Recent analysis, Bright Insight, was released by ALM and Law.com for 2020. It provides some really good insight into the world of law firms, from solo/small to large firms. Identifying the top issues law firms are facing, both pre and post COVID, is invaluable information. The key takeaways are the top issues firms are facing and what they are doing about it... from quite a bit actually to nothing at all.
Focus on Liquidity & Stability
At the top of the list, it's about financials. COVID greatly slowed or stopped clients requests for new cases. Recent data shows trends of a bounce back in demand. Still, clients may be struggling financially, slowing their payments. The key is to manage cash flow in the short and medium to long term. Depending on the firm, the amount of expenses that are fixed and inflexible, and the rate of demand recovery, can cause some pretty serious financial stress.
To ensure some level of liquidity and stability, firms are looking for ways to streamline their processes. Honestly, this is nothing new. Most attorneys we speak with tell us they spend WAY too much time in the admin stuff and not nearly enough on law. Obviously, case management software is one tool to address this.
Some firms are focusing on working with their associates and non-legal timekeepers to increase profitability. All great, if you have them. If not, well, it's all about becoming more efficient yourself. Offering clients payment plans and other ways to support clients will help, too.
This is going to remain a really interesting area to watch. After shelter-in-place, nearly all respondents believe attorneys will continue to work remotely to some extent going forward. Maybe not the 100% at home situation, but at least a portion of the time.
Again, the ability to remain efficient and productive wherever you are is enabled by technology. Yeah, we know, we keep bringing it up. But it's reality. The sooner law firms adopt a fully cloud-based solution that drives efficiency, the better. It is important to note that attorneys need to be mindful of privacy and the client-attorney relationship wherever they are.
What the effect will be on law office space is changing too. Many firms were already reducing space requirements. Some firms mentioned space giveback in their future plans. Suffice it to say, it's all going to change!
Return to the Office
Who will go back and when? Generally speaking, once the all clear is given, complete with a vaccine that has been widely distributed and all employees have tested negative for the virus, most attorneys will return to the office (77%). For staff, the figure is similar (78%). The interesting thing to note here is it isn't 100%. So even when we return to a more stable and healthy environment, not all lawyers and staff will return to the typical brick and mortar office.
The Tech Play
You knew it was coming, right? 55% of firms said they are re-evaluating their technology to find ways to streamline the delivery of legal services. Things like case management software, document automation, and other tools that automate the mundane are all on the list. While attorneys have long been slow to adopt technology, COVID seems to be the stimulus to reconsider.
70% of firms spent less than 4% of gross revenue on technology. Looking forward, only 11% of law firms don't plan to change their technology spend. 71% of firms anticipate increasing the spend 6% and up.
Law firms are facing some pretty dramatic changes in the coming years. Issues with the fixed fee structure, changing client demands, and attorneys leaving the practice of law are big concerns. Some are adjusting their processes to adapt. Others are not.
When it comes to the fixed fee issue, this has been a long standing issue. More and more, clients are looking for more flexibility in pricing. Some are more service oriented - a certain rate for the hard work, with a different rate for the mundane processes. But how does an attorney adopt to this? You guessed it. Technology.
Other technology tools are creating the issue versus serving as a solution. The introduction and wide availability of DIY Legal, with sites like Willing.com among others, provide more options for consumers. Some firms are learning to work with these platform, offering review services with limited liability.
Check out the full report. There is a lot of great information in it. From there, spend some time doing a bit of soul searching. Where can your firm improve? Are you leveraging technology to become more efficient and effective? We hate to say it, but it sure seems another wave of shelter-in-place is on it's way in many areas of the US and internationally. Get ahead of the game.
Want future blogs delivered straight to your inbox? Subscribe to our blog HERE.