Our latest podcast discusses the recent Dynamic Law Firms Report and how and whether the success of those firms can be replicated across the legal industry
It’s one thing to examine data in order to identify what makes for a successful law firm. This is, in fact, the intention behind the Thomson Reuters Institute’s recent 2022 Dynamic Law Firms Report — to explore quantitative and qualitative data in an effort to determine which law firms are exhibiting the best growth in today’s legal marketplace and what about the actions and strategies of those firms can be replicated.
For example, the report shows that those firms we label Dynamic Law Firms — those that had the highest compound annual growth in revenue per lawyer, overall firm profits, and average firm profit margin — have been investing more heavily in their people. This is shown not only by higher profit per equity partner payments, but in the form of recruiting as well as salaries and benefits for support staff. Also, these firms have created a culture within the firms themselves that fosters collaborative cultures, embraces change, and adopts practices like alternative fee arrangements more readily than their peers, according to lawyers within Dynamic firms.
You can listen to the full podcast here.
Simply put, this combination of higher investment in people and a more engaging culture has resulted in a group of law firms at which lawyers want to stay and where market-leading growth is part of the reward.
While this is roadmap to success become vivid when it’s in the form of data, it’s another issue entirely to put the theoretical into practice. For that, a boots-on-the-ground perspective can help provide a real-world grounding into how best to approach the goal of generating new growth within a law firm.
In the latest podcast available on the Thomson Reuters Institute Market Insights channel, Bill Josten, manager of legal industry and law firm content at Thomson Reuters Institute, recently chatted with Randy Staggers, Chief Financial and Administrative Officer at Baker Donelson. In this podcast, Staggers shares his perspective on the findings of the Dynamic Law Firms Report, and whether and how law firms can model similar success within their own businesses.
While the success of Dynamic Law Firms is undergirded by strong data, Staggers suggests the idea of replicating such success across the legal industry may not be so clean cut.
In the podcast, Staggers shares his perspective on the steps he would take to attempt to spark growth within a struggling law firm and to maintain and continue to build upon the success achieved in a high-growth practice. The podcast also delves the importance of the current hot market for legal talent and its impact on law firm culture as Staggers shares his thoughts on the sustainability of current compensation and hiring practices, particularly as firms hire individuals in more remote markets at premium salaries. “There’s a potential that you feel like you’re on an island and you’re just being fed work,” Staggers observes in the podcast. “Does that really mean it’s an investment for you to provide additional client value and build your career?”
As to the question of replicating the success of Dynamic Law Firms across the legal industry, Staggers suggests the idea may not be so clean cut. Indeed, as he sees it, some firms may not fare as well in an analysis like the Dynamic Law Firms Report because their definition of growth varies from how the report defines it. For example, a firm that is focusing on building out a stand-out group of attorneys in core practices or improving the profitability of those practices may not show much in terms of top-line revenue growth, but their overall profitability and reputation may be greatly enhanced by their efforts. Similarly, a greater focus on delivery of client value may not fit within the rubric of the report, as a client’s perception of value from a particular firm is something that is hard to gauge within the confines of certain data.
Overall, as Staggers’ comments in the podcast illustrate, the key to leading a growing firm comes down to intentionality — whether the question being answered is how to transition to hybrid work or how to cultivate firm culture. And the idea of a law firm being intentional in a strategic plan that moves the firm forward might be the best way to sum up the 2022 Dynamic Law Firms Report.