Clients are taking a stand on litigation now and into 2021.
Despite an unpredictable world — clients are charging ahead with definite plans and budgets for the biggest component of their budget. The law firms able to catch this wave and dodge the dips will enjoy unusually higher rewards. Here are the 9 key trends driving the remainder of the 2020 litigation market and 2021:
1.) 9 industries expect to pay higher rates and increase litigation spending
BTI tracks legal spending in 18 industries — half of these are expecting higher rates and plan to boost their budgets. Clients are willing to pay the law firms able to meet their expectations. Their needs and objectives are compelling, and it is worth the premium to ensure law firms meet and exceed these goals.
2.) Only 15% of companies plan to cut spending
This leaves 85% with the same or higher budgets. Top legal decision makers don’t believe they can count on court delays and the pandemic to slow things down. They want to dispose of these matters quickly — they are increasing budgets to make it happen.
3.) 4 of 8 major areas of litigation have bigger budgets this year and next
Fully half of clients expect the biggest areas of litigation will get the bulk of the increased funding. This includes labor and class actions to name a couple.
4.) Employment litigation is surging faster than all other areas
It’s all about the workforce. What clients did when closing, what they are doing now, claims related to WFH and shut down orders, and a whole host of new claims. There is virtually no client without workforce issues at the top of their list.
5.) Complex commercial litigation is up in 9 industries
Every industry has agreements and contracts. But those with complex and/or longer-dated agreements are feeling the surge. We are only at the beginning of the uptick. The law firms who can get in early can position themselves for a steady flow of business.
6.) Settlements will soar in 2021
Clients believe settlements are one of the most effective tools to cut risk and legal spending. They want to settle 57% of the new matters piling up in 2021.
7.) AFAs are becoming an essential budget management tool for clients
The surge in caseload well exceeds the planned litigation budget increases. AFAs — more specifically — fixed fees, or fixed fees by phase, are one of the few proven tools to add certainty to their spending. This explains why 2/3 of clients expect to use AFAs.
8.) Clients see risk growing more than 10% in the next 12 months
The most challenging work is yet to come. The source: the enormous increase in the caseload. Most clients expect to see the highest caseload on record — growing up to 24%. The risk lies in managing all these cases to the right objective, on time and budget, with settlement as the front-running goal.
9.) Top legal decision makers are actively looking for new law firms to help
The pandemic enabled only 1 of the client’s 2 primary law firms to create a new and enormously strong client bond. Clients’ demanding caseloads are driving them to look for a 2nd firm where they can create this bond. As a law firm, you can immediately up your game to try and steal this spot. Swarm your client with new and useful knowledge, bring tools to help manage the caseload, and get client feedback. Everything is different — except the expectation for excellent client service.
The good news for law firms: outside counsel spending on litigation is heading up. But increases in caseload are rising 4 to 6 times faster than spending. This collision course in client objectives, resources, and the external world creates an opportunity for the law firms who can develop business or are skilled in RFPs. You can develop business before the RFP — if not, be ready with a killer response — somebody is going to get the business.
You can get all the details, and countless recommendations on how to make one of the most complex and unexpected markets work for you and your firm, in the just-released BTI Litigation Outlook 2021: The Pandemic-Led Market. See where and how clients are spending their litigation dollars in 2021 — and the firms they think are best. Order today.
Good luck. Be well.
The MAD Clientist