Predictions about the future might appear to be difficult, but Niels Bohr, and perhaps three other influential people, might have been astonished to learn we have been fortunate to compile a long list of rather pragmatic predictions for the legal industry in 2015.
Given this is the second year we’ve compiled a list of year-end predictions – from legal professionals across the industry – we were struck by one underlying theme: it seems to us that overall this year’s predictions do seem more upbeat than last year’s predictions. We’d be interested in your perspective on that too, so please feel free to leave a comment.
It’s important to note, that other than organizing predictions into three categories there is no prescriptive order. In other words, the order does not convey a ranking but rather in a manner which we believe will make for easy reading. The three categories are a) the state of the legal industry b) legal technology and c) law firm business development.
With our sincere thanks to the contributors, here are 25-plus legal industry predictions for 2015.
2015 Predictions for the State of the Legal Industry
In 2015 some of the most successful firms will relax, having seen their profits grow at a healthy pace as the economy improves. Some will begin to repeat mistakes of the past – such as hiring larger classes of new associates at ever-increasing salaries without regard to the specific market demand, and recruiting expensive laterals in the hope that clients will follow, and pursuing mergers in the quest to become larger. Others will continue to pursue what is, and has always been, a more lucrative path to profitability – namely, proactively embracing alternative fees and delivering these projects with matter budgets, and guided by the principles of project management and process improvement. The latter approach will win, inevitably, because it’s the approach most directly tied to client demand.
Bigger is not always better. Sometimes, it’s much worse.
Big firms: The rich will get richer as a small subset of Am Law 100 firms will continue to separate itself (in profits and prestigious engagements) from the rest of that pack. Some large firms outside that group will hold fast to their ongoing strategy of growth for the sake of growth because they believe it will help them move into those rarified ranks. They will be disappointed because, for most firms, that strategy is a loser.
Mid-sized firms: Those with a strategic focus will benefit as sophisticated corporate clients pursue greater cost-effectiveness in the delivery of legal services. Smart mid-sized firms will reap the rewards as many larger firms remain unresponsive to their clients’ persistent demands for change.
Small boutique firms: Those with a clear identity and vision will continue to enjoy the early stages of a renaissance. Their flexibility makes them nimble in ways that most large firms cannot achieve. Technology allows them to compete with their larger brethren.
Things won’t change that much. Until clients embrace change beyond asking for “AFAs” we will only see small, incremental changes. Firms are generally ready to change, but until clients force the issue, things will plod along pretty much as they are.
Canada will become the third country, and the first in North America, in which a regulator will approve a substantial degree of authorized “non-lawyer” activity in the legal market, either through greatly reducing barriers to entry for “non-lawyer” providers or loosening restrictions on who may own equity positions in a law firm.
One of the Swiss vereins will blow apart as they have less glue to withstand the anti-gravitational forces affecting many firms.
One of the Big Four accounting firms will challenge the ABA’s prohibition of non-lawyer ownership of law firms.
My prediction for 2015 is that women lawyers will assume more leadership positions in large law firms and many will start their own law firms.
Competition for the best clients (Fortune 1000, energetic start-ups and fast-growing private companies) will be hotter than ever. The smartest way for firms to ensure they are on the short list for the best work is to effectively manage their relevant experience – and present it in a way that distinguishes them from their competitors. Without relevant experience to evaluate, buyers of legal services will not hire you. It’s that simple.
The business of law will continue to cross over into new fields. With 2013/2014 solidifying firms as publishing houses, 2015 will see firms become SaaS providers through strategic partnerships with clients and SaaS companies.
Thanks to the recession and other grim economic realities, law firms have done a good job of trimming the fat. Now they need to build muscle mass. In 2015, I see more firms using big data to improve attorney and staff performance and to enhance client engagement. Instead of ceding ground to online legal services providers, firms should hire some 25-year-old millennial whiz kids who understand the Internet and social media and find a meaningful way to compete with the LegalZooms and RocketLawyers of the universe. Firms that ignore market realities do so at their peril.
Note: Ms. Tripoli is also an academic department chair at Kaplan University online where she oversees the Master of Science in Legal Studies program.
An acceleration of the stratification of law firms and operating models. Moving toward 20 – 30 global law firms able to operate in “traditional” model with premium pricing. A prediction that I highlighted in my first book, Unbound, in 2009.
An acceleration of legal departments getting comfortable with alternative models by “unbundling”, re-aggregating previously unbundled tasks and using managed service providers to get work done.
An acceleration of small to medium law firms “outsourcing” their core operating platforms to the cloud to begin to level the playing field with larger law firms allowing more work to seamlessly flow to smaller law firms.
