Adapting to a Changed Legal Marketplace
Chapter 14: The future of the profession
The prolonged, profitable growth of law firms, the “golden age” of law firm growth, lasted from the late 1960s until 2007. Undoubtedly, the profession flourished throughout this period, increasing in specialization so law practice became ever more sophisticated. Large firms had the capital to invest in technology and also expand into additional practice areas. The profession has grown more lucrative for all lawyers. Nevertheless, the recession of 2008–2009 caused a retrenchment, with firms starved for demand. There were too many lawyers in large firms, causing the clients to resent the long years of increases of billable rates and to resist increases in rates, as well as seeking larger discounts. This situation also imposed restrictions on the personnel policies of law firms. The legal marketplace has been more competitive since the recession, and law firms have not been able to increase rates as much. The client in the transformed legal marketplace is in the driver’s seat. There has been much expansion of the flexibility of legal roles, caused by the greater number of women and minorities joining the profession, as well as the competitive pressure on law firms. In the new marketplace, large law firms know that traditional clients will not retain them for all work; most clients send some work out to their traditional law firm, some work to smaller, less expensive firms, retain some work for their own in-house staff, and use contract lawyers heavily for document review in large litigations. As a result, the legal market is very much divided by price, practice area, geography, and client service. No longer is growth a proper strategy for most law firms. A firm must choose its appropriate niche in the marketplace, according to its market strengths. As a result, if it has weak areas, the client will not choose the firm to do work in those areas.
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