/>iConsulting firm Altman Weil just released its sixth annual Law Firms in Transition Survey that shows just how dramatically the ground has shifted under the feet of BigLaw – a shift that threatens to bury large firms unless they start taking some action to respond to what has become a permanent change in the market.
The survey, conducted in March and April of this year, includes responses from managing partners and heads of 304 U.S. law firms with more than 50 attorneys; 73% of the firms included in the survey had fewer than 100 attorneys.
This chart provides a telling look at the trends shaping the legal industry today – many of which were thought to be just trends five years ago but have instead morphed into permanent change:
The survey serves up some eye-popping data:
The permanent change has been driven by clients and competitors who have brought on a paradigm shift in how legal services are bought, paid for and delivered. Destiny control is no longer in the hands of law firms (if it ever really was).
Alternative fee arrangements are now the rule, not the exception, with 92% of firms surveyed saying they are using some non-hourly billing. However, only 16% say they’ve been able to make AFAs more profitable than hourly fees.
BigLaw firm management is finding it difficult to react to changing market conditions because firm partners are often unaware that the market has shifted or simply don’t want to do things differently.
Consequently, less than half of the law firms surveyed are responding to the pressures of the current market by significantly changing elements of their traditional business model. (Opportunity alert for small firms!)
Less than one-third of the law firms surveyed have taken on the challenging task of re-engineering work processes.
According to Altman Weil, “smaller firms should take note. Regardless of the reasons, once one segment of the market starts moving toward a new more client-focused model and resetting market expectations, other firms will need to fall in step or they will inevitably fall behind.”
