No Option for Law Firm

I don’t know about yours but my December has been a whirlwind and as such blog posts have taken a back seat. So as it’s unlikely I will get another post out before 2012, I thought I would just put up a quick post to wish everyone a great Christmas and a happy New Year!

Outlook 2010 top 11 cool things – #4 Booking meetings

Staying on the calendar/meeting theme the next feature in Outlook 2010 I want to point out is the assistance you get to help find a suitable time slot for your meeting. If you’ve a dept. that is anything like mine, finding a suitable point in the day/week for all the people you want to pull together can be a bit of a challenge!

In Outlook 2010 there is a neat pane on the right hand side of your appointment that can help.

At the top is a calendar which colour codes each day indicating whether the day is goo/fair/poor for booking the meeting. Below at the bottom are suggested times, these are ordered from best to worst slots.

If you set up meeting rooms in Exchange 2010 you can also see available rooms in the middle section.

On receipt of the request that person will see another cool feature in Outlook 2010. A nice calendar preview allowing you to see immediately where the meeting fits into your schedule, saving you from having to jump across into your calendar to check before accepting or rejecting the meeting request.

Is the recession over? From a UK perspective I guess the answer is “just about!”

So as we are now on a slow road to recovery when will the good times return? Well I’m going to put my neck out and say never!

At least not in a return to what seemed to be the halcyon days between 2006 and 2008. My thoughts are these will be seen as the pinnacle of law firm revenue and profits per partner and I honestly think they’re gone for good.

Agree/Disagree? Let’s take a look at the graphs for big law UK (the figures are an average pulled from the top 20, to give a better picture of BigLaw firms generally). *click the images to get a larger size*

BigLaw

The growth is starting to slow, but is probably dipping in real terms. Due to the top 20’s truly global nature, their growth will probably look as if it is continuing for a few years as they receive greater revenue due to their size increases and global markets.

A better picture of the plateau being passed is to look at the picture for the mid sized firms. 2008 being the peak, the revenues are starting to fall.

Mid Size

But this is just a small dip isn’t it? Once we’re out of the recession things will move upwards again. Hmmm, if you look at the Profits per partner, the picture is much worse. And after all isn’t profit the real indication of the “good times”.

BigLaw

Mid Size

But again isn’t this just a dip until the markets pick up again?

I don’t think so. There are a number of factors why I think this drop off post 2008 isn’t just a dip which law firms will bounce back from.

• The move from the old style bill by the hour and for those that continue to bill by the hour, the pressure to keep costs low. As one IT Director put it “Yes we’re looking at alternatives to billable hours… but only because we have to”. I can’t see us not having to, clients will continue to make us!
• The UK (and US) markets are pretty saturated. There isn’t much room for growth. The introduction of the Legal Services Act 2007 as well as further commoditisation of legal work will put more pressure on fees.
• The costs were slashed across the board in most firms through 2008-2009. And still profits were down! All those expenses that have been deferred (and I bet there is a fair bit) will start eating into future years revenues.

And there are many challenges of the recession and economic downturn yet to come.

• Although many firms this recession have been sensible and avoided over enthusiastic job cutting, there have been plenty of pay freezes. This could be a drain on costs in the coming years as staff want that raise! The problem will happen first in the support depts., the staff there have a market for their skills outside legal. So the market could dictate a rise in salaries even if legal would ideally like to keep wages low.

As the graphs above show it’s having less of an affect on BigLaw at the moment, but as competition grows fierce in the mid sized firms, the BigLaw could see their home markets coming under more and more pressure. It’s only so long before BigLaw can rely on the non-UK revenues to keep the growth going, eventually you run out of places to grow!

So what’s my point? That Legal is a basket case and lawyers will have to get used to smaller pay packets?

No, I’m not saying is that Legal is a basket case, just that the peak has been reached. From here on in the competition will start to hot up, but as with any mature business this is good news for the client and good news for innovation. There will be winners and losers, but we’re not going to see all the top firms continue to grow. Overall the average will plateau, but within there will be firms that really increase revenue and profits and there will be those that really drop!

We’re in for a really interesting time in legal, seeing how firms change, how they innovate and from a personal point of view whether they really embrace IT and start using it as an enabler of change rather than a utility.

After a lot of talk of this happening and a few false starts, I think we’re now in for interesting times!