January 30, 2019
2018 in Review
Thomas Reuters recently published their annual report on the legal industry, titled "2019 Report on the State of the Legal Market.” Among the many positive trends was a 5.5 percent jump in average revenue growth across the legal market. This was due to both demand for legal services and billing rates climbing higher for the year, 1.3 percent and 3.3 percent, respectively. Demand for law firms came mostly in the litigation, labor and general corporate practices, up 1.6 percent, 1.2 percent and 1.6 percent, respectively.
Am Law 100 firms saw their demand growth exceeding 3 percent, while Am Law 200 firms and midsize firms saw demand growth below 1 percent.
Law firm collection rates have remained stagnant at about 82 percent of standard (published) rates. However, collections against agreed upon rates was up to 89.3 percent, a level not seen since 2013, but far below the 94 percent collection rates pre-Great Recession.
Overall, “direct expenses in 2018 grew by 3.4 percent, while indirect expenses increased by 2.5 percent. Both of these were consistent with the patterns seen since 2013, although there has been some uptick in direct expenses in the past couple of years, no doubt attributable to the recent increases in associate compensation,” noted the report.
Innovation in Law Firms
A recent article, published in Law.com, titled “The State of Law Firm Innovation 2018” by David Parnell, describes a survey on innovation in law firms. The findings suggest most law firms consider innovation “very important” or “extremely important”, with 76 percent of respondents in those two categories. Just 6 percent consider innovation “slightly important” and 13 percent considering it “moderately important.” Interestingly, 57 percent of firms considered innovation to be technology based, while the other 43 percent considered it operationally based. The survey author “considered ‘innovation’ to be synonymous with ‘tech’ and assumed that the market did, as well.”
When asked if there was “support for partners taking risks,” 41 percent of firms responded “yes” or in the affirmative, while just 23 percent responded “no” or negatively.
When asked how they would describe their innovation achievements, a majority described their progress as “ad hoc” or “in initial development.” Just 27 percent considered themselves a “first mover” in innovation.
When asked if their firm rewards innovators within the firm 44 percent said definitely “no”, while only 13 percent responded with an unequivocal “yes”; the rest fell within a spectrum from “no” to “yes”. Likewise, when asked if their firm had someone “formally in charge of innovation efforts,” 50 percent said “no”, while just 20 percent said “yes”.
The survey author summed up the results by saying, “While it seems as though firms understand the importance of innovation and have done some work to incorporate it into their cultures and strategies, when it comes to full-scale support and investment, we still have some ground to cover.”
Mentoring New Partners
In an article published in The Current: The Journal of PLI Press, titled “How to Grow a Partner” by Deborah Brightman Farone, Ms. Farone, a former law firm Chief Marketing Officer, describes how new partners should go about building their practice. Advice seasoned partners should be sure to share with their juniors to ensure the overall success of their firm. Some key takeaways from Ms. Farone’s article:
What to Know for that Interview
So, you finally got that interview with the firm, now what? Here are some interview tips from the recruiters at Legal Resource Group:
Thomas Reuters recently published their annual report on the legal industry, titled "2019 Report on the State of the Legal Market.” Among the many positive trends was a 5.5 percent jump in average revenue growth across the legal market. This was due to both demand for legal services and billing rates climbing higher for the year, 1.3 percent and 3.3 percent, respectively. Demand for law firms came mostly in the litigation, labor and general corporate practices, up 1.6 percent, 1.2 percent and 1.6 percent, respectively.
Am Law 100 firms saw their demand growth exceeding 3 percent, while Am Law 200 firms and midsize firms saw demand growth below 1 percent.
Law firm collection rates have remained stagnant at about 82 percent of standard (published) rates. However, collections against agreed upon rates was up to 89.3 percent, a level not seen since 2013, but far below the 94 percent collection rates pre-Great Recession.
Overall, “direct expenses in 2018 grew by 3.4 percent, while indirect expenses increased by 2.5 percent. Both of these were consistent with the patterns seen since 2013, although there has been some uptick in direct expenses in the past couple of years, no doubt attributable to the recent increases in associate compensation,” noted the report.
Innovation in Law Firms
A recent article, published in Law.com, titled “The State of Law Firm Innovation 2018” by David Parnell, describes a survey on innovation in law firms. The findings suggest most law firms consider innovation “very important” or “extremely important”, with 76 percent of respondents in those two categories. Just 6 percent consider innovation “slightly important” and 13 percent considering it “moderately important.” Interestingly, 57 percent of firms considered innovation to be technology based, while the other 43 percent considered it operationally based. The survey author “considered ‘innovation’ to be synonymous with ‘tech’ and assumed that the market did, as well.”
