Facing competing challenges of faltering legal demand and burgeoning technologies, the resilient law firm adapts and thrives

June 29, 2023

The legal industry continues to grapple with falling demand, profit margin erosion, soaring expenses, client pushback on fees, and growing competition from mid-size law firms. Despite all this, Global 100 and AmLaw 200 firms have shown surprising resilience and flexibility, meeting these challenges with data-informed, value-driven solutions.

In the first of an exclusive series of “Resilient Law Firm” roundtables organized by Sandpiper Partners and sponsored by Williams Lea, top law firm and industry leaders, including our CEO Clare Hart, shared how they are facing these headwinds and building resilience amid uncertainty.

Here are the top takeaways from the event:

Law firms need to run more like businesses and be just as strategic

Thanks in no small part to the COVID-19 pandemic, more and more firm leaders are realizing that the way they run their law firms can’t be “business as usual.”

“There is tremendous pressure to run their firms, their departments, like a business,” one panelist said. “CEOs and CFOs are demanding more in terms of transparency, efficiency, cost reduction, and resilience.”

Williams Lea CEO Clare Hart agreed. “A lot of our law firm clients are now looking at their firms as a business, instead of what we might have seen seven years ago when people didn’t look at it as such. Leaders who treat their firms as a business have a clearer view of the North Star, and they know how they’re going to get there.”

One of the more strategic solutions business-focused firm leaders are looking into is outsourcing. Hart shared that their law firm clients know what is pivotal to their growth. “Smart leaders look at business support activities and understand they are must-have services to firm growth, and they must be managed by people who understand the value they bring to the firm,” Hart said. “Firms are increasingly outsourcing secretarial support, document processing, marketing support, financial support. Law firms are doing this because, ‘they want to focus on practicing law and therefore moving this kind of work to someone who does it for a living, like Williams Lea’.”

Taking a more strategic approach means firms must hone their data analytics and data science capabilities; analyzing historical datasets and building data models to find correlations and predict outcomes to better inform business decisions. “It’s not just knowing what we’ve done in the past, but what’s happening right now, what are our needs in terms of what’s in the sales pipeline,” said another panelist. “We’re saying… let’s start working on that, on tuning the pipeline and managing supply and demand for the firm.”

Returning to the office: The carrot and the stick

Are incentives the way to get more people back to the office? Or would consequences for non-attendance drive more action? Law firms that have implemented hybrid working policies are still struggling to perfect the secret sauce, although some have reported growing attendance, especially on their chosen foundation days. “We expect our lawyers to be in (the office) three days, on Tuesday, Wednesday, Thursday, and we were explicit about those days, and the project has been relatively successful,” revealed one law firm panelist. “On those three given days, we have about 60 to 65% of our lawyers in the office across the US and internationally.”

However, there are law firms that are wielding the carrot and the stick: Making the workplace a destination with purposeful, collaborative spaces and great perks to magnetize people to go to the office, as well as becoming firmer in their policies, going as far as tying attendance to performance scores. “We require some sticks, particularly with some of our partners, so we’re very clear that every partner receives a practice management score,” said one panelist. “Part of that is, are you back in the office? Are you engaged with our younger talent? Are you pulling your weight in terms of mentoring the next class of lawyers? If the answer is no, then that will have a negative impact on your compensation.”

However, another panelist gave this advice: Pick a lane. “If you want to be fully remote, be fully remote and embrace it. If you choose to be in fully in the office, you must go with that and have it be a positive thing. You’ve chosen it for a reason. Another firm may choose something different that works well for their culture or their service. It’s all a bit of judgment of call. We’ve made decisions and we must stick with them.”

Generative AI could transform the legal industry, but law firms should be cautious

In 2022, Wolters Kluwer came out with the “Future Ready Lawyer: Leading Change” survey, which gathered insights from over 700 legal professionals across US and Europe. According to the survey, 63% of technology-leading law firms reported profitability increased over the past year.

If there was one thing this survey revealed, it’s that law firms are ready for and actively investing in new technologies to build resilience against unprecedented events, improve service performance, and enhance client relationships.

The technology of the moment is generative artificial intelligence (AI), and almost all participating law firms on the panel were doing something about AI, slowly and steadily. The thing they had in common was good change management, with each law firm creating a task force to test both the technology and its risk and rolling it out to a pilot group.

One panelist shared: “Our task force is divided into three categories. The first is risk and risk management in using the technology. The second is the trickiest part: we have a few pilot groups focused on developing use cases that our practitioners believe they will be able to take advantage of once ChatGPT tools evolve that account for confidential client information. The third prong is the product cycle. We’re very carefully monitoring crucial development of all the different tools that we may want to actively engage in a pilot or proof-of-concept exercise.”

“You know, there’s a real fear of missing out with AI, everyone’s jumping on this bandwagon, and they’re thinking this is gonna be great,” said one panelist. “No one really knows what it is going to do for us.”

Hart agreed and summed it up nicely: “We’re all saying it’s (AI) going to be bigger, and there will be changes in this industry, there will be changes in every industry. We have to be talking to our CTOs. We also have to be talking to our clients, understanding their needs, and understanding what’s out there.”

Find out more about how Williams Lea is using AI and automation to drive productivity and improve quality. Learn more about our ENGAGE digital platform, our workflow and analytics tool, and our recently launched LogoCloud, a Software as a Service (SaaS) platform that automates critical elements of presentation and pitchbook creation.