What now, what next? Preparing law firms for the new normal
Last week, our CEO Clare Hart joined a panel of prestigious law firm leaders to discuss the state of the market in turbulent times. At the Williams Lea sponsored Sandpiper New York Legal Market Virtual Conference, the first question posed to the panel was: What now? What next?
The collective answer was “We just don’t know.” Or, as one panelist said, “It takes a certain amount of hubris to predict what will happen next.”
Maybe it’s impossible to accurately predict the future of the legal industry in a post-pandemic world, but there are measures law firms can implement to better prepare for various outcomes. Here are the top takeaways from the discussion:
Evolving workforce dynamics and culture
“We weren’t managing culture like we are doing today,” one panelist commented, comparing the COVID-19 pandemic with the 2008 financial crisis.
Law firms, relationship-driven and slow to change, had to figure out how to be more agile and quickly adapt to a new world. In a few short weeks, attorneys and support staff, were freed from the distractions of their daily commute and found more ways to connect better both internally and externally. More importantly, they were able to add value to their service levels by asking clients how they could help in this virtual environment, emphasizing now more than ever the need to fully understand their clients’ business.
The silver lining? Things law firms thought couldn’t be done, such as remote working and the technologies it required, were done significantly faster than expected. As one panelist put it, “We’re all learning how to work remotely… We talk and write for a living, and now we can do it from the moon if there is good internet service.”
With remote working proving to be highly effective, firms are considering making this flexible work arrangement more permanent. According to our instant survey on the impact of the COVID-19 crisis on law firm support operations , 57% of respondents said they plan to change their remote working policies by year-end.
The panelists were also quick to point out the important role the millennial workforce played in this transition. For instance, the younger, more digitally-enabled associates at one panelist’s firm developed training videos on witness preparations and other core legal activities. “The stereotype of millennials was wrong. They have over delivered,” the panelist said. “They are tech-savvy, and this switch (to remote working) has been very easy for them.”
Immediate need for cost management
At the start of the crisis, law firms made high-stakes decisions to minimize its anticipated financial impact. These included widespread salary reductions and cost-cutting. Unlike the financial crash in 2008, the pandemic has “everyone in the same boat all at the same time, and no part of the firm is unaffected,” one panelist pointed out.
Law firms took immediate action, reducing partner draws, furloughing support staff, slashing salaries, reducing discretionary expenses, and eliminating travel. They also took a closer look at capital expenditures and real estate. The latter was a topic for discussion for the panel; with firms questioning just how much space they will need going forward, and how easy it will be to renegotiate leases to give back space.
These sentiments are reinforced by the findings from our instant survey, which showed that 52% of firm respondents instituted reduction in workforce measures. Other immediate cost-control measures were travel and entertainment (56%), hiring freezes (47%), and real estate and related expenses (40%).
Looking to the future
The COVID-19 crisis has also brought outsourcing strategies closer to the surface. According to one panelist, “firms already outsourcing are looking at outsourcing even more and firms who aren’t outsourcing are taking it more seriously in support of long-term strategic growth.”
With remote working becoming the norm and support staff capabilities further untethered from geography, firms are evaluating what services must be done onsite and what can be virtualized or outsourced. The instant survey revealed the areas firms are most considering for outsourcing are: document support/word processing, printing/reprographics/mailroom, mailing systems/digitized mail system, and data processing, among others.
Law firms are displaying more appetite for outsourcing, because “above all, firms want to save money,” a panelist pointed out. “Let’s face it, real estate and admin staff are costly, especially since we’re located in some of the most expensive cities in the world.”
The competitive advantage of data analytics
With law firm leaders planning for the next phase of recovery and return-to-work in a post-pandemic setting, data analytics has become even more important in both core and support operations.
Data analytics can help determine a law firm’s position in the market. “Companies with excellent data analytics, they end up leading the market,” one panelist said. Providing Business Intelligence (BI) and data to clients sets firms apart.
Additionally, data empowers firm leaders to make more informed decisions and increase the accountability behind operations decisions. For instance, data analytics can improve staff utilization rates, allowing firm leaders to find the right attorney-to-secretary ratio.
This begs the question: Do you want your law firm to be a laggard that uses very little data and doesn’t understand the firm’s direction of travel? Or do you want to be a leader that uses robust data to gain insight into the future and plot your growth accordingly?
Challenges vs opportunities
The COVID-19 crisis has caused unprecedented challenges, but it has also presented law firms with opportunities. This may be the best time to refocus and review all the aspects of firm operations business, from client billing processes to the methods used in evaluating technologies and optimizing workflows. It may also be the best time to establish new best practices to increase operational efficiency.
“We’ve learned so much from this crisis,” a panelist said. Sooner or later, we will return to work in a world we hardly recognize and those who maximize the lessons of this crisis will come out on top.
To find out more, download our instant survey results, The Impact of the COVID-19 Crisis on Law Firm Support Operations.