The Past, Present, and Future: Looking Ahead at Three Key Trends for Big and Boutique Law Firms in 2023
Since the COVID-19 pandemic began, the legal industry has been transforming: while America’s largest law firms are reporting billions in annual revenue, they’re also seeing significant staff turnover as employees increasingly pursue greener pastures. Remote work, which previously was limited to small segments of the technology sector, has now increasingly taken hold among legal professionals, with employees seeking greater autonomy in where and how they work. Finally, while the domestic and global economy is seeing a slowdown due to supply-chain disruptions and international conflict, the legal sector remains largely insulated from seeing demand for its services decline.
As we embark on a new year, here are three trends that define the past, present and future for law firms–big and small.
Moving to the Cloud Will Define Legal Technology
In 2021, America’s 200 largest law firms reported nearly $150 billion in revenue. The #1 firm on the list generated $6 billion alone. However, being at the forefront of revenue generation doesn’t always mean being the most efficient or effective, as the results from Everlaw’s 2022 Ediscovery Innovation Report: From Big Law to Boutique, a survey of 195 legal professionals conducted by Everlaw and the Association of Certified Ediscovery Specialists (ACEDS) found.
Read Everlaw’s 2022 Ediscovery Innovation Report: From Big Law to Boutique to learn more.
The survey revealed that when it comes to modernizing the discovery process, 63% of Am Law 200 firms report that they still use on-premises software for ediscovery, even as a majority of the market has begun transitioning to the cloud. In contrast, only 38% of boutique and midsize law firms, defined as any firm outside the Am Law 200, are still using on-prem ediscovery solutions.
However, respondents from Big Law firms understand that the future lies on the cloud–even if they’re not on it (yet). Although only 26% of Am Law 200 firms are using cloud-based ediscovery, 94% say that it already is or will soon become the norm for the industry in the next two years. As such, providers of legal technology across the board have been rushing to brand themselves as cloud-based platforms, and numerous legacy platforms have begun moving to the cloud as well, sunsetting their on-premises offerings. As support for on-premises offerings begins to get phased out, law firms and corporate legal departments–both big and small–are going to start looking for cloud-based solutions for ediscovery and investigations.
But it’s not just the discontinuation of on-premises platforms that is catalyzing this change. Cloud-native software offers enhanced security, robust analytics, seamless collaboration, and faster processing speeds. These are significant improvements to what legacy legal technology currently provides users, allowing legal professionals to spend less time on manual tasks that AI and machine learning can automate easily.
Furthermore, as the scope and scale of ESI continues to explode, and cloud-based ESI increasingly become a part of data in discovery, cloud-based ediscovery platforms are uniquely positioned to collect to cloud sources of data, and then ingest and process them for review.
We expect this momentum to the cloud to be one of the big defining trends for the legal sector in 2023.
Great Resignation Driven by Younger Professionals Seeking Greater Autonomy
The COVID-19 pandemic locked legal professionals out of the office and accelerated a trend that was otherwise nascent in the legal field: working from home. For many, this meant ‘working all the time,’ and scores of legal professionals began experiencing burnout.
Making matters worse was the reliance on older on-premises technology for basic tasks. To accomplish some of these tasks on on-premises platforms, legal workers would have to spend countless hours connecting to VPNs and dealing with slow processing times. Many began to wonder: if we use great technology in every other aspect of our lives, why can’t we use great technology at work?
As such, a process called the ‘Great Resignation’ began. Older employees started to retire in large numbers, while younger workers began handing in resignation letters, trading jobs for opportunities they considered more desirable. Their decision-making was guided by the desire for work/life balance, remote or hybrid work environments, burnout, compensation (with law firms handing out record raises and even profit-sharing to employees in 2020 and 2021), and impact. These are all issues that can largely be addressed by robust legal technology.
In fact, a 2022 ‘Future Ready Lawyer’ survey by Wolters Kluwer found that 70% of corporate lawyers and 58% of law firm lawyers are somewhat likely to leave their current position in the next year, and that 83% of law firm lawyers and 87% of corporate lawyers state that it is extremely or very important to work for a firm that fully leverages technology.
As the new year begins, it is important for law firms and corporate legal departments to invest in early career employees and continue nurturing mid-career and late stage professionals by creating a collaborative work environment where team members are empowered and able to take ownership of their work. One strategy to achieve this is by maximizing the potential of easy-to-use cloud-native solutions that enable collaboration and make life and work easier, and not harder for their employees. Intuitive platforms offer law firms direct access to data and enable any team member–from junior professionals to senior partners–to log onto the platform and find information easily.
Demand For Legal Services Should Withstand Potential Economic Downturn
As supply chain disruptions and international conflict have severely impacted the cost of commodities, food grains, and raw material, global inflation has shot up. Around the world, central banks have hiked interest rates to control inflation, and as a result, companies are adjusting their growth forecasts, and in many cases, laying off employees.
However, in times of crisis, the legal sector often has an inverse relationship with economic realities. Even as the economic downturn began in 2022, the legal sector in the United States added 3,000 jobs, reaching levels of employment not seen since before 2008, when a global financial crisis that was brewing for years took the legal industry down with it. Few of those serious vulnerabilities exist today, but as economic conditions change, lawsuits and litigation become inevitable–from corporate restructuring, mergers and acquisitions, and bankruptcies to class action lawsuits–the demand for legal services is unlikely to drop even if the economic outlook worsens.
In this environment, it becomes increasingly important for law firms and corporate legal departments to use the best technology to support their workflows, uphold top quality standards of client services, and retain and attract talent.
Looking Ahead
2023 is going to be a momentous year for numerous reasons. The legal industry is going to be at the forefront of the action, and while America’s midsize law firms have embraced cloud-based legal technology, their Big Law counterparts are still loyal to on-premises solutions. This is giving boutique law firms critical advantages in staffing, efficiencies, and analytics.
Read Everlaw’s 2022 Ediscovery Innovation Report: from Big Law to Boutique to learn more.
