2016 Law Firms in Transition survey released

Now in its eighth year, Altman Weil’s 2016 Law Firms in Transition Survey continues to document market forces that are reshaping the competitive legal landscape, identify ways in which law firms have responded (or are lagging in their response), and prescribe how law firm leaders can find competitive advantages in a redefined marketplace.

“Despite pockets of true innovation, most law firms are choosing to proceed with lawyerly caution in the midst of a market that is being reinvented around them,” said Altman Weil principal and survey co-author Eric Seeger.

Key findings from the 2016 survey include:

1. Erosion of Demand:  Market demand for legal services has failed to return to pre-recession levels in over 60% of U.S. law firms; and 62% of firm leaders believe that erosion of demand will be a permanent trend in the legal market.

2. Surplus of Lawyers:  Law firms report that half of their equity partners and over 60% of their non-equity partners are not sufficiently busy, creating an ongoing drag on law firm profitability.

3. Clients as Competitors:  Corporate law department insourcing is taking work from 68% of law firms, including 84% of firms with 250 or more lawyers.

4. Inefficient Delivery of Legal Services:  Although 94% of law firm leaders identified the need to improve the efficiency of legal service delivery as a permanent trend, only 43% of firms have significantly changed their approach to achieve greater efficiencies.

5. Price Competition:  95% of law firm leaders think more price competition is a permanent trend in the profession, but only one third of law firms are changing their approach to pricing strategy.

6. Resistance to Change:  When asked why their firms aren’t doing more to change the way they deliver legal services, the top response from 64% of firm leaders is that their partners resist most change efforts – up 20 points from last year.

“This is a leadership moment,” according to Altman Weil principal and survey co-author Tom Clay. “When the market is moving forward and your partners are unwilling to move with it, it’s not enough to be a caretaker or consensus builder. Law firm leaders have a responsibility to vigorously pursue opportunities that enable them to outpace and outcompete other firms.”

Conducted in March and April 2016, the Law Firms in Transition Survey polled Managing Partners and Chairs at 800 US law firms with 50 or more lawyers.  Completed surveys were received from 356 law firms, including 49% of the 350 largest US law firms and 48% of the Am Law 200.

The complete survey report includes sections on industry trends, market demand and competition, pricing and alternative fee arrangements, efficiency of legal service delivery, lawyer staffing strategies, law firm growth and economic performance. 

It is available to download at: www.altmanweil.com/LFiT2016.