Small and solo
What will the legal industry look like after the 2020 pandemic?
When the pandemic hit, it was unclear how law firms would weather the storm. In the end, the legal industry came together to find a way forward. Virtual hearings became a necessary response to deal with the COVID-19 situation. Courts have sworn in juries over video conferences. Law students have graduated remotely. And lawyers now meet their clients over Skype or on Zoom, after asking them to sign a retainer agreement electronically.
If you had asked me in January 2020 if I thought any of this would ever happen during my career, I would have laughed at you.
It's great to see the legal profession come such a long way, but this is no time for the profession to rest on its laurels. There's more to be done. Indeed, the pandemic has changed expectations, particularly from clients. They are getting used to receiving legal services virtually, which is why according to the 2020 Clio Legal Trends Report, released in October, most attorneys are planning to continue using technology post-pandemic.
According to the report, over nine out of ten lawyers plan to store firm data in the cloud, support electronic documents and e-signatures and accept electronic payments and use practice management software. Eighty-three per cent are meeting clients through online platforms.
These are encouraging signs, but the truth is lawyers still struggle mightily with technology — something that struck me during the Clio Conference in October. Attending the event online were some 4,500 lawyers, and the virtual conference sections were full of comments by lawyers that they couldn't get the video or sound to work. Others, betraying their superficial knowledge of online tools, asked if it was possible just to put the videos on YouTube instead. Of course, none of these lawyers thought that the fault was with themselves and proceeded to blame the conference.
Those same lawyers are likely to be in for a rude awakening as we emerge from a crisis that has only accelerated the shift to technology supporting legal services.
The market will favour lawyers who embrace technology over those who don't. According to the 2020 Clio Legal Trends Report, law firms that were already using online payments, client portals and client intake before the pandemic were better at generating new business and collecting revenue. Firms in the U.S. using electronic payments collected over $15,000 more per lawyer.
Speaking of payments, there also appears to be an opportunity for law firms that offer their clients payment plans.
In the last ten years, hourly rates for lawyers have increased only modestly. Ten years ago, the average hourly rate of a lawyer was $200. Now it is around $275. The only way to increase revenue is to increase the number of hours billed (and collected.) But rates are still high enough to discourage many potential consumers from hiring a lawyer, particularly when there is so little cost transparency and budget certainty up front.
One of the most interesting findings that stood out in the Clio Report was that 72% of people with a legal issue stated their preference for a payment plan, while only 53% of law firms offer them. When I was a law firm manager, our lawyers frequently asked if we could work out a payment plan for clients. Why some firms resist this form of payment is perplexing. As the Clio report points out, flexible payments are a way to "unlock the massive market potential" of helping potential consumers of legal services to solve their legal problems.
Instead of thinking about increasing the number of hours they work, lawyers need to figure out how to serve clients better using technology. If they can do that, they will get better reviews, and then you will get more clients. More clients equal more hours.
Admittedly, there are risks in embracing payment plans. If a firm bills $3000 in legal services to be paid in monthly instalments of $500, it will take half a year to collect it. The client might disappear or their credit card might get declined. And nobody wants to chase down clients or sue them in small claims court. What if the client leaves the country?
Even so, the times are changing and lawyers will have to get accustomed to taking more risks. Those that can quickly adapt to the new market will flourish, and those who cannot will fail.