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Another Study, Same Old Conclusion: Law Firms Are Behind The Times

Nicole BlackAnother day, another study concluding that law firms are in dire straits. The times they sure are are a-changin’. But for law firms, the more things change, the more they stay the same. In study after study, year after year, various authors decry the stubborn stagnancy of law firms, urging them to wake up and smell the coffee. And in response, the vast majority of law firms collectively yawn and dismissively check their watches. They’ve got more important places to be and listening to the same old refrain is not part of their plans for today, thank you very much.

In today’s version of “Groundhog Day—The Legal Version” the Center for the Study of the Legal Profession at the Georgetown University Law Center and Thomson Reuters Peer Monitor once again joined forces to bang their already bruised heads against a wall and issued the 2016 Report on the State of the Legal Market

Presumably because things have changed so little since 2015, the authors decided to save time by cutting and pasting an assortment of passages from prior years’ reports. At least, that’s my assumption since the report consists of extensive quotes from their earlier works. And who can blame them? It appears no one’s listening, so why reinvent the wheel? After all, unlike the law firms they’re criticizing, the authors appear to be all about efficiency and action based on facts. 

The authors begin their analysis by establishing the primary issue that law firms are facing: “Clients who previously deferred to their outside firms on virtually all key decisions regarding the organization, staffing, scheduling, and pricing of legal matters are now, in most cases, in active control of all of those decisions. Increasingly, clients are demanding more ‘value’ in return for their legal spend, and by value they mean greater efficiency, predictability, and cost effectiveness in the delivery of legal services. What once was a seller’s market has now clearly become a buyer’s market, and the ramifications of that change are significant.”

Next, they support their assertion with significant data regarding the stagnancy in the growth of the demand for legal services, the unlikely growth in law firm hires despite the reduced demand for legal services, and the increasing segmentation within the law firm market share. After laying bare the facts, the authors conclude that law firms must pivot in order to survive (and exercise what is, in my humble opinion, incredible restraint by refraining from using all caps to make their point): “To prosper in the newly segregated market, law firms will need to seriously address the inefficiencies and unnecessary costs that have become deeply embedded in the way most firms operate. As The Economist noted: ‘[L]aw firms that are sub-scale and inefficient risk ruin. The Walmarts and Amazons of professional services are at their gates, and the legal industry’s halting pace of creative destruction is set to accelerate as a result.’” 

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And then, in a last ditch effort to evince change, the authors issue an astute and dire warning—knowing that it will no doubt fall on deaf ears, yet again: “Under these circumstances, it would seem that more firms would be actively embracing the need to change their basic operating models – to design and implement new approaches to staffing and legal work processes, to explore new opportunities for collaboration with other service providers, and to adopt and market innovative strategies for the pricing of their services. While a few firms have been proactive in pursuing these opportunities, the vast majority has not. Like Kodak, they have been locked in a kind of denial driven inertia, a belief that somehow the model that brought them past success will see them through now as well. As with Kodak, their approach might work for a while, but ultimately the firms that succeed will be those that not only understand the dynamics that are driving the current legal market but also have the courage to make the changes necessary to respond to them.”

You’ve got to admit, they made their point quite eloquently. Too bad no one’s listening.

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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