I have been thinking a lot about the state of change within the legal profession, and wondering what the ultimate consequence will be for firms as the pace of change continues to accelerate. A few weeks ago, Altman Weil released their 2018 survey of law firms; the survey, its results and commentary are excellent. In reviewing the document, I was struck by the extraordinary risk that so many law firms are operating with — the risk of obsolescence.
A friend and highly regarded marketing and strategy consultant, Eric Fletcher, published an article titled, Don’t Look Now, But Things May Be About To Change, which is exactly on today’s point. His observations regarding Eastman Kodak, Blockbuster and typesetters can be extended to law firms–they will either adapt or go the way of the dinosaur.
There are three quotes from the Altman Weil survey that provide focus for this post.
“The overall demand for legal services (billable hours) has decreased in the aggregate since the recession, and all of the dynamics that affect hours available to traditional law firms clearly indicate a continuing downward trend. Commoditization, new technology tools and ‘non-traditional competition are all permanent changes to a post-recession market. Demand for law firm services will not return to pre- recession levels–ever.”
Change is constant and non-traditional service providers have seized on a lucrative niche in the legal arena, one that has not evolved with the efficiencies that technology and creativity bring to so many other professions. According to the survey only a little more than one-third of the 800 plus law firms surveyed are proactively engaged in activities that will drive innovative change.
Bites of the traditional legal marketplace pie are being devoured by new non-legal competitors. To survive, law firm leaders will embrace this reality and take appropriate action. The others will ultimately find one path or another to extinction.
“In 69% of law firms, partners resist most change efforts.”
This quote aligns interestingly with one-third of law firms not engaging in innovative ways to serve their market.
Lack of interest in change among law firm partners is driven by a variety of factors. Some partners are reaching the end of their careers, many are tired and don’t need to change to reach the finish line. Some haven’t accepted the necessity of change and others don’t know how to change.
Leaders of tomorrow’s successful law firms will have found a means of making innovation a normal part of their firm’s culture. They will budget, recruit and promote with adaptive change in mind.
“Equity partners are not busy enough in 51% of law firms.”
The challenge of unproductive partners is not a new one. What is new is the margin of operational error firms can afford in this marketplace. Partners who are habitually unproductive and are not seeking to change–create viability problems for their firms.
Successful firms will have a declining percentage of under-performing partners, and even fewer partners who are both underperforming and resistant to change. I believe in treating everyone with compassion; however, compassion must be coupled with a drive for institutional stability and survival.
Massive change is afoot. The most successful firms will take advantage of change and come out winners. The others will ultimately find their way to a growing heap of “former” firms.