Can Law Firms Improve Realization Rates Again in 2022?: The Morning Minute

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WHAT WE'RE WATCHING

DO YOU REALIZE?? - Large law firms did a better job collecting their bills last year, contributing to one of the strongest years on record in the legal industry. And along with an uptick in Big Law's realization rate came a realization for Big Law: getting paid is better than not getting paid. As Law.com's Andrew Maloney reports, whether firms have any room to once again improve realization this year partly depends on demand during the rest of the pandemic. But there are also variables they can control, analysts and law firm leaders said, such as practice mix, leverage, billing and collection discipline, and client relationship management—all of which could nudge realization upward. "I do think there is opportunity there still," said Gregg Eisenberg, managing partner of Benesch, Friedlander, Coplan & Aronoff. Big Law boosted its realization by an average of 2.1% last year, according to the latest analysis by Citi Private Bank Law Firm Group. Although 2021 saw a demand spike that created less discounting pressure, according to Citi's analysis, Eisenberg noted some firms fall off on realization because there is a "disconnect" between them and their clients, and that project management and working collaboratively help buoy that rate, in part by eliminating surprises. "You just have to make sure you have a meeting of the minds there on what things should cost," he said.

WELL 'VERSED - Arent Fox may be the first Big Law firm to buy land and start building an office in the metaverse, but, as Law.com's Bruce Love reports, other firms were pioneers of virtual reality dating at least as far back as 16 years ago. In 2006, Hogan Lovells precursor Lovells opened up shop in Second Life, a forerunner to today's metaverse. And late last year, a boutique personal injury firm built an office in the metaverse designed by the 11-year-old daughter of one of the partners. But why? According to those that have made the leap, a major factor in the decision was the ability to demonstrate to cutting-edge clients that the firm is fluent in the tech. Chris Hinze, who was head of corporate communications at London firm Lovells when it entered Second Life, said clients are generally less interested in whether a firm has a presence in the metaverse and more interested in whether their lawyers truly understand the issues and have the experience. "Think of it as a mechanism for demonstrating familiarity, rather than a 'must-have,'" he said. Arent Fox crypto chair James Williams had a similar take with regard to his firm's recent foray. "You're trying to get in early," Williams told Love. "The idea, at a minimum, is to show clients that you're smart and familiar with the metaverse. We want to show our clients: We know this world; look, we bought in this world, and we can help them navigate this world."