An acceleration of legal departments focused on meeting corporate objectives to increase both diversity of lawyers performing work and dollars spent with diverse suppliers.
An acceleration of the implementation and utilization of data analytics to drive both purchase and service delivery decision.
In short, a year of acceleration of trends that have been percolating in the industry for years. We could be entering the classic “hockey-stick” trend line for a lot of these trends that will fundamentally change the legal services market as we all know it.
Note: Mr. Galbenski was the keynote speaker at the 2014 LexisNexis CounselLink Annual Customer Conference: Good Counsel: Think, Act and Achieve like a Legal Visionary.
Drive for Value. Law departments will continue saving money by moving more work in-house and to alternative legal providers. In response, law firms will improve efficiency and effectiveness with more legal project management, process improvement, and knowledge management. And firms will hire more staff attorneys to offer lower costs than partners and associates.
Legal Technology. Legal tech start-ups blossomed in the last two years. In 2015, many will fail but that some will see much broader uptake. The PR around the D. Casey Flaherty technology audit reminds us how much better lawyers could do with the tech we already have. Yet I see little progress on that front in 2015.
Big Data. More than just buzz, some large firms will use Big Data predictive analytics to understand and improve their costs, profits, and write-offs. General counsels could use it to for preventive law but I doubt any actually will. On a related note, IBM Watson bears watching but I do not expect significant action in legal in 2015.
Competitive cost structures and market based compensation will be an advantage for small to mid-sized firms. At least in the small to mid’s pricing models will continue to change slowly and will be mostly driven by lawyers seeking better returns. In the commodity practices for sophisticated purchasers, the dominant competitor will be an in-house solution.
Large and global organizations will acquire middle market companies and startups to build out needs in products, technology and market channels to drive their own growth.
Law firms will mine boutique law firms for cybersecurity lateral partners.
Health care is poised to increase outside counsel spending in 7 legal segments—the most of any industry.
The number of pricing professionals will continue to climb in 2015, but I think we’re at a point where quality has become the focus over quantity. More importantly, I think we’re at a classic point of ‘Haves’ v. ‘Have Nots’ — 2015 will be the year for the firms that have pricing professionals to demonstrate significant gains over firms that have not invested in a pricing infrastructure.
General counsel will increasingly combine insights from their billing data (e.g., hourly rates, adherence to budgets) with outside counsel performance scores (on things like quality, responsiveness, expertise, efficiency) to identify the best lawyers and firms for their work – this will help in-house lawyers replace not just poor performers, but even “average” performers with much stronger ones, thereby increasing legal market competition. Related, general counsel reliance on law firm pedigree will continue to decline, as noted in this Harvard Business Review Blog post.
Merger and acquisition activity from 2014 will continue into 2015. However, the easy targets have dried up and firms will begin to look at more risky targets this coming year. This will translate into an increase in lawsuits against the directors and officers of a firm for employment related issues surrounding a transaction and from failed transactions.
Network security breaches are going to be a mainstream problem, but the solutions will become more mainstream in 2015. As firms begin to renew their 2015 insurance policies, they should expect that this will be a discussion topic with their insurance brokers. If they don’t get such a discussion, they should seek it out – security breaches are here to stay.
2015 Predictions for Legal Technology
I anticipate that the general counsel of large companies will increase their focus on data-breach risk significantly in 2015. [And separately] In a recent survey that Consero conducted of that group, a slight majority reported an increased legal department budget, which should enable the deployment of more resources in this area next year.
A prominent law firm will experience an embarrassing, expensive and damaging data security breach. Client data will be circulated, litigation will result and the reputation of the firm will be irreparably harmed when their lack of protection becomes apparent.
With the bottom line still growing faster than the top line in many law firms, the demand for solutions/tools that enhance firm business development will continue to increase. Harnessing everything and everyone a firm knows and being able to turn that knowledge into actionable information is a business challenge perfectly suited for technology.
With the focus on data/information security on the rise and driving needed attention on law firm environments, I expect we’ll see more firms outsourcing in 2015. They’re asking themselves, “Why should I host and manage all of these applications and data when I can get an expert to do it and satisfy my clients need for an ultra-secure legal data environment?” In 2015, more will move to an outsourced model.
Note: Mr. Lipps leads the LexisNexis software division and contributes to this blog: Legal Industry Evolution: Back To Business.
An increasing number of cloud software products will offer a better user experience via native apps on Windows, OS X, iOS, and Android. Meanwhile, the web version of these products will serve as a little-used back end for adjusting settings, etc.
There will be a major law firm data breach which will open the conversation about law firm technology in general, and digital security in particular. Corporate clients will begin to drive change by conditioning the award of work on the successful performance of digital security audits by outside law firms. Ripple effects will extend throughout law firms of all sizes, causing them to augment their technology and security protocols as clients start to demand stronger performance in this area.
