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06 May 2020

US firms see sharp slowdown in new matters as coronavirus dents demand, study finds

Clio research shows that matter creation has fallen by 30% since the start of the year

By Ben Edwards

US Navy hospital ship USNS Mercy arriving at the Port of Los Angeles with 1000 hospital beds for non Coronavirus COVID-19 patients during the pandemic Robert V Schwemmer; Shutterstock

US law firms have seen new matter creation drop by almost a third since the start of the year as the impact of the coronavirus pandemic crimps demand for legal services, according to research from Clio.

The number of new legal matters being created each week has slowed by more than 30% compared to the average seen in the first five weeks of the year, extending to 40% when compared to the busiest period at the end of February, the data compiled by the Vancouver-based practice management software specialists showed.

The research was based on aggregated and anonymised data from Clio’s legal tech apps and surveys of 485 US legal professionals and 1,042 US consumers.

By early April, more than three-quarters of law firm respondents said their day-to-day operations had been impacted since the start of the outbreak — with two-thirds fearing their day-to-day operations will continue to be strained even after the pandemic eases.

In an online research briefing, Clio noted: “Respondents expressed widespread concern over the future success of their businesses and their ability to make ends meet. Much of this concern is likely due to the fact that the majority of firms have seen a drastic decrease in the number of people reaching out for legal services.”

Clio added that 49% of US consumers would delay seeking legal support until after the pandemic has subsided, even if almost two-thirds of those respondents said they would still seek a lawyer to solve their legal problems rather than trying to fix them in another way. A further 13% said they expect to encounter legal issues that are directly related to the Covid-19 outbreak. 

While 11% of legal professionals think that social restrictions imposed to limit the spread of the virus are an overreaction, 75% say they are suffering higher levels of stress and anxiety, and almost half say they are more concerned about their financial future than their health.

However, not all law firms have been impacted. Some 23% of respondents said they had not seen a significant drop off in demand, while 14% said they had seen a significant increase in the number of people reaching out for legal help.

Respondents also reckon that technology will play a key role in how firms adapt to the long-term impacts of the virus, with 69% agreeing that tech is more important now and 83% identifying cloud technology as being necessary for their survival.

Research published by HFW and litigation analysts Solomonic last month revealed a 65% slump in claims lodged with the UK's High Court over the past four weeks.

And in Q1, global deal making ground to a halt with the value of Q1 2020 transactions falling back to levels not seen since 2013, according to analysis by Mergermarket.

Further reading on the Covid-19 pandemic

After Covid-19, client tensions that pre-existed the pandemic will become intolerable — Law firms banking on a return to the old way of doing business once the immediate crisis is over are doomed, argues Rob Millard

Under lockdown socialising between international colleagues has increased — Colin Passmore outlines the measures Simmons & Simmons has been taking to promote staff wellbeing during the Covid-19 crisis

After Covid-19 lockdown will virtual arbitrations become the new normal? — Michela D'Avino and Bahaa Ezzelarab argue that remote arbitration hearings should be carefully considered as an option to avoid costly delays

A question of timing: the different responses of US and UK elite law firms to Covid-19 — Looming decisions over associate pay and bonuses are a factor in the timing of UK law firm Coronavirus measures

Above all, this crisis too will pass — Rob Millard foresees large law firm mergers and accelerated digitisation in the wake of Covid-19

'It is about being proactive and decisive' — Norton Rose Fulbright EMEA managing partner Peter Scott on the thinking behind the firm's flexible working scheme

General counsel braced for six-month shock to their businesses, survey finds — MoFo poll of 110 GCs finds them making unprecedented decisions as HR issues dominate

'Now is the time for law firms to deliver on their stated values' — Consultant Tony Williams advises law firm leaders to avoid knee jerk decisions and go into communication overdrive during the Covid-19 crisis

Unprecedented response to Covid-19 is 'testament to legal profession's resilience — Stewart Salwin is impressed by how quickly the Arizona courts have adapted to the coronavirus crisis

Staff welfare, supply chain and privacy: the coronavirus-related issues keeping GCs awake at night  — Linklaters, Baker McKenzie and Ropes & Gray have published the most sought-after briefings, according to Lexology

'I have realised how powerful technology now is': an Italian lawyer's take on Covid-19 — The lockdown is forcing Italians to embrace digitisation - and that even includes its public officials, writes Gabriella Geatti

Coronavirus risk may be unprecedented, but the fundamental principles of crisis response still apply — Crisis PR specialist Bethaney Durkin advises law firms impacted by the coronavirus to act quickly while avoiding a kneejerk response

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