The State of Law Practice in the State

March 13, 2018 § 4 Comments

Fifteen years ago it was not uncommon to see trials going on before both chancellors in our district as many as four or five days a week. By ten years ago that had slowed somewhat, but the number of court hearings was robust. Now, hearings and filings are down, except perhaps in probate matters. What’s the deal?

An article by a “Legal Marketing Expert” in The Above the Law Blog had this to say about the phenomenon in other parts of the republic:

It was easier to be a lawyer a decade ago – the demand for legal services always seemed to be growing, along with the revenue and profit that came with it. With the Great Recession, everything changed. The flow of clients slowed while competition increased, leaving profit margin and productivity to suffer.

If the latest Report on the State of the Legal Market from Georgetown University Law Center and Thomson Reuters Legal Executive Institute is any indication, the trend continues. Consider their findings from 2017:

  • Only intellectual property, tax and corporate work saw modest gains in business, but demand has waned in all other practices – including general litigation, which makes up for 30% of all practice activity.
  • The number of attorneys at U.S. law firms increased by 1.3% in 2017, but there’s less work. On average, lawyers are working 156 fewer hours than in 2007.
  • Profits remain stagnant, except for a few of the AmLaw 100, but even most of them experienced modest financial returns.

Even so, the competition is poised to further disrupt the marketplace. You may have heard that AVVO, the first company to take the legal marketplace online, has just been purchased by Internet Brands. A news release noted that AVVO attracts more than 100 million visitors annually, and that Internet Brands has seen “strong growth over the past decade.”

So it appears there is, indeed, a strong demand for legal services – just not from traditional law firms. This points to one of the reasons that many law firms may be stagnating: They still operate like it’s 2007. They cling to the traditional law firm model, do things the way they’ve always done before and, of course, get the same results. This is more than just a hypothesis when you consider the findings of the Thomson Reuters 2017 State of U.S. Small Law Firms Report which reveals that while:

  • 75% are finding it challenging to acquire new business, 71% aren’t doing anything about it.
  • 70% say they spend too much time on administrative tasks, 81% aren’t doing anything about it.
  • 61% want more control over costs and expenses, 74% aren’t doing anything about it.
  • 59% say clients are demanding more for less, and 80% aren’t doing anything about it.

Only the firms that break from tradition and adapt to a new way of thinking will survive the tenuous landscape. And, as noted above, that’s currently just a small fraction. The strategies often used in past to overcome market declines such as expense cuts and rate increases, are less likely to be as effective going forward.

Embracing change will allow firms to more effectively compete and be better positioned to take hold of the marketplace that typically seeks alternative legal services. This is underscored by the Thomson Reuters Legal Executive Institute, which says the future could be brighter for firms that proactively provide clients the value they’re looking for.

Okay, can’t disagree much with the premise, but that’s like saying “plague is caused by germs.” What we want is the vaccine; the cure. If the “traditional law firm model” doesn’t work, then what does?

To me, the most revealing dynamic in that article is that “clients are demanding more for less.” Clients access all kinds of free general legal advice, data, and information on Google and don’t understand why you have to charge them for the particularized advice and counsel you provide. Clients can buy generalized form pleadings and agreements online for a fraction of what you must charge to tailor documents to their needs. Although many of those DIY, one-size-fits-all rigs wind up back in court to fix their built-in flaws, I guess people think it’s worth the chance that they won’t.

“[T]he future could be brighter for firms that proactively provide clients the value they’re looking for.” How does a small-town practitioner do that? The expert doesn’t reveal the secret in her article. Or maybe there’s no real secret to reveal. Maybe one must just be aware and keep trying new techniques until something clicks. The only credentials I have to offer for that advice are my 33 years of private practice in which I had to do that very thing through all kinds of ups and downs of the legal profession. Since I’m not a “Legal Marketing Expert,” there’s no charge.

§ 4 Responses to The State of Law Practice in the State

  • Portia says:

    Recent demographic trends:
    1) National: People are leaving rural zip codes and moving to suburban or urban zip codes (See Desoto County, Greater Jackson Metro; and, Gulf Coast Counties;
    2) National: U.S. Middle Class is shrinking;
    3) Mississippi: Losing population and in particular young people 18 – 45;
    4) Mississippi/National: Jobs for young people 18 – 45 with benefits permitting them to raise families are increasingly found more frequently in nearby States and across the nation than in Mississippi; and,
    Combine all of the foregoing with some of the amenities available in nearby States and Mississippi is practically inviting people to leave.

  • BowTieLawyer says:

    I started with a big a firm (by family law standards) and witnessed the shift first hand. The legal climate has changed considerably in the last 12-15 years. My solution was to change with the times; adopting alternatives to billable hours, taking advantage of limited services contracts, incorporating fixed or scheduled fees, and being willing to be flexible, have all helped. It’s not perfect, but it’s not doom and gloom either. Marketing is not a dirty word and it can be done in a variety of ways.

  • Philip Thomas says:

    Those types of articles drive me crazy. It’s gobbledygook.

    It’s like saying we’re never going to get to Mars unless NASA embraces change and stops charging so much to build and launch spaceships.

    Most of those attorneys aren’t doing anything about it because they can’t think of anything good to do about it. Not because they are too stupid to know they need to change. Stupid change is worse than holding on for dear life.

    • John H. (Zeke) Downey says:

      The comment about free legal advice on the internet is true, tho laymen can sure mess up a corporate formation. But the fundamental problem is generating too many incompetent lawyers and allowing them to make a living because they can now “market” themselves in what used to be considered sleazy, if not actually prohibited ways.

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