Fall 2016 issue of Horizons

LAW FIRMS

Law Firms at a Crossroads by Matt Finke, CPA, CGMA

I n the entertainment business, few companies had a market cornered like Blockbuster Video. The home video rental chain that operated, at least in the beginning, primarily as a brick-and-mortar establishment, dominated the living rooms of American households for over a decade. At its peak, the company’s business model was straightforward and profitable. However, as consumers’ tastes changed in favor of more convenient technology and service delivery options, Blockbuster was caught flat- footed and did not change quickly enough in order to keep pace with the permanent changes in consumer demand. Since 2009, the legal sector has experienced a similar journey. The industry has endured many negative changes in the demand for legal services, most of which, experts believe are permanent.

Underlying the many factors and trends that play a vital role in the overall decline of demand is the prevalent client desire to obtain more value in return for their legal spending. Clients are increasingly viewing enhanced value in legal services to be translated into greater efficiencies, more predictability and overall cost effectiveness in their delivery method. While greater efficiency and value represent a major theme in the current challenges facing law firms, another challenge that law firms are facing is the overcapacity of their staff. According to the Altman Weil’s 2016 Law Firms in Transition Survey , many firms have trouble keeping lawyers fully utilized, which translates into diminished productivity.

page 32 | horizons Fall 2016