I believe that 2015 will see attorneys and law firms continue to adopt and utilize web-based software and services at an ever-increasing rate. While the legal industry has historically been slow to adopt new technology, firms that conduct the cost-benefit analysis of these services conclude that it’s almost a “no brainer”.
The future of the legal industry depends upon the adoption of technology by lawyers, and 2015 will accelerate the trend. Wearable computing, wireless and mobile connections, and preoccupation with data security all will dominate legal tech news. As efiling becomes more ubiquitous, some lawyers will fall by the wayside, as they will not be able to function without active interest in the Internet and technology. Another trend will be towards even more free legal research materials online, and the increasing addition of other features to enable the legal publishers to compete.
BYOD (Bring Your Own Device) Starts Spreading to Laptops and Tablets, especially in Smaller Firms.
Windows 8 will continue to be avoided in droves.
Microsoft 365 and Google Apps will continue to gain ground against in house exchange for smaller firms.
Firms will spend most of their extra money on Document Management Software rather than Practice Management Software.
Note: Mr. Bayer is a LexisNexis Certified Independent Consultant and has been previously interviewed on this blog: Legal Tech Briefs: Law Firm Practice Management Tools.
2015 Predictions for Law Firm Business Development
The firm website becomes the sine qua non of legal marketing. A law firm website is now the essential element of its marketing. Hinge research showed that 77% of professional firms generate new business leads online. 70 percent of law firms in another survey said their website generated new matters, according to Alyn-Weiss research.
Note: Mr. Bodine has five other predictions which were published yesterday: 6 Predictions for Law Firm Marketing in 2015.
27. James O. Ruane, Esq. | Ruane Attorneys
Lots of attorneys are focusing on internet and technology to market themselves. We do it too. But we used it to ignore traditional approaches, and have decided in 2015 we will double down on our personal network growth. Developing real one to one relationships with our colleagues. We aren’t abandoning online, but we are refocusing our efforts into connecting with people in the real world rather that cheating and using social networking. One real world friend who sends you a case annually is better than 1000 online friends who never send you business. Even a few weeks of reaching out to colleagues, acknowledging professional accomplishments and recognizing professional victories has turned into a referral machine.
Forward thinking law firms that embrace “insight selling” approaches will boost their market share and share of client. Attorneys that leverage industry and subject matter insights in responses to RFPs, outside counsel selection, and other business development efforts will displace competitors that cling to ineffective “solution selling” models.
Small and medium-sized law firms that choose to remain ignorant about social media, search engine optimization, and content marketing will “disappear” themselves from the web. Downmarket firms with web-intensive marketing strategies that fail to understand key content marketing trends will not only waste significant money on SEO charlatans, but will also incur severe penalties from Google that can make them virtually invisible in search results.
More full-service law firms will hold practice group leaders accountable for their teams’ performance objectives. Look for firms to invest more in business development management training and “coach the coach” programs for PGLs, stronger partnerships between PGLs and internal and external marketing professionals, and carrots and sticks in PGL compensation that are more closely aligned with their groups’ new business goals, organic revenue targets, and cross-selling efforts.
Updates: Additional Predictions from Industry Thinkers
Already in 2014, we’ve seen not only an influx of new attorneys starting their own law practices due to scarce job prospects, but also new attorneys moving toward non-traditional legal jobs. As new law students become more discerning about their decisions to pursue legal careers, we will begin to see an even greater focus by educators and students to design innovative solutions to problems with the delivery of legal services, leading 2015 graduates and beyond to contemplate non-traditional career paths, particularly with respect to technology.
“I don’t think much really happens year over year. In the legal industry, it’s the long-term trends that matter.”
Note: Mr. Glover also wrote a compelling post on disruption earlier this year, which in our view had a similar line of thinking: The Practice of Law Does Not Need to Be Disrupted
The herd is dispersing. We have growing income inequality in the US economy and among US law firms. The haves are getting richer and the have-nots are falling behind faster. Equally, we have process and technology inequality among law firms. The firms that have focused on improved business processes and supported them with smart technology will have many more opportunities in 2015 than the firms that are simply trying to make the standard technology tools work well together. It’s another case of the haves and have-nots.
In the year 2015, lawyers and law firms will convert from the traditional Microsoft Office/PC arrangement to Google Apps for Work/Macs in greater numbers than ever before, building on a trend now mostly entrenched in start-up law firms.
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Got a prediction to add? Please leave it in the comments – or tweet us @Business_of_Law and we will consider updating this post with additional predictions.
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