Welcome
Bloomberg Law Analysis

ANALYSIS: The New Normal—Law Firms May Never Be the Same

May 7, 2020, 7:47 PM

The legal industry, known throughout the United States as being slow to embrace change, has been shifting its operations. Some shifts are entirely related to the Covid-19 pandemic, like the current work-from-home situation. But some were already in progress, like the integration of basic and long-overdue business practices and professionals, and are being accelerated by the pandemic’s impact on the workplace. The combination of pre- and post-Covid-19 changes has created the unique environment required to push the legal industry, and law firms in particular, forward.

Integration of Business Practices

Over the past few years, law firms have been hiring business professionals to handle activities like legal operations, innovation, project management, and practice group management. Some of these professionals are in senior executive roles that historically have been reserved for lawyers. These business professionals tend to be more comfortable with data-driven analytics than lawyers are, and have been moving the industry toward the use of relevant metrics to evaluate decisions, measure value, and drive growth.

In our recent 2020 Legal Operations Survey, Bloomberg Law asked organizations including law firms, corporations, non-profit organizations, and academic institutions, a number of questions relating to their use of data and metrics. Included in our survey were questions relating to whether law firms measure the value of legal operations and legal technology. Responses indicated that two-thirds of law firms measure legal operations value and nearly one-quarter of law firms using legal technologies measure the value of that legal technology.

As firms continue to work through the current economic downturn, metrics will likely take on increased importance, allowing organizations to effectively track the efficiency of employees and technology tools being used by law firms. This may result in increased hiring of business professionals with necessary analytical expertise and utilization of technologies offering integrated data tools. To compile required data, some firms may resort to monitoring employee activities with the help of remote surveillance software.

The integration of metrics, if done effectively, will result in a permanent change in how decisions are made across all areas of the firm.

Advancement of Work-From-Home Arrangements

Rare was the attorney who did not take work home with them on nights and weekends before the Covid-19 crisis. For many, working from home has always been part of the job. Thanks to Covid-19, employers are being forced to recognize that their lawyers are capable of performing remote work effectively. And to support the demand of a full-time work-from-home environment, law firms have had to embrace alternate work schedules and upgrade technologies.

If the Covid-19 crisis passes quickly, which is not expected, the snail-like legal industry will likely revert back to its old ways. Back to the days of remote access using older technologies that may operate at speeds that mimic that of the legal industry generally. Back to the days when flexible and work-from-home schedules existed in some law firm policy books but were rarely available for use.

If Covid-19 shutdowns continue into 2021 and beyond, the changes integrated by firms to support work-from-home arrangements are likely to become the new normal. As remote work becomes more accepted, individuals who require or desire more flexible work arrangements (including caregivers and disabled individuals) may have an easier time finding permanent employment. Also, some firms that successfully transition to remote work environments may embrace the financial benefits associated with downsizing their physical space. This is especially true in the short term, since expenses (including law firm bills) are under heightened scrutiny and firm revenues are expected to decline during the economic downturn. While large, established firms are unlikely to eliminate their physical space entirely, they still may opt for fewer assigned offices and more flexible working arrangements.

Improvement of Technology

As we continue to muddle through the current economic downturn, we’re expecting to see law firms more fully embracing modern technologies. It can take time to integrate changes that allow lawyers to efficiently work remotely with access to the tools they need from all of their devices—including tools that help lawyers collaborate, host and attend virtual meetings/depositions/hearings, and access firm software and files. But the open-ended nature of the pandemic should be sufficient incentive for organizations to upgrade and continually improve their technologies. This is especially true for law firms, which are under constant pressure from clients to increase efficiency.

We explored the way law firms and corporations view legal technologies in our 2020 Legal Operations Survey. Responses indicate that law firms are willing to embrace change, with more than three-quarters of law firm respondents saying their firm is prepared to increase its use of legal technologies.

Eight out of ten respondents whose firms utilize legal technologies stated that clients expect them to increase their legal technology use for efficiency purposes.

Corporate legal department respondents reinforced the importance of legal technology, with two-thirds stating that their organization is prepared to increase its own use of legal technologies and three-quarters stating that outside counsel is expected to increase its use of legal technology in order to be more efficient.

As corporate counsel consider increasing their utilization of legal technologies and alternative legal service providers to reduce legal operations costs, firms may increase their focus on creating and expanding legal technology and consulting subsidiaries. Such innovation would help them maintain and expand client relationships, thereby improving their ability to survive in times of economic volatility.

Conclusion

Law firms are proving that, when the situation warrants it, they can change and adapt relatively quickly. If firms continue on the trajectory towards utilizing business metrics to guide decisions, accepting and advancing remote and alternative work scenarios, and integrating modern technologies to support their practices, the industry may no longer be seen as stagnant—a trait that has encouraged the development of competing tools, technologies, and services by organizations such as legal technology companies and alternative legal service providers.

If firms choose to increase their focus on innovation, the legal industry could even emerge from this crisis with a reputation of being entrepreneurial! We are, after all, living in a world that has been shuttered in response to the coronavirus—so anything is possible.

If you’re reading this on Bloomberg Terminal, please run BLAW OUT<GO> in order to access the hyperlinked content.

To read more articles log in. To learn more about a subscription click here.