Editor’s Note: Chair Emeritus of Seyfarth Shaw, Stephen Poor, shares some salient thoughts on the real pace of change and economic realities for law firms in this article extract.
Extract from an article by Stephen Poor from From Big Law Business
The Real Pace of Change, Economic Realities for Law Firms
First, if you look at data like the Altman Weil 2017 Survey of Chief Legal Officers, you will see something interesting. For the past five years, the budget allocations between in-house counsel, law firms, and alternative service providers have remained relatively stable. If anything, the amount of budget allocated to alternative service providers has dropped a bit in the past couple of years. Change – most certainly. An accelerating pace of change? Reasonable minds can differ.
Second, if you look at most of the reports on law firm economic performance, the story they tell for this year is much the same as it has been for many years. Yes, there is increased stratification in the industry – the super-rich law firms are growing profits faster than the rest of the market. This certainly reflects the continued distinction buyers are drawing between routine legal work and bespoke, complex work. It is also true that alternative providers continue to pull off portions of the market (an estimated $8.4 billion). But, at the same time, a large driver for increased profitability for law firms continues to be the old staple – increased billing rates. According to Peer Monitor, demand was relatively flat in 2017 while rates grew 3.1% – the best performance since 2014.
So, in an expanding business climate, we see a relatively flat market.
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