How has the Global Downturn Affected the Legal Industry?

Few have dodged the wrath of the global economic downturn. There have been many victims and in this post we ask a simple question: how has the economic crisis affected the legal industry?

Well the Financial Times/Meridian West research paper, entitled “Effective Client-Advisor Relationships 2012,” is a good place to start when answering this question. Available here, the paper makes a simple assertion: “a revolution is underway in professional services.”

Driven by an increase in regulation and a challenging business environment, the needs of clients are changing. And so as firms adapt to meet the change in client-needs, law firms are undergoing a “radical transition.”

But what are these new client-needs? Well the FT/MW research paper provided a comprehensive overview of how the client-advisor relationship has changed. Whilst in the past lawyers were rigid, partner-centric technical experts focused almost solely on the billable hour, the next generation of lawyers will have to be multi-faceted, client-centric commercial advisors.

Client expectations pre-crisis	Client expectations post-crisis
We do our job, you do yours	More collaboration
They accepted the billable hour	They expect alternative fee arrangements
Saw lawyers as strict interpreters of the law	They expect commercially aware legal advisors They want legal advisors to know their business intimately
Accepted mediocre management	They expect improved project management
Accepted low management interaction	Want more contact with management
	They want added-value services (ie. regular feedback, briefings, social media, free seminars etc.) Discounted services and products Improved training in legal advisors

This stands no doubt as a rude awakening for many seasoned legal professionals. However there's no point in swimming against the tide of change; for the law firms that does will soon slip down the performance tables, overtaken by the leaner more responsive firms. And when economic uncertainty eventually passes it won’t be a simple case of a return to business as normal.

In a later post we will look at the recommendations made by the report on how law firms can best respond to the change in client expectations.