Recently, the good folks at Lawyaw invited me to discuss the state of the legal industry and upcoming trends for 2023. I joined speakers Andreas Becker of Lawyaw, Rio Peterson from Clio, and moderator Garima Goswami, also from Clio. The discussion focused on some of the key findings in Clio’s Legal Trends Report. We talked about the state of the legal industry, trends we see on the horizon, and methods lawyers can use to adjust to these trends.
Some specific trends stood out above others, including an increased need for legal services and inflation rising faster than billing rates. Yet, the fundamental methods for adjusting to these remain the same. Lawyers should focus on designing and documenting their processes. Then, increase the efficiency of those processes through relentless iteration.
State of the Legal Industry
It’s no surprise that Clio’s Legal Trends Report shows an industry adjusting to an increasingly connected world. Casework has increased in the last year, collection rates are still down, and inflation is outpacing the billable hour index. Further, online client reviews are influencing legal services decisions, and cloud-based firms are finding greater client and staff satisfaction.
We address all of these in the webinar. But I want to focus specifically on increased casework and combating inflation in our practices. These are relatively new trends in the legal industry.
Expanding Need for Legal Services
According to Clio’s LTR, the need for legal services has increased over the last year. And it doesn’t seem to be stopping. This is likely spurred by pent-up demand due to court closures and other effects of COVID-19. However, this is expected to continue as more and more attorneys are turning to educational content marketing. This, in my opinion, is broadening the market by educating consumers about their options.
Thoughtful and prepared attorneys can use this information to grow their businesses and possibly counteract the effects of other recent trends. Most attorneys, in my experience, aren’t prepared for an influx of clients or casework. After all, there are only so many hours in the day. So, even though this is an opportunity, it could prove detrimental to the unorganized.
Inflation Outpacing the Billable Hour Index
The Legal Trends Report notes that increases in the billable hour index are not keeping pace with the current inflation rate. Essentially, lawyers are allowing the market to devalue their services. But, as we discuss in the webinar, it isn’t always easy for lawyers to increase their rates. Sometimes rates are set by statute, while in other cases, it’s simply difficult to pass on increased costs to clients. In a competitive market, it’s tough to be the first to raise rates.
This means that many lawyers are looking to do more with less. Or, more specifically, to do more with what they already have. As law firms contend with rising costs, they will, inevitably, look to create efficiencies. As Andreas notes in the webinar, however, many lawyers get overwhelmed when thinking about efficiency. There’s so much to be done, and so many places we can fix, many of us simply freeze.
How Lawyers Adjust to Legal Trends
In order to excel in the current state of the legal industry, attorneys need to use their resources wisely. This starts with building healthy systems. If they haven’t already, lawyers should create a procedures manual and document how they get their work done. Then, periodically revisit that manual to look for potential efficiencies.
As Andreas states in the workshop, look for processes that are high-impact yet require low effort. Don’t start by attempting to automate your discovery process. Begin with your engagement letter, or automate a portion of your intake workflow.
For access to the full discussion, you can sign up here and access the recording. Lawyers can learn more about building healthy systems in our Healthy Firm section. There, we have information on Healthy Owners, Healthy Profits, Healthy Teams, and more. It’s free for Lawyerist subscribers.
Last updated December 1st, 2022