When asked if there was “support for partners taking risks,” 41 percent of firms responded “yes” or in the affirmative, while just 23 percent responded “no” or negatively.
When asked how they would describe their innovation achievements, a majority described their progress as “ad hoc” or “in initial development.” Just 27 percent considered themselves a “first mover” in innovation.
When asked if their firm rewards innovators within the firm 44 percent said definitely “no”, while only 13 percent responded with an unequivocal “yes”; the rest fell within a spectrum from “no” to “yes”. Likewise, when asked if their firm had someone “formally in charge of innovation efforts,” 50 percent said “no”, while just 20 percent said “yes”.
The survey author summed up the results by saying, “While it seems as though firms understand the importance of innovation and have done some work to incorporate it into their cultures and strategies, when it comes to full-scale support and investment, we still have some ground to cover.”
Mentoring New Partners
In an article published in The Current: The Journal of PLI Press, titled “How to Grow a Partner” by Deborah Brightman Farone, Ms. Farone, a former law firm Chief Marketing Officer, describes how new partners should go about building their practice. Advice seasoned partners should be sure to share with their juniors to ensure the overall success of their firm. Some key takeaways from Ms. Farone’s article:
- Concentrate on Existing Clients – “In the legal profession, there is often a belief held by new partners that they need to sprint from the starting block and begin chasing business. But that is not the case. As a new partner, the most important thing for you to do is to take account of and assess your existing clients,” says Ms. Farone. These clients already know your firm and are therefore the best source of new business. Partners should call on these clients to see if there are other “opportunities to further solidify and grow the relationship.”
- Delight a Client to Gain a Referral – Another reason to focus on existing clients is that they may also be a source of referrals. “Referrals can be a powerful and consistent way to garner new clients,” notes Ms. Farone. However, clients don’t just refer anyone, they will only make a referral if they are “delighted” with the work. “Turning a happy client into a delighted client is the only way to grow an apostle for the firm—someone who is extraordinarily pleased and proud of the relationship with the firm and who is likely to share that experience with business colleagues. Doing a fabulous job for an existing client is economically the most important marketing step one can take. Producing great work and providing good service are the baseline of any good legal relationship, and without them, nothing will grow the business; but in trying to create an apostle relationship, it is necessary to dig in deep and get to know your clients, their concerns, and their industry,” says Ms. Farone.
- Every Contact is Important – To build a practice a new partner should build on existing contacts. All the people that a partner has relationships with is a potential client or referral source. "Treasure your connections and consolidate them into one system. As a new partner, you may not think that you have established contacts, but you are incorrect. The folks with whom you went to law school or the people you may have stayed in touch with from childhood, high school, or college are all connections. Those you met across the other side of a deal or at a client’s business may move higher up on the corporate ladder or become a referral source of business. There are also the intermediaries, accountants, consultants, and expert witnesses you have gotten to know as you’ve worked on matters. And as an associate, if you were involved in any groups such as bar associations or community efforts, those groups and their members should be counted as contacts,” suggests Ms. Farone.
What to Know for that Interview
So, you finally got that interview with the firm, now what? Here are some interview tips from the recruiters at Legal Resource Group:
- Know the Position – Before you interview, reread the job description carefully. Write out talking points on how your skills and experience match the requirements of the position. Rehearse the talking points until you know it cold. Also, remember every question you are asked is an opportunity to draw a parallel between your experiences and the requirements of the position.
- Know the Firm – Research the firm thoroughly. Visit their website and make note of key themes, core competencies and firm culture. Be sure to highlight how your experiences and personality would fit in with the firm’s core competencies and culture. Also, extend your research to current news items. There may be news on the firm (positive or negative) that you should know about and may be asked about in the interview. Have a ready answer, and if possible, how your skills fit the positive aspects or challenges that that news represents.
- Know the Interviewer – Most firms have their partners’ biographies on their websites, and many have senior administrative staff, as well. If not, look them up on LinkedIn or Google search. If you can’t find out anything, don’t be afraid to ask – in-house or outside recruiters should be able to get you a bio on the person you’re meeting. Know their role and how that role interacts with the position for which you are interviewing. Also, if it makes sense, ask the interviewer questions about their experience that will draw positive parallels with your own experience.
- Know Yourself – It is important to be clear and confident in an interview. Go over your background and knowledge by conducting mock interviews with any friends and family that have interviewing experience. Take constructive criticisms and incorporate them into your interviewing skills. In the interview, make an effort to give clear, direct and concise answers to each question. If you don’t know the answer or don’t have a skillset, admit it directly - better to acknowledge it and move on, than fumble around for an answer and look worse. Finally, when an opportunity arises to show off your technical knowledge, seize it, but take care not to go on too long, or you might lose your audience. Remember, you got the interview for a reason, so show them your best self!