Innovate or get left behind: How law firms can emerge from the pandemic stronger

September 29, 2020

The COVID-19 crisis is providing an impetus for change, and law firms – once notoriously averse to rapid change – have been given the rare chance to adapt and innovate, poising them for post-pandemic growth.

Yet, the question remains: “How can law firms move forward successfully?”

This was the central theme at Sandpiper Partners’ most recent virtual conference on Managing Law Firm Profitability, Pricing, and Data Analytics. Our CEO Clare Hart joined a panel of US law firm leaders and pricing experts to tackle the strategies, structures, and systems law firms can employ to drive more growth and client value through innovation.

Here are the key takeaways from the event:

Tune in to your clients’ needs

“Our entire existence is to serve our clients,” one panelist said. “If we are out of touch, then we are in trouble.”

As we move into a more virtual world, with lawyers and support staff working remotely, the need to foster stronger long-term relationships with clients has never been greater.

Clients will lean on strategic relationships as the pandemic wears on, and law firms must be on point and keep adding value to the client partnership. This all starts with listening to clients, which paves the way for more meaningful interactions.

A panelist pointed out, “Law firms should start looking at their clients with an enterprise view and ask: What are my client’s needs in my space? What other business issues is my client experiencing? How can I help them with these needs, instead of simply acting as their litigator?” When a law firm initiates an open conversation about how to meet their client’s legal and business needs, they gain a client for life.

While gathering client feedback isn’t the most groundbreaking strategy, it is often overlooked. Client feedback equips law firms with the right information to anticipate potential challenges and opportunities and can be key to supporting innovative changes.

Pricing structures will continuously evolve

Clients are always looking to get more bang for their buck, especially in times of economic volatility. The COVID-19 crisis, for instance, has intensified conversations around alternative fee arrangements.

To address client concerns on pricing, law firms should look at areas where they can unbundle services, offer hourly rates, or package fixed fees, while still providing the same efficient service. “Law firms have to start operating more like businesses that have budget predictability, because clients need that,” one panelist said.

When developing flexible fee structures, law firms need to keep in mind:

  • New fee arrangements need to be fair to both the client and the law firm. With the pandemic affecting industries differently, pricing has become more nuanced. This volatile market environment favors law firms that have centralized pricing departments and processes that ensure a balance between the partnership and client
  • Pricing is relative to something, so it’s important to focus on the value provided to clients
  • Pricing discussions, though difficult, can strengthen client relationships and provide law firms with the opportunity to become better business partners. Firms can use pricing as a starting point to ask clients, “How can we help you? How have your needs changed?”

Data analytics will drive firm strategies

The pandemic has brought unprecedented challenges, and with the future still uncertain, law firms need more well-thought-out strategies that play to their strengths and capabilities, so they can move forward successfully and outsmart the competition.

How can law firms grow and make more informed decisions about the future? It all boils down to data and how it’s used.

There is a growing emphasis on driving efficiencies and productivity in an increasingly virtual world. Meaningful data can measure productivity, particularly in support functions, and will provide insight on what kind of work is being done for whom, enabling firms to improve secretary-to-attorney ratios. Our digital client platform ENGAGE, which has built-in workflow management and provides real-time analytics, enables our clients to measure productivity, efficiency, and resource utilization through service performance and trends analyses.

With the right data, law firms can also determine how much of their operations they are willing to redefine or restructure, whether it’s through outsourcing or virtualizing services such as document processing, secretarial support, or mailroom operations. Our own research shows that 60% of firms are planning to outsource certain functions, and interest in outsourcing has picked up enormously in the last five months as firms look for more innovative ways to reduce costs and improve process efficiency.

“Data is going to determine the level of innovation you can drive. Use data in a smart way, and you will be successful,” a panelist summed up.

Put DEI into practice

While conversations around diversity, equity, and inclusion (DEI) aren’t new, law firms are finding that it takes real discipline to go beyond tokenism and implement DEI initiatives.

Whether it’s attracting diverse talent or mentoring younger associates who are losing the opportunity to have insightful hallway conversations due to remote working, these programs must be more organized and deliberate. A panelist said, “Right now, it’s not structured, and we need to be sure we are doing the right things in the right time frame.”

Some law firms have “diversity colleges,” where they identify key diverse talent and help build their business acumen and client development skills. Other firms invite their diversity teams to meet with clients, which can lead to deeper law firm-client relationships, while others have embraced the Mansfield Rule, taking affirmative action to improve hiring practices.

While the pandemic has wrought tremendous hardships, it also presents a great opportunity for law firms to make positive, sustainable changes in both their culture and their operations. One panelist put it best: “This is an opportunistic time for law firms. What ties it together is innovation – how we drive innovation and how we add more value.”

For more insights, download our instant survey report, The Impact of the COVID-19 Crisis on Law Firm Support Operations.

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