Every law firm leader should carefully read this report, digest it, and consider its implications for his/her law firm. Beyond that, firm leaders should distribute the report to partners and discuss what it means to the firm at an upcoming partnership meeting. Importantly, the firm must develop strategies and action plans to capitalize on the opportunities in the market. Although the overall demand for legal services remained flat in 2015 (as it has since 2008) there are exciting opportunities for firms willing to break the mold and try something different. Here are some the report’s highlights:
- The overall demand for legal services remained flat in 2015. Real estate and corporate were up. Litigation, employment and bankruptcy were down.
- Litigation represents 31% of the total market for services. Although litigation was down for BigLaw, midsize law firms reported slightly positive increase in this area.
- Generally, law firms have been very slow to respond to the changing marketplace and, in those instances where firms are evolving, it’s usually driven by the client, not the firm.
- BigLaw raised its standard hourly rates by 2.7% on average in 2015. Making the increase stick, however, is another story as client pushback has resulted in plummeting realization rates for many firms.
- Marketing and technology budgets for most firms continued to grow at a 3-4 % rate in 2015, compared to 2014.
- Midsize law firms outperformed Biglaw in Revenue per Lawyer (RPL) and Profits per Equity Partner (PPEP) growth, two very important metrics to asses a firm’s financial performance in 2015.