Law firms have relied on raising their rates to improve profits, as opposed to increasing the hours their firm works. In 2021, (Clio Legal Trends Report) demand for legal services was robust with increased billable hours. Today, law firms are billing more hours for every case.
Maintaining profitability amidst challenging inflationary pressures have law firms assessing:
- mergers and acquisitions,
- geographic expansion,
- client relationship management,
- industry groups,
- pricing, brand positioning,
- and talent management.
Many experts agree that the pandemic is now in our rear-view mirror. Firms may face potential slowdowns in 2024, as a consequence of sustained inflation and rising interest rates.
Concerns about the economy have been compounded by realizations about the banking sector. The potential for future bank mergers would certainly generate a high demand for legal services.
Since 2022, demand for litigation and labor & employment has been strong. These counter-cyclical practices (litigation, labor & employment, and bankruptcy) are heating up as we approach the fourth quarter of 2023.
In today’s environment, unemployment lingers near historic lows and job openings remain high. Firms are faced with attracting and retaining top talent to meet their client’s needs.
In the current economic climate, transactional work has declined significantly from its 2021, mostly due to contraction in mergers & acquisitions and real estate work. Midsize firms however, have seen their transactional demand decrease marginally.
Pushback from clients experiencing higher rates from the larger AM firms has been limited. Clients may be sending more work to Midsize firms seeking lower billing rates as general economic pressure persists.
Firms must adapt to changing market conditions and assess market trends to develop to better position the firm and become more resilient in this uncertain economy.
RECOMMENDATIONS
- Leverage your firm’s resources more efficiently and effectively by aligning strategic planning decisions with client needs as they shift. Earn a seat at the table by creating market-aligned strategies for their clients’ growth.
- Examine and align your firm’s strategies to meet the needs of your legal team to create a culture that attracts the top talent, and take the steps to retain top-performers.
- Embracing technology using cloud-based interactive software to improve efficiencies and reduce time consuming tasks will result in improved relationships with clients.
- The hybrid remote / in-house work model seems to be the new normal to meet lawyers expectations who want a healthy work-life balance.
Lots of opportunities going on in the legal industry right now. Don’t make a move without assessing your worth in the marketplace. Let us be your GPS! We create a strategic plan that is unique to your needs.
Call 516-731-3400 or email Shari@onbalancesearch.com. To learn more about compensation visit our website at https://www.onbalancesearch.com.
#law #lawjobs #lawyerlife #attorney #legalrecuriter #legalcareer #trends
Source:
The impact of a changing economy on law firm performance in 2023
https://www.thomsonreuters.com/en-us/posts/legal/changing-economy-law-firm-performance/
About On Balance Search Consultants
On Balance offers great insight and industry intelligence. Shari Davidson, president of On Balance Search Consultants, advises law firms on how to take a firm to the next level and helps rising talent make the transition to the right law firm.
Contact us today. Call 516.731.3400 or visit our website at https://www.onbalancesearch.com.
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