- Law firms across all segments will likely achieve a 10% increase in profits per equity partner in 2020
- 81% of firms stopped or significantly reduced also discretionary spending
- KM and IT were the only areas where spending increased in 2020
- Billing rates continued to increase
- Bankruptcy is the only practice area that experience growth and demand
- Lawyer FTE declined by 1.7%
- Law firm merger activity declined dramatically
- Nearly all firms imposed aggressive cost control measures.
- 48% of large firms received government financial support
Have Firms Reached a Tipping Point?
The report states that “2020 may in retrospect be seen as an important inflection point for the redesign of the delivery of legal services on a broader scale” and highlights some positive changes.
- Success of working from home, as the transition was less disruptive than expected.
- Greater acceptance by partners of the role of technology in improving the delivery of legal services and reducing costs. An overwhelming 84% of firms plan to increase their technology budgets.
- Consideration of fundamental changes to operations, such as staffing, working patterns and use of office space.
- Greater openness to new practice models, including collaborations with other firms and new law companies such as alternative legal service providers.
- More attention to work-life balance, employee mental and physical wellness, and viewing of people as key firm assets.
Mike Abbott, vice president, Market Insights and Thought Leadership, Thomson Reuters provided some historical context. “After previous downturns, we often saw firms going back to business-as-usual. As harsh as the COVID-19 situation has been, it presents an opportunity for firms to seize the new experiences, skills and technologies they’ve gained during the crisis to create sustained competitive advantages for the post-COVID-19 future.