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Larger Law Firms and Change: We Don’t Wanna!

Nicole BlackIt’s that time of year again. The annual Altman Weil “Law Firms in Transition” report was just released. And the results are entirely surprising—that is if you don’t follow the profession and didn’t read last year’s report. And the report before that one. And the one before that. 

The conclusion, in a nutshell? The majority of responding firms agree that everything’s changing, but they’re not really all that interested in acclimating.

Or, as the authors of the report put it, there continues to be resistance to change even though 84.8% of respondents agreed that the trend of technology replacing human resources will be a permanent one:

“Partners’ resistance to change is an ongoing theme of the survey and is also a persistent threat to law firm success. Forty-four percent of firm leaders cite partner resistance as one of the reasons their firm is not doing more to change. As the economic outlook improves and demand returns, firm leaders will need to work harder to guard against partner complacency.“

This, despite the fact that the proof is in the pudding. The evidence shows that the minority of firms that actually do choose to adapt are profiting from their willingness to do so. According to the survey results, pursuing a strategic change with the end goal of increasing the efficiency of legal service delivery has a positive effect on a law firm’s financial performance.

“The 2015 Law Firms in Transition Survey shows that a large majority of law firm leaders see the profession is changing. The survey also shows a correlation between those firms that are doing more to address those changes and those that are enjoying greater economic success…Although 93% of law firm leaders think a focus on practice efficiency is a permanent trend, just over a third of firms are changing their strategic approach in this area – and the number is declining.”

Maddeningly, the number is dropping even though the evidence shows that implementing change makes sense. The study authors compared the change in Gross Revenue from 2013 to 2014 for firms that are pursuing strategic change to those firms that are not. Here are the results:

Gross Revenue Down No change Up 
YES: Changed strategic approach 18.6% 5.9% 75.5%
NO: Have not changed approach 23.0% 11.0% 66.0%

Interestingly, when it comes to adopting change, the results of this year’s report square with what I’ve long predicted: although solo and small firms continue to lead the way when it comes to the use of innovative technologies in their practices, some large law firms are close behind. Mid-sized firms, on the other hand, will be the last to adapt and reap the benefits of emerging technologies. 

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In fact, according to the report, the largest law firms are nearly twice as likely to change  their strategic approach to efficiency of legal service delivery than their mid-sized counterparts. When it comes to the specific steps taken to increase the efficiency of the delivery of legal services, here’s how mid-sized firms compare to larger firms: 

 Under 250 250 or more 
Using technology tools to replace human resources 55.7% 64.5%
Knowledge management 52.8% 68.4%
Rewarding efficiency/profitability in comp decisions 43.9% 61.8%
Project management training 34.4% 69.7%
Shifting work to contract/temporary lawyers 32.5% 67.1%
Shifting work from lawyers to paraprofessionals 34.4% 44.7%
Reengineering work processes 21.2% 40.8%
Using non-law-firm vendors 12.7% 27.6%
None of the above 9.0% 1.3%

Statistics don’t lie. Of the larger law firms that are taking steps to streamline the delivery of legal services, the end result is profit. Most mid-sized firms, however, are risking being left in the dust. 

Or, as the authors report’s explained: “This is not about business development or ‘making your numbers.’ It is about changing the way work is done and priced. It is about rethinking client relationships and service delivery. Opportunities clearly exist to differentiate your firm, move past competitors and strengthen the foundation of your law firm. Some firms have accomplished this already. But it doesn’t happen without committed leadership.” 

In other words, change is good. Carpe diem! 

Nicole Black is the Legal technology Evangelist at MyCase, a cloud-based law practice management platform. She is an attorney in Rochester, New York, and is a GigaOM Pro analyst. She is 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 speaks regularly at conferences regarding the intersection of law and technology and can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it. .
 

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