The latest Law Firms in Transition flash survey from Altman Weil has found that only 38 per cent of law firm leaders feel like demand for work has returned to pre-recession levels at their firm. Some remain optimistic, with 12.5 per cent believing that workloads will return to pre-recession levels in 2016 or 2017. However, a whopping 62 per cent think that the erosion of overall demand for the work done by law firms is a permanent trend alongside emerging pressures like client use of technology. Around one quarter of survey respondents perceived the expanding function of in-house legal departments as a threat to their own workloads, with 68 per cent saying that they had already lost client work to in-house counsel.

Threats here to stay

Client use of technology, growing price competition and the rise of non-traditional legal service providers were cited as three of the biggest threats to the law firm work pipeline. Around 85 per cent of law firm leaders believe that the replacement of human resources with technology is a permanent trend in the way clients manage their legal needs, with 21 per cent reporting that they already feel threatened by the shift towards using technology platforms, rather than solicitors or paralegals, for nuts-and-bolts legal work.

Lawyers underutilised

More than half of the firms included in Altman Weil’s study reported difficulty in keeping their equity partners sufficiently busy, given lighter overall workloads. The problem seems to be more intense at large firms with 250 lawyers or more, where 80 per cent of firms are struggling to keep their non-equity partners sufficiently busy. Around 60 per cent of law firm leaders said that overcapacity was placing a drag on profitability, with the number climbing to 76 per cent for large firms.

Sources: Australasian Lawyer; Altman Weil