2007 LAW FIRM PREDICTIONS
In the first installment of our mid-year legal industry forecast series, our own Doug Anderson spoke with Altman Weil’s Ward Bower to get his take on both the national and local outlook for law firms. Bower specializes in law firm organization, strategic and partnership planning, mergers and compensation-related issues.
- Though the industry is healthy in 2007 top to bottom, we are seeing a growing gap between the top 50-100 firms and everyone else. The rich are getting richer as they are attracting both the top clients and the top talent.
- The top firms have separated themselves by attracting the highest value business including IPOs, M&A, IP, and big-ticket litigation.
- These top firms have moved into higher value practices while moving out of practice areas that have become commoditized, like employment litigation and environmental law.
- DC is one of three critical locations for all big firms (NY and California being the others) and is at least as important as New York for international firms. Look for all major British firms to open DC offices in the next 3-6 years.
- Biggest challenge for managing partners for the foreseeable future is keeping and attracting good people. There is an enormous supply-demand imbalance for talent and that will not change. Look for associate compensation to continue to grow for top talent as firms’ economic models can justify higher salaries. Firms will also increasingly look at the top students from second tier law schools.
- Other major trend for MPs to watch is growing importance of client loyalty. In many cases, clients are reducing the number of outside firms they use and in doing so are gaining leverage in dictating staffing and billing. As this happens, firms need to develop tighter bonds with their clients and deeply understand and anticipate their interests and needs.
- Alternative billing remains more talk than action but it’s still more action than 10 years ago. Clients are gaining power and expect more RFPs, beauty contests, and panel reviews.
- Many firms still look alike to clients. Expect more emphasis on branding and marketing their services as distinct. Strategic planning is also becoming a regular activity for big firms and not just an occasional exercise.
- In 2007, global law firms should have strategies that address the following four key trends: (1) globalization, (2) industry consolidation, (3) increasing client buyer-power and (4) the war for talent.