The legal industry is undergoing a transformative phase, shaped by a multitude of factors that are expected to reshape the post-pandemic landscape. The 10th edition of The National Legal Sector Benchmark Survey, conducted by Cushman & Wakefield’s Legal Sector Advisory Group and ALM, sheds light on the key forces driving this change and the challenges faced by law firms.
Participating firms anticipate growth this year, with two-thirds planning to expand their staff and 87% expecting an increase in attorney headcount. The average projected rise in attorneys is 5.6%, surpassing the 3.6% growth for staff, reflecting the trend of firms enhancing staffing ratios. While a quarter of firms intend to reduce staff, only 10% anticipate reducing attorney numbers.
Impact of Technology
According to the survey, the rising use of technology and its associated costs, coupled with evolving client demands and intense competition for talent, are poised to be major catalysts for change in the legal industry. The report highlights that 51% of respondents believe shifting client demands will have the most significant impact on the future of the legal profession. Concurrently, retention and recruitment of skilled professionals were identified as a critical concern by 50% of the participants.
The survey reveals that an increasing number of firms, around 59%, are either already using or planning to adopt artificial intelligence (AI) solutions. AI is being leveraged for various purposes, including legal research, expertise, and document analytics and generation. However, the adoption of technology comes at a price. The average technology spending in 2022 accounted for 5.3% of gross revenue, and it is expected to rise to 6.8% by 2024.
Evolution of Law Firm Business Models
While law firm business models are expected to undergo shifts, the foundational partnership structure is unlikely to change significantly. Approximately 10% of firms anticipate no modifications, while 75% foresee only minor adjustments to their partnership arrangements.
In addition to grappling with the impact of technology, law firms are also contending with the challenges of redefining their office spaces as they navigate a return to the physical workplace. Hybrid work policies and evolving workspace designs are being considered to strike the right balance between in-office and remote work. The survey suggests that most law firms are finding value in having some in-office work, preferably three to four days a week. Consequently, 75% of firms expect incremental changes to their office workplace, while 16% anticipate more substantial modifications.
The report highlights a growing trend away from private lawyer offices and towards open floor plans or hoteling. While 40% of survey participants predict that firms will move away from private lawyer offices, only 22% held the same view a year ago. This shift is particularly notable among Global 100 and Am Law 50 firms.
Conclusion
Research like this is crucial for our work at Leffler Search. This gives us the opportunity to hear from US attorneys on a wide scale regarding their experiences within the workplace, both in the present and in the projected future. It is clear that the legal industry is poised for significant change in the post-pandemic era. The increasing use of technology, evolving client demands, and competition for talent are reshaping the industry landscape. By understanding these transformative forces, legal professionals can position themselves for success in an increasingly digital and client-centric legal landscape.
