The 2021 Report on the State of the Legal Market, issued today by the Center on Ethics and the Legal Profession at Georgetown University Law Center and the Thomson Reuters Institute, concludes that “2020 may in retrospect be seen as an important inflection point for the redesign of the delivery of legal services on a broader scale.”
Despite the unprecedented disruptions caused by the COVID-19 pandemic, large law firms, for the most part, were able to adapt. According to the report, “that most firms were able to adjust to these challenges with notable success is a tribute to the innovation and resiliency of law firms and their leaders.” While the pandemic is seen as posing continuing challenges going forward, law firms leaders are generally optimistic in their outlook for 2021, and fairly bullish on their firms’ three-year outlook.
“There are signs we may look back on the COVID-19 crisis as a moment that significantly accelerated many changes that firms had resisted in advancing their delivery of legal services, and introduced new changes as well,” said James W. Jones, a senior fellow at the Center at Georgetown and the report’s lead author.
You can download a full copy of the 2021 Report on the State of the Legal Market here.
Nearly all law firms instituted aggressive cost-cutting measures, including the first widespread lawyer headcount reductions since the 2008-‘09 financial crisis. Firms also cut salaries, reduced partner draws, furloughed staff, and slashed overhead, especially in expenses related to reduced use of office space. According to data from Thomson Reuters Peer Monitor, these moves to support revenues and reduce costs boosted law firm profitability — as measured by profits-per-equity-partner — by double-digit rates.
“As firms turn the page on a challenging year, they may also be rethinking how they have been managing their practices and operations,” said Mike Abbott, vice president of Market Insights and Thought Leadership at Thomson Reuters. “As harsh as the COVID-19 situation has been, it presents an opportunity for firms to seize the new experiences, skills, and technologies they’ve gained during the crisis to create sustained competitive advantages.”
The new report relies on data from Peer Monitor and Acritas, now part of Thomson Reuters. The report reviews the performance of U.S. law firms and breaks down the new market realities that are seen as driving the need for firms to take a longer-range, more strategic view of their market positions.