Survey says: Law firms should invest in business development and technology
Since the economic downturn in 2008, law firms of all sizes have struggled - and most have failed - to maintain profits at levels existing prior to the market’s near-collapse. During that same timeframe, technology has advanced at unprecedented rates, affecting all aspects of the practice of law and ushering in a new age where globalization and changes in practice models have radically altered client expectations.
Study after study has confirmed the permanency of this newfound reality. Unfortunately, in most cases, the repeated recommendations of legal industry experts regarding the changes law firms need to make in order to stay afloat in the midst of this new world order often fall on deaf ears. This very phenomenon was adeptly described in the recently released 2018 Report on the State of the Legal Market, issued by The Center for the Study of the Legal Profession at Georgetown University Law Center and Thomson Reuters Legal Executive Institute.
The authors explained that rather than adapt, law firm leaders often dig in their heels and stay the course, even if it’s a failing one: “The phenomenon of ‘consensual neglect’ seems a particularly apt description of the strategic posture of many (if not most) law firms in today’s rapidly changing market for legal services. Ignoring strong indicators that their old approaches – to managing legal work processes, pricing, leverage, staffing, project management, technology, and client relationships – are no longer working, they choose to double down on their current strategies rather than risking the change that would be required to respond effectively to evolving market conditions.”
This despite the fact that one of the key recommendations that the authors make (and many other experts have made in the past) centers around a concept that should be palatable to lawyers since it’s the very essence of what we do: providing good client service. In other words, according to the authors, it’s imperative to provide the type of legal representation that 21st century clients want, not what lawyers think they need: “To be successful in addressing the new market realities, however, it is essential for firms to listen carefully and respond proactively to the concerns of their clients. And those concerns – at least since 2008 – have been driven by consistent client demands for greater efficiency, predictability, and cost effectiveness in the delivery of legal services.”
With the advent of sites like Legal Zoom and the rise of alternative legal service providers, competition is increasing and legal clients have more options than ever before. Law firms that ignore client demands for change are doing so to the detriment of their bottom line.
That’s why, according to the Report, the law firms that proactively addressed client needs “by implementing alternative staffing strategies, pursuing flexible pricing models, adopting work process changes, making better use of innovative technologies, and the like,” exhibited a what the authors referred to as a “dynamic response” to the changing landscape, thus achieving a better success rate than their more static counterparts.
According to the authors, the size of the firm was irrelevant, and instead investment in two primary areas were indicators of success: business development and technology. “These differences in investments by dynamic firms in both business development and technology suggest a philosophy of active engagement that is also reflected in the details of the expenditures. Dynamic firms reported that increased expenses in business development were designed to facilitate more client interactions and direct client meetings, business development coaching for lawyers, and brand development. Dynamic firms said their technology investments were focused on improving workflow efficiency, as well as enhancing their ability to assess profitability and better analyze data.”
So whether your firm is large or small, the lessons to be learned are clear. Turning a blind eye to change is not an option. Listen to your clients and respond strategically to their expectations. Take steps to facilitate improved client communication and understanding, whether through the use of improved processes or technology. Business development is a necessity; ignore it at your peril. And, finally, invest in technology to improve your law firm’s efficiency and increase profitability. Your clients, and your law firm’s bottom line, will thank you.
Nicole Black is a Rochester, New York attorney, author, journalist, and the Legal Technology Evangelist at MyCase, intuitive web-based law practice management software for solo and small law firms. She is also the author of the ABA book Cloud Computing for Lawyers, co-authors the ABA book Social Media for Lawyers: the Next Frontier, and co-authors Criminal Law in New York, a West-Thomson treatise. She is the founder of lawtechTalk.com and speaks regularly at conferences regarding the intersection of law and technology. She can be reached at firstname.lastname@example.org.