The annual report examines the performance of U.S. law firms and breaks down the factors that explain the need for companies to take a longer-term, more strategic view of their market positions. General Counsel and their management teams are at the forefront of transforming the legal industry. Management is increasing the pressure on them not only to cut expenses, but also to act as business units and move from cost centers to value creators while proactively serving as business advocates. In practice, the first step to increasing the profitability of law firms is to use the financial model developed with the client as a budget for legal work. Instead of having carte blanche in a particular matter, employees should have a budget and learn to work within that budget to achieve the necessary result. This is how all other companies on the planet work. This could be uncomfortable for employees at first, as they might naturally worry that it could result in long unpaid hours in the office. The flip side of the coin, however, is that if employees see themselves as a permanent accumulation of customers, they will be more inclined to take a long-term perspective. Equally important, they are able to communicate both internally and with the client when the actual requirements of a project deviate from the agreed scope.
The associated bonuses should be based more on completion rates than on pure hours. This is a better measure of alignment with the company`s customers. In the past, the company focused primarily on revenues, earnings, stock prices, and other economic indicators. Now it has additional measures of success – Enterprise, Society and Governance (ESG), Diversity, Equity and Inclusion (DCI) – under a growing list of holistic and humanistic values. A report by the McKinsey Global Institute found that 87% of respondents believe that companies should create value for multiple interests, not just make profits. This data point has implications for business goals, culture, talent management, marketing, strategic partnerships, and governance, to name just a few examples. Again, is that total? No. It`s colorful. The changes are also asynchronous, meaning they are not in line with other aspects of the internal world. For example, someone might say, “If the billable time is still accepted by internal teams, then nothing has really changed. They are still totally stuck.
But then, how do you explain that part of the internal world is tackling something pretty quickly, and that makes a difference? Indeed, not all changes are interconnected. We tend to think in absolute numbers (for example, “the market always changes gradually”), but the reality is not. For example, we own a mobile phone with the most modern means of communication of all time, but maybe we send Christmas cards in the mail. Different parts of the system move at different speeds. While the growing legal demand has been a boon for the fate of law firms, it has also created a growing appetite for legal talent that has already begun to clash with the changing work preferences of lawyers. In response to this new competition for talent, many companies have increased their compensation. In fact, employee compensation alone has increased in the double-digit range, pushing up total costs for many law firms. Most law firms have more than enough experience to provide high-quality legal work. While I would not say that legal services have become a commodity, they are certainly moving in that direction.
What customers really notice is service levels. How long did it take me to receive a reminder? Has the company met its deadlines? Have the lawyers taken any extra steps to make the transaction easier or, God forbid, more enjoyable? If employees are more concerned about the company`s customers and understand the company`s strategy, then everyone wins. What makes this period of fundamental importance for law firms is the fact that the double-dip recession is just one of the many dynamics that are reshaping the legal market: the transformation of the legal industry is reasonably predictable, if not inevitable. The role of the profession in a reconfigured legal function tailored to the client/company is much less secure. Their willingness to change and expand their legal expertise will determine their relevance. Therefore, the legal change in the market is not always gradual and a rapid and perceptible change is indeed there, it is simply not uniform or everything happens at the same time. For change agents reading this: Focus on your passion and keep pushing, because the market can and will change, very rarely all at once. Many workers are thinking about how to balance their need for work with their desire to enjoy the world around them.
For them, life is about earning a living, but also about being part of the wider community. The same applies to the legal profession. With employment growth of more than 180,000 in the U.S. each month, many people, including those in the legal profession, find it possible to choose the job they like the most. They also find it a good idea to think about a part-time job in the legal field. Part-time work allows people to earn the money they need to pay their bills while paying off all the debts of law schools. This also allows the company to have additional staff available throughout the year. 16. The legal department must align with the business world – speak its language, work at its speed, make data-driven recommendations, contribute to and take advantage of the corporate data lake, seek holistic diversity, create important measures to achieve business goals and exceed customer expectations, increase the importance of empathy, educate its workforce and ethical entrepreneurship.
assume social and planetary responsibility.