To navigate the complex legal landscape of 2024 and beyond, the resilient law firm must leave no room for mediocrity

October 05, 2023

This year has been a roller coaster ride for the legal industry. Soaring inflation, client uncertainty, and volatility in the global economy continue to drive down demand for legal services. However, looking ahead to 2024, law firm leaders are feeling bullish, as they see more signs of life in the market, especially in litigation and M&A.

This optimism is much needed: With a complex and dynamic landscape faced with increasing AI (artificial intelligence) hype, the ever-present challenges of hybrid working, and ongoing economic uncertainty, law firms can’t afford to be complacent.

In the third roundtable of the exclusive “Resilient Law Firm” series, organized by Sandpiper Partners and sponsored by Williams Lea, top law firm and industry leaders, including our CEO Clare Hart, shared how they are building resilience, agility, and innovation to weather these challenges.

Here are the key takeaways from the event:

Focus on strategy and execute it well

Many law firms are stuck in a cycle of mediocrity, delivering legal services but struggling to differentiate themselves from competitors, and failing to attract and retain top talent and clients. In this era of generative AI, intensifying market competition, and the continuous evolution of the legal workplace, mediocrity is not an option.

“It’s a terrific time to excel and it’s a crummy time to be mediocre,” said one panelist. “There is not as much growth in demand for legal services, so law firms need to identify what it does well and what their strategy is for success and profit. They have to think about what levers they can use to boost their productivity in the market, to grow.”

“No one should be standing back,” another panelist echoed the same sentiment. “This is a time of innovation. This is a time of change. This is a time we should be really thinking about what the right driving strategy should be.”

It’s important to look at things from a short-, medium-, and long-term perspective. For example, a short-term goal would be converting accounts receivable and building targeted collections to ensure a strong finish to the year. Medium- and long-term goals would focus more on diversification of clients and geographies, and ensuring the firm is operating in the right markets and targeting the right client base. One panelist noted that a longer-term strategy was “the investment in our people. The investment in our associates. How do we develop talent? Are they willing to come downtown and fight traffic to engage in a discussion with their peers and their colleagues, and meet new people?”

There is also a growing movement to leverage outsourcing as a smart long-term strategy, since it provides economies of scale and lower overheads. “Law firms are thinking, ‘How do I continue to drive strong profitability for the firm’? That’s where firms like Williams Lea come in,” said CEO Clare Hart. “We focus on quality, above all, but there are also natural cost savings when you move people out of the most expensive cities in the world to our delivery centers in Ohio, West Virginia, Leeds in the UK, and Chennai and Cochin in India.”

A law firm panelist agreed with Clare, saying, “We’ve been a proponent of outsourcing. Our outsourcing partners are able to see in the market what we don’t, because we’re busy running the firm, and that’s very beneficial. They bring a lot to the table what we wouldn’t have seen otherwise. It’s also not just about cost savings, but about efficiency and getting these experts as partners.”

The data conundrum: Artificial intelligence without quality data lacks intelligence

Are law firms paying enough attention to their data?

In a data-obsessed world, almost everything is driven by information, whether raw statistics or processed input, from making decisions to building innovation. However, one of the biggest challenges facing law firms today is the access to and quality of their data.

“There’s this phobia and ignorance of data,” said one panelist. “Many law firms have leadership who don’t understand data or have never noticed it. That has trickled down to the rest of the firm. Most administrative people in law firms have inherited that ignorance of data.”

This becomes a problem when AI is increasingly making its way across the law firm. AI isn’t a magic wand that can suddenly make everything efficient; for it to drive innovation and make improvements, it requires quality data.

One panelist said, “AI is a very powerful tool, but to us, it’s kind of a stacked bar chart, where we’re saying you’ve got to have a foundation of great data and understand the processes. Then this is where the software comes in, and the processes on top of the data that can get us to be a better business.”

A good example to demonstrate this “garbage in, garbage out” concept is an AI-based CRM (customer relationship management) tool. The cleaner the data you put into a CRM system, the more valuable the output you can extract, such as predicting more precise client behavior and preferences, identifying potential sales opportunities, and improving overall client experience. A panelist agreed, “When you have that kind of data in the CRM and you’re doing a healthy analysis of the opportunities flowing to your sales pipeline, you can look into how they’re all meeting your firm’s strategic plan and have confidence that you’re working on the things you said you wanted to do.”

“Data is extremely valuable in terms of understanding how we practice law,” one panelist concluded. “It really lends itself to using the type of advanced analytics to be able to understand the practice and how to manage our time and manage the team. The value of that data is essential.”

To bring people back to the office, magnetize don’t mandate

The legal workplace has evolved dramatically in the last two years, and while most law firm leadership would like to see everyone return to the office every day, it’s clear that hybrid working is here to stay. Most firms have hybrid policies requiring two to three days per week in the office, but even at that level, compliance is still mixed.

One law firm panelist advised focusing on creating a purposeful and magnetic experience for employees when they are in the office: “We want to encourage people to use our collaborative spaces. We use the phrase ‘return on experience’ in our office, because we’ve asked them to be in the office 40% of the time, and we say, when you’re here, it’s got to be purposeful. It’s about professional development, it’s about our culture, it’s about building the future of our firm.”

“We’re also seeing that we don’t need large conference rooms as much anymore, so we’re moving forward with new renovations to upgrade our collaboration spaces,” said another law firm panelist. “We’re taking up less space overall, it’s more dense, but there’s more energy and you’re creative a vibe.”

Building highly amenitized spaces, such as outdoor areas and cafes, is becoming a bigger focus for law firms to bring more vibrancy into their offices, but some firms have taken it a step further. “We’re building a completely tricked-out courtroom. Envision the most tricked-out federal courtrooms in the country; it’s going to be like that. We’re really happy about that, because it will be really helpful to our practice, especially in training and developing associates.”

Another panelist added, “Working remotely sometimes is great, but for both the delivery of client service and the training of our people, being together and working as a team is important.”

The winning formula in hybrid working remains elusive, and it’s not a “one size fits all” arrangement. Law firms need to establish a model that’s mutually beneficial to leadership and staff, one that creates a workplace whose success doesn’t hinge on physical attendance alone, but also, and more importantly, on engagement.

The road ahead is littered with challenges, but there are also some real opportunities that law firms can seize and build on. Learn more about the future of the legal workplace to stay abreast of the factors constantly shaping the industry.