The Georgetown University Law Center, in collaboration with mass media and information firm Thomson Reuters, released its 13th annual 2016 Report on the State of the Legal Market on Jan. 7.
The report found that to succeed in the shifting legal market, firms must make changes to the way they interact with clients and provide legal services.
The report weaves together data provided from Thomson Reuters Peer Monitor, which is sourced from 143 law firms each month, reports conducted by other organizations and a specialized survey of 34 firms conducted by Peer Monitor in October regarding the correlation between financial performance and law firms’ use of new practices.
Thomson Reuters Public Relations Consultant Leonard Lee explained that the firm aimed to produce a report that would pinpoint important patterns and trends in the legal market.
Jones highlighted the topic of changes currently impacting the legal market as salient particularly in recent years, as a result of the 2008 financial crisis.
“That event – coupled with other macro forces that had been in operation in the legal market even before 2008 – resulted in some fundamental changes in the market that are probably permanent,” Jones wrote in an email to The Hoya.
According to Jones, one of the primary impacts of the drastic change that the market has undergone is a shift from a sellers’ to a buyers’ market. Under this new reality, it is the client who dictates many elements such as staffing, scheduling and pricing, which were previously under the sole domain of law firms.
Ultimately, the combined effects of the recession and changes in the needs of legal consumers have led to a drop in demand for legal services. This has been further aggravated by a lesser need for legal services, more in-house work by companies’ legal teams and competition from non-legal vendors, Jones said.
“Productivity in law firms continues to decrease because firms continue to hire lawyers at a faster pace than demand is growing,” Jones wrote. “That in turn has led to a market environment in which clients are insisting in increased ‘value’ for their legal spend, by which they mean greater efficiency, predictability, and cost effectiveness in the delivery of the legal services they purchase. The ramifications of this shift have been THE story in the legal market for the past 8 years.”
According to Jones, law firms that now find the odds stacked against them must adapt to this change by re-evaluating the way they operate.
“That means breaking each type of process down into its component parts, making sure at each stage that the work is performed by the lowest level (and thus lowest cost) person who is competent to perform the work … asking whether some of the work might even be outsourced by the firm at third-party providers,” Jones wrote.
Jones said it is not possible to predict whether firms will make the necessary changes in time to adjust to the changing market, but that regardless, firms should heed the advice that the report provides.
“Obviously, law firms are still enjoying a fair amount of success. But there are plainly clouds on the horizon, and our report is intended to encourage firms to start addressing these issues before the market changes have a serious impact on their business,” Jones wrote.
Jones added that students interested in law or who are currently on the pre-law track should not be discouraged by the report.
“In terms of implications for people thinking about the law as a career, I think the future is actually bright,” Jones wrote. “There are certainly more opportunities for lawyers to practice outside the traditional mode of law firms than ever before.”
Georgetown Undergraduate Law Review Communications Director Brendan Saunders (COL ’18) lauded the report’s contributions and expressed his eagerness to see how law firms will adapt.
“As a member of an organization that is clearly invested in the future of the legal industry, I appreciate the author of this study’s work in looking at the current nature of the legal field, the changes facing the profession and ultimately how to rectify the two,” Saunders said. “I look forward to seeing how the recommendations outlined in the report play out in the future.”
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