Have you heard the news? Even the world’s largest law firms are feeling the pinch – and alternative fee arrangements are just the tip of the iceberg.
According to a recent article in The Economist, the legal business is changing forever. Firms are changing their very structure. They’re no longer counting on greater profits each year. In fact, some firms are taking extreme measures just to ensure their survival.
In an environment like this, how is your law firm changing?
If your firm is like most, you may be taking one or more measures to protect your profitability and increase your chances of surviving the economic downturn:
1. Looking for work in unexpected places. Some larger firms are globalizing, going hard after business in burgeoning Third World economies. If you’ve got the manpower, global footprint, language expertise, and knowledge of local law, this can be a good way to go.
2. Cutting staff. Reducing your number of attorneys means less overhead. It also means less ability to scale up your workload when new work comes in – unless you’ve diligently trimmed the fat from your business processes.
3. Outsourcing tasks. Legal-process outsourcing firms were hardly on the radar just a few short years ago. But they can often perform routine legal tasks, such as research, quickly and accurately – and more cost-effectively than an attorney.
4. Embracing alternative fee arrangements. How far are you able to go to win – or keep – the client? Will your firm work on contingency? Charge a flat fee per project? Agree to fee caps? These are all changes that clients are asking law firms to make. In some ways, they feel they have firms over the barrel and have the right to negotiate more favorable terms. But on the other hand, they are looking to see what firms have their business processes and business model fine-tuned to allow them to offer this kind of flexibility. If your firm can’t…that says something to your prospects! Your ability to meet these demands will generally be a function of how efficiently your firm can work on any given client’s projects.
5. Leaning on technology. A major part of working efficiently is to leverage technology to streamline or automate tasks that used to tie up hours of an attorney’s time. For example, some law firms are using business process management (BPM) software to streamline and decrease the cycle time of key business processes. BPM helps them to monitor processes and to identify bottlenecks. Making processes more efficient enables them to offer AFAs and still maintain profitability.
The downward pressure on law firm fees isn’t likely to end anytime soon. But if you’re going to compete with other firms on price, efficiency will be the name of the game.
Elegrity specializes in helping law firms like yours achieve a competitive advantage by working “leaner” than their peers. We’ve written a special report that outlines how you can improve your business processes, increase your efficiency, and boost your bottom-line profits – even in this economy.
“7 Steps to Efficiency Gains and Enhanced Loss Prevention at Law Firms” focuses on the new business intake process as an example and describes how to use a seven-step process to do more with less. Download the special report.