January 03, 2014
2014 Report on the State of the Legal Market Issued by Georgetown Law and Peer Monitor Says Law Firms May Be Facing Disruptive Change
EAGAN, Minn. & WASHINGTON, D.C. – Georgetown University Law Center and Peer Monitor today issued their “2014 Report on the State of the Legal Market”. The report highlights recent trends in the legal market, as well as factors that will likely impact the market in 2014 and beyond. The report warns that unless law firms re-examine their traditional business models and embrace change in how legal services are delivered, they will not be able to successfully adjust to the significant outside forces that are reordering the industry.
The report argues that the strategy of “growth for growth's sake” that has appeared to drive the law firm market in recent years is the wrong strategy for most law firms. It recommends that firms instead focus on developing new business models and service delivery models that will enable them to provide more efficient, predictable and cost effective legal services. Optimizing management of legal talent and effective pricing strategies may be more important than achieving economies of scale.
The law firm market has become much more intensely competitive over the past five years. The supply of legal services has significantly exceeded demand with the result that the only way most firms can expand market share is by taking business from others. In addition, the market for legal services has shifted from a sellers' market to a buyers' market. Fundamental decisions about how legal services are delivered – including staffing, scheduling, strategies and how firms charge for their services – are increasingly being made by the clients, and not by the law firms. Clients are increasingly pushing back on these issues and more.
“Competition in the law firm market has fundamentally changed,” said James W. Jones, senior fellow at the Georgetown Law Center for the Study of the Legal Profession, and lead author of the report. “Many factors have contributed, but in the aftermath of the recession, the pace of change has accelerated. Clients are increasingly focused on enhancing the value of the legal services they receive from firms. This has serious long-term implications for the leaders of all firms. Law firm leaders must focus their attention on re-thinking their basic organizational, pricing, and service delivery models in order to produce competitive success in the long run. While some firms have engaged in such reviews and launched innovative new models to better compete in the current market environment, most have not. And without widespread change, the legal market may be poised for what could be a dramatic reordering based on the same type of disruptive forces that have reordered many other businesses and industries.”
”Some of these disruptive forces are already underway,” said Mark Medice, senior director, Peer Monitor. “Clients now have more diverse options available for handling legal matters, including shifting work to smaller firms, bringing work in-house, and using non-law-firm providers such as legal process outsourcing. In order to stay relevant and competitive in an increasingly fragmented market, it is incumbent upon firms to reshape themselves to be more responsive to the needs of clients, to deliver services in a more efficient and predictable manner, and to develop pricing models that reflect more accurately the value of the services being delivered.”
The “2014 Report on the State of the Legal Market” can be downloaded at:
About Georgetown Law Center for the Study of the Legal Profession
The Center for the Study of the Legal Profession at Georgetown Law is devoted to promoting interdisciplinary research on the profession informed by an awareness of the dynamics of modern practice; providing students with a sophisticated understanding of the opportunities and challenges of a modern legal career; and furnishing members of the bar, particularly those in organizational decision-making positions, broad perspectives on trends and developments in practice.
About Peer Monitor
Peer Monitor® from Thomson Reuters is a dynamic, live benchmarking program that provides any-time access to critical firm assessment information and allows you to compare your firm against selected peers, with details for practice performance.
Peer Monitor provides the most current information available, pulling directly from participating firms’ recent monthly financial statements, yet ensures your firm’s details remain strictly confidential. Participants receive an aggregate benchmark of peer firms’ data to compare against their own data, so they benefit from insights in industry trends while still protecting their individual privacy.
For more information, please visit us at peermonitor.thomsonreuters.com
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