- Outsourcing Parts of the Legal Process
- Corporations are outsourcing much of the work done by attorneys and paraprofessionals to external vendors located both domestically and across the globe. Outsourcing helps minimize costs and expands the capabilities of in-house counsel and solo practitioners. Solo practitioners and in-house counsel once offered little threat to the market share of big law, because they couldn't hope to compete with the resources available to large firms. Outsourcing has changed that dynamic.
- The practice of corporate law has gone global. That is not a new trend, but improved technology is erasing boundaries to collaboration with foreign counsel. Removing these boundaries is eradicating geographic hurdles to practicing international law.
- Work-Life Balance
- Striving to have a balance between a personal and professional life was once something scorned by prominent law firms. As a result, they found themselves no longer easily able to recruit the best and brightest practitioners. Instead, those who once clamored for a space in big law firms began seeking opportunities that allowed them to have a life outside the firm.
- New Billing Models
- The traditional model of billable hours has come under heavy scrutiny for rewarding inefficiency. There is no other industry that makes money by increasing the amount of time it takes to accomplish a task. Alternative billing models such as capped fees, fixed rates, or models that blend those have become the new trend for competitive practices. Clients are flocking to legal providers who can offer proven results and a new billing model that helps them budget for legal costs.
Re-branding and new business models are helping traditional law firms remain a staple of the legal market. For many large firms, willingness to change with the times is the primary determinant of success or being left behind. The days of client loyalty being a given are over, and even the most stalwart clients are flocking away from rigid firms that refuse to embrace change.
Technological innovation such as artificial intelligence in software improves every part of legal practice, including:
- Legal research
- Contract management
- Document management
- Time and personnel management
Technology is also playing a more significant role than ever in bringing in new business. From website design to social media, firms need to project an image that gives potential clients confidence in their choice for legal services.
Top talent is the key to continued success in the legal field, and big law firms need the best of the best. Attracting top-of-the-class new attorneys from the best schools, as well as successful attorneys seeking to make a lateral move, is crucial to a large firm. Prestigious firms can no longer rely solely on the prestige of working at their firm to attract and retain the best talent. Instead, they now find themselves in competition with places that offer a better work-life balance or offer the chance to rise through the ranks faster than one would have in a large firm.
Essential Talent Extends Beyond the Attorneys at the Firm
Paralegals, legal assistants, file clerks, and receptionists need to be among the best in the industry. Every person a client has contact with can leave a positive or negative impression with clients. Training staff to exude professionalism is a critical aspect of maintaining the reputation of a firm.
All of these factors play a role in Biglaw retaining their slice of the legal market pie, but in the end, what matters most is results. The base equation is quite simple. Clients have legal problems that they need to solved by a legal professional. If a big firm can solve the problem in a cost-competitive manner, the client will remain a client, and the firm's reputation will remain untarnished. Reputation is the biggest asset owned by a firm of any size.
Well-managed Biglaw firms can and have adapted to the rapidly changing legal landscape. Practicing law has always been about survival of the fittest, and distinguished firms have fought past battles to maintain their positions at the top. They have the resources and wisdom to reinvent themselves, and many have already made enormous changes to adapt to the new environment.
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