A Look At 2017 Through The Eyes Of 2016

I don’t really believe in making predictions. I do think that if you’re paying attention to what’s happening in the market, you can make strong educated guesses for the future. Based on what we saw in 2016, it’s pretty clear that structural changes in legal services will continue to affect the business and practice of law in 2017. Those on the virtuous path will continue to build, grow and change legal. Those on the wrong path are unlikely to change course anytime soon. While the year ahead will have its surprises, it’s doubtful that there will be a whole lot of shockers in 2017.

Legal Technology In 2016, legal tech made steady progress in becoming more integral at all levels for law departments, law firms, and legal service providers (many of whom have been most effective at harnessing its power to change the business of law). While I love to resonate on the latest in legal tech, it has become apparent this year that technology in other fields like financial services is very relevant and will impact legal services. This year also saw a growing number of partnerships between legal software providers and large or medium-sized law firms, as well as an increased number of startups who received funding in the legal space. While legal tech does not attract the high level of venture capital investment that some other sectors might, there has been meaningful development this year.

In 2017, we will continue to see Artificial Intelligence and blockchain play a prominent role in legal service adaptation. Both technologies stand to have a huge impact in various areas that will eliminate the need for attorneys to do certain types of work. Technology will continue to be adopted, adapted and leveraged by those who have an eye toward the future. We have not begun to see the limits of the power of technology to change the face of legal service delivery and practice, and 2017 will bring many new advances.

Law Departments In 2016, clients charted their own path and continued to demand the lowest possible fees on the vast majority of repetitive legal work. They in-sourced more work, deciding it was a better bet than depending on law firms to serve their economic interests. Many law departments used billing data and analytics to decrease outside legal spend, putting pressure on their law firms to change. Legal operations professionals made an impact in companies with large legal budgets, and have proven to be an excellent investment.

While we will see more growth of legal staff in 2017, I hope to see law departments sort through whether they’ve moved the right work in-house to assure not only the lowest cost, but the appropriate level of risk exposure. Technology will continue to trickle down and be adopted in smaller legal departments because the benefits will certainly outweigh the costs. However, many law departments are likely to maintain outmoded, inefficient ways of working because they feel incapable of making the kinds of changes required to increase efficiency and leverage new technology. While predictions of the billable hour’s demise persist, it won’t happen in 2017. Most legal departments after all are operated by attorneys who themselves struggle with vision and are challenged to adopt new models.

Law Firms Although some noted partnerships between law firms and tech companies took place in 2016, this is the extent of what was new and exciting. Although many saw a profitable year, law firms continue to lose overall market share. Law firm mergers remain one of the most common ways mid-sized and large law firms are attempting to adjust to the market, choosing to focus on increasing top line revenue growth rather than bottom line profitability. Substantive reorganization and growth based on a coherent market strategy is uncommon. Moves like increasing associate salaries and maintaining a commitment to unprofitable partners are antithetical to competing successfully.

In 2017, issues like profitability, client demands, partner productivity and resistance to the new realities of the market will continue to plague many law firms. No doubt we have not seen the last law firm collapse or a merger strategy based on hopes for a short-term fix. Denial runs deep, and figuring out how to get partners to follow a new strategy, which might ultimately affect partner compensation, for the sake of the long term health of a firm may still be impossible next year. On the other hand, inaction will continue to erode the ability of law firms to compete for client work.

New Business Models This year alternative legal service providers continued to make their mark on the industry. New Law, encompassing anything outside of the traditional law firm structure, has become more familiar to many attorneys and clients, and these types of models have created some splash in 2016. Suffice it to say, there are many ways to change legal service delivery models which more successfully address client demands and concerns.

In 2017, alternatives to the traditional law firm, where technology and talent are highly leveraged, will continue to significantly impact the market. In particular, in markets where legal talent is plentiful and clients can continue to demand lower pricing, the growth of the temporary attorney staffing market shows no sign of abating. I personally would like to see terms like New Law, Alt.legal and alternative legal services go by the wayside to show that we have fully adapted to structural changes in the legal industry.

Talent While some law departments and law firms expanded their workforce in 2016, the market remained relatively flat for attorney job growth. Technology, client refusal to pay for inexperienced associates, and shrinking budgets negatively impacted prospects for new attorneys. The changing legal market does create new opportunities, and many more attorneys are embracing different models, finding that flexibility and variety of work provide certain benefits and work/life balance.

In 2017, Millennials will continue to impact the changing face of legal. But they will not be alone in the need to adapt a wider set of skills and bring the right attitude as well as experience to an employer. Next year’s projections for job growth may vary, but it is undeniable that employers now look for candidates to bring more value than ever before. Technical skills are merely the starting point, and often it is the ability to communicate well, effectively work with others, and the potential to positively impact the work environment that create the ideal hire.

All things considered, 2016 was a good year to continue on the path toward modernizing legal service delivery. I personally look forward to the exciting changes that will be realized in 2017 and the successes that no doubt will follow.

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