Law firms in transition survey – permanent change expected

In the fourth annual "Law Firms in Transition Survey" by legal consulting firm Altman Weil it is revealed that there has been a radical shift in attitudes since 2009. Trends that were largely seen as temporary in 2009 are now viewed by law firm leaders as permanent changes to the industry and the transition in the legal profession is seen to be increasing in intensity and pace.

The survey polled managing partners and chairs at 792 U.S. law firms with 50 or more lawyers, with statistics showing a major shift in leaders' assessment of what the profession will face in its future. Clearly the bigger firms are waking up to and addressing the profound changes and challenges that are occurring in the practice of big law.

"Emerging legal market trends that were viewed with considerable skepticism in 2009 have become majority opinions in 2012," said Altman Weil principal Eric Seeger. "These findings suggest that change management will be a required core competency of law firm leadership going forward. The leadership challenge will be to drive change, not just react prudently to external conditions. These are striking changes."

In 2009, 42 percent of those surveyed believed that more price competition will be a permanent fixture of the post-recession legal market; 92 percent believe that now.

This year, 84 percent of those surveyed believe more commoditization of legal work will be a permanent change, whereas in 2009, only 26 percent of respondents thought that was the case.

In 2009, only 28 percent believed that more firms will adopt nonhourly billing, whereas 80 percent anticipates that today.

Now, 46 percent expect that outsourcing legal work will become a permanent fixture, compared with 12 percent in 2009.

"In 2012, failure to successfully transition key clients and the resulting loss of revenue are top succession planning concerns, followed by leadership succession and loss of expertise. Strong majorities of law firm leaders believe the practice of law will be permanently characterized by pricing pressures, further commoditization of legal work, new forms of competition and thus a need for improved practice efficiency. Clearly, achieving greater efficiency in the delivery of legal services has become an imperative. Whether in response to requests for non-hourly pricing or as a proactive initiative to boost profitability, firms have recognized that efficiency in legal services delivery must improve. Firms that begin to rethink their service delivery model, practice by practice, matter type by matter type, will be well positioned to capitalize on clients' demands for greater transparency and greater value at a consistently high level of service."

The full 75-page survey includes sections on economic performance and billing rates, alternative fee arrangements, firm growth, lawyer and staffing levels, succession planning, client relationships and the future of the profession. It is available for download here.

 

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