Law firms can look forward to modest growth this year in what remains a volatile market with success coming to firms nimble in their response to client demands. However there was a note of warning to firms projecting themselves as 'all things to all clients,' in the 2018 Client Advisory report from Citi bank and Hildebrandt Consultants. The market would continue to favour firms with strong brands in specific practices, the bank maintained.
Despite the difficulties which law firms are currently going through, the legal industry remains one of the most profitable personal services businesses in the world. 'That said, we expect to see further consolidation and some law firm dissolutions as weaker firms lose their ability to compete,' Citi said. 'While there are those who suggest that law firms cannot adapt to the shifting demands of clients and the changing competitive environment, we take a different view. We believe that law firms have historically been resilient in the face of changing market conditions and while change has come slowly, the law firm of 20 years ago bears little resemblance to the law firm of today.' In the longer term, the way firms adapt their talent models in response to market pressures for more efficient legal services, and the onslaught of equity partner retirements likely to occur in coming years, will be an important factor in the growth trajectory and sustainability of law firms across the industry, it added.
Looking out to 2018, Citi projected that industry revenue growth and profit per equity partner growth would remain in the mid-single-digit range on average. Technology, including AI, would help reshape the law firm industry, while the possibility of a cybersecurity breach (and the associated reputational and financial risks) has rapidly become one of the biggest concerns of law firms today, according to the report. 'We believe that the firms who harness the emerging technologies and who focus on protecting their clientsand themselves from cybersecurity breaches will be even stronger in the future.'