Recalling the demise of once-mighty photography empire Kodak, the latest report from Georgetown's Centre for the Study of the Legal Profession has suggested that law firms are exhibiting a similar unwillingness to embrace much needed overhauls of management and growth strategy. 'The market for law firm services has changed in significant and permanent ways,' argues the report, citing important shifts in power between companies and their outside counsel. Where firms were once largely autonomous in setting the terms of their engagement with clients, Georgetown researchers suggest that a 'buyer's market' has now emerged in which greater emphasis is placed on service, efficiency and value for the client. Rather than responding proactively to changing client expectations, however, firm partners are continuing to rely on the 'tried and tested' success of past management and operational models. A cautionary tale for the legal market, the report warns that it's only a short step from unresponsive to dead for firms in an evolving industry.
The report, which focused specifically on US law firms, identifies several key developments in 2015. While demand in legal services remained flat, lawyer headcounts grew by 1.3 per cent, leading to an overall decline in productivity over the course of the year. While firms increased their revenue by 3.5 per cent overall, the data reflected a growing segmentation of the legal market in which some firms are performing extremely well and others extremely poorly. Firms are also continuing to lose ground on their market share of corporate legal spend, with many businesses cutting their spend on outside counsel and increasing their in-house legal budgets. Sources: Georgetown University; The National Law Journal