How can law firms best prepare for 2023?
This is an especially tough-to-answer question for the legal industry today, considering how many dramatic changes we’ve seen in the last few years. When the coronavirus pandemic hit, demand for legal services skyrocketed, leading law firms to compete for legal talent and driving payroll expenses sky high. Then, this year, demand dipped. Hiring has slowed, with some firms enacting austerity measures and tightening budgets.
Now, we’re heading into a new year amidst the threat of a recession. To start thinking ahead, I asked many law leaders what they’ve got planned. What must law firms do now to succeed in the days to come?
Many of the leaders I’ve talked with say it’s time to rethink firm budgets. More specifically, it’s time to reassess our expenses to spend smarter.
Why? Well, for one, most firms are simply spending too much money at the moment. During the first half of 2022, law firms saw a 14.7% increase in expenses, according to Citi Private Bank’s Law Firm Group. Yet revenues only rose by 5% during this time. This is an unsustainable imbalance that must be corrected for firms to survive.
However, firms don’t have the luxury of slashing budgets across the board if they are to stay competitive in today’s legal landscape. Many have pressing needs for resources — ranging from legal tech to support staff — that must be met to remain productive in an increasingly global and online world.
In fact, many lawyers say they are undersupported by their law firms and lack the full resources they need in order to do their work efficiently. Basically, lawyers today are spending too much of their time today doing work that could and should be done much more inexpensively by administrative and back office support staff.
How can law firms correct this imbalance? By bringing on strong support staff and letting these team members handle all the administrative and back office work, law firms will allow their talent to spend more time on the work that matters — thereby improving efficiency and better managing compensation expenses.
As a senior vice president at iFive, I’ve seen law firms grow exponentially with the support of fully-staffed administrative teams, simply because these teams allow lawyers to focus solely on the legal work. When all the administrative and back office duties are taken care of, firms can put their attention on what really matters to push the business forward.
Skimping on support staff only ends up costing businesses more. Yet too many law firms have been doing just that in recent years. This practice has come about in part as an attempt to cut costs, but has also been created due to the difficulty of finding qualified support staff members in the competitive U.S. labor market. With the availability of offshore staffing today, however, this national shortage can be circumvented. iFive connects American law firms with experienced and trained administrative staff members overseas who speak fluent English. This is one creative solution to solve legal staffing challenges that affect many law firms today.
The last couple years have brought a sea of changes for the legal industry, and 2023 is poised to bring us more. Now is the time to prepare for the future by giving your legal talent the top-notch support it needs to not only survive, but succeed and grow. It’s time to rethink 2023 budgets to ensure smarter spending.