According to the 2018 Law Firms in Transition survey, 49 per cent of law firms failed to meet their annual billable hour targets in 2017, while 51 per cent say their equity partners are not busy enough, 59 per cent report non-equity partners are underutilised, and, 83 per cent report they have some lawyers who are chronic underperformers. The survey says 45 per cent of respondents reported their revenue per lawyer (RPL) rose in each of the last three years, while nearly 44 percent reported that their RPL was mixed. Just over 11 percent reported flat or declining RPL.
The 2018 Law Firms in Transition survey says, despite a recovery of business since the 2008 recession, firms face ‘a more volatile marketplace characterized by client demands for greater value at lower prices, non-traditional competitors taking market share and new technologies disrupting the status quo.’ Tom Clay, Altman Weil principal and survey co-author, said ‘Unlike the recession and its aftermath, the threat to law firms in 2018 is broader and more nuanced. It’s not just an economic threat. Now there are clear, systemic disruptors in play that pose a threat to the sustainability of the traditional law firm business model.’
The Altman Weil survey also found 70 per cent of reporting firms are losing business to in-house law departments, 26 per cent have lost business to improved technology tools in direct competition with law firm services and 16 per cent are losing business to alternative legal service providers. Meanwhile, 9 per cent of law firms say they are losing work to the Big Four accounting firms. The report notes that while there is nothing new in this, half of firms do not project ‘a distinct and compelling value’ differentiating them from their competitors. This is the 10th year of the survey.