It was easier to be a lawyer a decade ago – the demand for legal services always seemed to be growing, along with the revenue and profit that came with it. With the Great Recession, everything changed. The flow of clients slowed while competition increased, leaving profit margin and productivity to suffer.

If the latest Report on the State of the Legal Market from Georgetown University Law Center and Thomson Reuters Legal Executive Institute is any indication, the trend continues. Consider their findings from 2017:

• Only intellectual property, tax and corporate work saw modest gains in business, but demand has waned in all other practices – including general litigation, which makes up for 30% of all practice activity.
• The number of attorneys at U.S. law firms increased by 1.3% in 2017, but there’s less work. On average, lawyers are working 156 fewer hours than in 2007.
• Profits remain stagnant, except for a few of the AmLaw 100, but even most of them experienced modest financial returns.

Even so, the competition is poised to further disrupt the marketplace. You may have heard that AVVO, the first company to take the legal marketplace online, has just been purchased by Internet Brands. A news release noted that AVVO attracts more than 100 million visitors annually, and that Internet Brands has seen “strong growth over the past decade.”

So it appears there is, indeed, a strong demand for legal services – just not from traditional law firms.

This points to one of the reasons that many law firms may be stagnating: They still operate like it’s 2007. They cling to the traditional law firm model, do things the way they’ve always done before and, of course, get the same results. This is more than just a hypothesis when you consider the findings of the Thomson Reuters 2017 State of U.S. Small Law Firms Report which reveals that while:

• 75% are finding it challenging to acquire new business, 71% aren’t doing anything about it.
• 70% say they spend too much time on administrative tasks, 81% aren’t doing anything about it.
• 61% want more control over costs and expenses, 74% aren’t doing anything about it.
• 59% say clients are demanding more for less, and 80% aren’t doing anything about it.  

Only the firms that break from tradition and adapt to a new way of thinking will survive the tenuous landscape. And, as noted above, that’s currently just a small fraction. The strategies often used in past to overcome market declines such as expense cuts and rate increases, are less likely to be as effective going forward.

Embracing change will allow firms to more effectively compete and be better positioned to take hold of the marketplace that typically seeks alternative legal services. This is underscored by the Thomson Reuters Legal Executive Institute, which says the future could be brighter for firms that proactively provide clients the value they’re looking for.

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Amy Larson is a Director in Small Law Firm Customer Marketing and Firm Central at Thomson Reuters. She has over 17 years of experience in technology marketing with extensive focus on learning how technology can meet the needs of attorneys. Amy has been involved in numerous product launches throughout her tenure, public relations efforts, interviewing customers and telling their stories, and often writes and distributes information on legal practice management.