Market chaos is being upstaged by COVID-19. As it should.
This does not mean underlying market changes aren’t taking their toll. We uncovered 6 transformative changes rivaling the pandemic’s impact. These include:
The largest influx of new top legal officers ever
More than 30% of top legal decision makers are new to their position.
Just over half of them joined their current organization during the pandemic — the remainder just before. Few things will change company legal strategies and needs like a new GC. 3 of every 10 larger clients are actively sorting out which law firms they want to keep, add, and eliminate. 50% of smaller clients are making the same assessment — and adding their first-ever GC.
This represents a sea change in client retention risk and opportunity.
Unexpected and enduring changes in spending on outside counsel — for the better for law firms
2021 marks the 2nd time in 20 years outside counsel spending and in-house spending are heading up simultaneously. The last time we saw this was the beginning of a multi-year run in outside counsel spending growth, ending with the clients wondering if the largest firms in the world had enough capacity.
Considering courts are nowhere near fully operational and at least 36% of clients are deferring their matters whenever possible, all signs point to a backlog of increased demand.
Broad and large caseloads redefine client expectations
Client caseloads are becoming so large and diverse they are grouping them by targeted outcome — settle, defend, defer, negotiate, and dispose of quickly or cheaply. This may not be a formal process, but it is the result of decision making.
Clients’ broad goals and expectations increase their sensitivity to law firm listening skills. The winning pitch now demands strategy discussions about matter-specific objectives. Law firms proving they can listen to, discern, and approach the needs at hand are winning the work.
New highs in client service performance
At least 21% more primary law firms earn unprompted client recommendations from clients than in 2019. This research is in process and we expect this number to head higher. Client service dominates the reasons for these coveted recommendations. These law firms stepped up in new ways and delivered during the pandemic. We will be discussing this in detail in today’s annual webinar The BTI Market Outlook and Client Service Review 2021.
Unfortunately, this improved performance makes other law firms serving the same clients look less skilled, making client service performance the most volatile it has ever been — and creating new rules for client service.
Reversion to old school business development techniques
Personal client connections lie at the heart of improved client service and business development during the pandemic. The attorneys talking to clients know way more about their clients than those who email.
The art of client conversations has been slowly dying — and is part art and part skill. The attorneys who know how to talk to clients are enjoying the best relationships. This forgotten skill is valued and worth the investment for every law firm to teach.
The most emboldened law firm strategies are in full implementation
While some firms hold their breath and smile, others are opening offices, adding high-profile laterals, and investing in both client service and business development. The aggressive firms are intimidating some while inspiring others.
The net effect is to create the widest spectrum of client-facing strategies we have seen in 30 years of analyzing legal markets. It becomes clear some law firms are knowingly making big bets while others are making bets by omission. This betting dichotomy sets up a future where the winners and losers will have more distance between them. And it will be harder to follow other law firms’ strategies.
Add the pandemic to the 6 factors above and you have a lot of decisions to make about your firm with short- and long-term implications. Chaos poses as much opportunity as risk — and the stakes have never been higher.
We will be discussing these changes and more today at Noon Eastern Time in The BTI Market Outlook and Client Service Review 2021 webinar. We have just a few spots left. Please register soon if you haven’t already.
Be well. Be safe.
MBR
The Mad Clientist