After what could only be described as a period of uncertainty in 2017, a new study published Tuesday by legal consultancy Major, Lindsey & Africa finds that law firms and in-house departments will need to double down on their strengths to keep their efficiency and profits high in what is bound to be an equally unpredictable 2018.
“There was some uncertainty at the beginning of the year following the election because people weren’t quite sure what was going to happen,” said Jeffrey Lowe, one of the study’s authors and global practice leader of the law firm practice group at Major Lindsey. “As that uncertainty continues to this day, I think firms finally realize we might not really have certainty over the next three or four years, so we’re just going to go ahead and continue to do what we’ve been doing.”
An ongoing increase in pressure to drive down costs and improve productivity will have law firms and legal departments looking within to determine their strengths and find better ways to leverage them, according to the Major Lindsey report. Therefore, the study suggested that firms who have a defined strategy will have a much better coming year than those firms who are still struggling to define who they are in the legal industry.
“What we see time and time again are firms who know who they are are going to go after practices and people that fit with their strategy,” said Lowe, adding that he anticipates the market for laterals hires will remain strong into 2018. “There’s still a surprising number of firms who really aren’t quite sure what their strategy should be, and we find that’s a very difficult sale proposition for people in the lateral market.”
Lowe said this trend will continue to result in some firms, especially those within the middle market, being squeezed out and either choosing to merge or be acquired by other firms.
The Major Lindsey study also noted that reverberations from the 2016 associate salary increases are still being felt throughout the legal industry, with some firms struggling to keep pace to meet the demands of the pay hike.
Lowe said the pressure to pay associates a competitive salary will cause firms to continue to be more judicious about who they recruit and how many associates they hire. But the salary increase also has caused associates to reflect on their role in Big Law.
“I think for the associates they recognize now as much as ever, or certainly probably more than ever, that those salaries come at a cost,” Lowe said. “They come with very high expectations in terms of performance and hours.”
The Major Lindsey study found this shift wasn’t all bad. Rather, associates have become more committed to their respective firms since the pay increase and are looking for ways to enhance their business development skills.
In addition, when combined with associate training and retention efforts, Lowe said associates at firms who went through with pay increases felt that their firms had invested in them and, in turn, built a sense of loyalty to those firms.