As the economy regains momentum, it's not a return to business as usual in the legal field. An industry report from Robert Half Legal outlines how strategies developed during the downturn are now guiding the business and customer relationship management models for law firms and corporate legal departments.
The report, "Best Practices for a New Era in the Legal Profession," is part of Robert Half Legal's eleventh annual Future Law Office project, which also includes video interviews with leaders in the legal field.
For its Future Law Office project, Robert Half Legal surveys lawyers from among the largest law firms and corporations in the United States and Canada, interviews leaders in the legal field, conducts research to assess how law offices might operate in the future, and obtains the insights of key Robert Half Legal staffing and recruiting professionals throughout the company's branch network in North America.
- Firms are playing a more strategic role in their clients' businesses. As corporate clients seek more return for their investment in legal services, the ability for law firms to address the needs of their clients is essential. A thorough understanding of clients' businesses and the issues they face, along with flexibility on fees, are forming the cornerstone of many law firms' new customer service models.
- Most law firm revenue growth is expected to stem from current clients. Eighty-five percent of lawyers surveyed said their law firms do not plan to launch new practice groups to increase revenue in the coming year. Eighty-six percent of lawyers said their firms were hoping to obtain more business from existing clients.
- Lateral hiring is more prevalent. More lawyers are making lateral career moves as law firms recruit them to bring their expertise and client contacts. Firms also are focusing on retaining top employees who are at risk of being recruited by other law firms looking to broaden their areas of specialization.
- New fee structures gaining ground. Law firms are offering clients alternatives to the traditional billable hour. More than half (56 percent) of lawyers surveyed said their clients request flat or fixed fees the most. Volume discounts and discounted fees followed, with each receiving 43 percent of the response.
- Compliance, cost-containment taking center stage. The top challenges facing legal departments include "compliance or regulation issues," "controlling litigation or outside counsel costs," "increased workloads" and "budget reductions." Many general counsel are keeping more work in-house and using project teams to control spending on law firms and meet business demands.
Changing Business Models to Improve Service Levels
According to the research, corporate clients are demanding greater efficiencies from their law firms. General counsel are specific about what they are willing to spend on outside counsel and the outcomes they expect. As a result, law firms are implementing new approaches to deliver quality legal services while containing costs to clients. "Many firms are renewing their focus on customer service and capturing new business by showing a willingness to adapt to their clients' changing needs," said Charles Volkert, executive director of Robert Half Legal.
Law Firms Pursue New Growth Strategies
Law firms increasingly are taking a measured and strategic approach to growth, expanding their client bases through lateral hires and mergers or acquisitions to enhance their service offerings and increase revenue.
"The most successful law firms in this new working order are focusing on improving efficiency, flexibility and responsiveness to their clients," said Volkert.
Retaining top performers and hiring senior- and partner-level lawyers with client portfolios in high-demand practice areas remains a priority while long-standing practices, such as lockstep pay and the billable hour, are being re-evaluated, the research shows.
Corporate Legal Departments Seek Greater Value from Outside Counsel
With compliance, discovery and litigation-related expenses continuing to escalate, general counsel are striving to minimize risk while managing spending on law firms. "To keep costs in check, many corporate legal departments are handling more work in-house and using external project teams assembled for specific case work, along with managed review solutions, in order to gain immediate access to specialized expertise," Volkert said.
Added Volkert, "Many corporate clients want to partner with outside counsel to find the best approach for legal matters, whether that involves obtaining the firm's advice on risk management and alternative business strategies, or coming up with creative solutions for resolving issues."