Even though some law firms, particularly those dedicated to bankruptcy and foreclosure defense, managed to stay busy during the Great Recession, quite a few attorneys felt the pain of diminished business in this dark period for the American economy. Demand for legal services has improved significantly in recent years, but consecutive years of growth have only occurred twice, including the period from 2018 to 2019.
There is a good chance that law firms will continue to enjoy substantial business in 2020; the bullish view on this would result in a third straight year of growth, something that has not happened since 2008. According to a market research study conducted by Thomson Reuters, the year 2020 will be very dynamic for law firms in terms of acquiring, retaining, and soliciting business. Clients are setting the pace of business; they are no longer entrusting all of their legal affairs to a single law firm, and this is a trend that will likely continue in 2020.
The Big Law sector stands to be the most affected by the decisions clients are taking, which may not always be in their best interest, but they reflect the status quo. The days of an investment banking firm retaining a major law firm to handle everything, for example, are largely over; even in-house counsel staff members are feeling the crunch because corporate legal departments are being streamlined. The market has become highly fragmented because clients have no qualms about shopping for law firms; they may retain a litigation shop to handle a lawsuit, and separately a boutique firm to negotiate an intellectual property deal.
According to observations made by the Georgetown Center for the Study of the Legal Profession, a few Big Law market leaders have been able to adapt to the ongoing shift, but they have done so through implementing certain changes. From outsourcing certain processes to relying on artificial intelligence to conduct legal research, law firms have to compete against corporate legal departments that can now do more with less.
As for billing hours and revenues, things are looking very promising for 2020. A 5% increase in billable hours took place in 2019 along with an overall increase in fees; this will probably be experienced again this year. Big Law mergers will be rare, but there is an expectation of subsidiaries being retained in captive agreements. A major law firm may join forces with a few boutique firms in order to become more appealing to clients.
Skilled paralegals will be in even greater demand in 2020. Senior partners are beginning to realize that a solid paralegal, even one who works from home, can be worth two associate attorneys in many cases. It makes sense to retain such valuable staff members, particularly if they can also help with marketing and landing new accounts. As for technology, law firm managers who wish to improve productivity while reducing overhead from excessive staffing should look into online self-service solutions, particularly with regard to regulatory compliance in the fields of human resources and finance.