How Law Firms Can Navigate A Downturn With Flexibility
August 30, 2022
Legal Talent Outsourcing
How Law Firms and Lawyers Can Navigate the Downturn by Embracing More Flexible Working Models
Expenses are up. Profits are down. Demand is decreasing. That’s the conclusion of the latest report of the Thomson Reuters Financial Index, which analyzes a number of quarter-over-quarter metrics that impact profitability at midsize and large law firms. In fact, the index, which was created in 2006, is at its all-time low.
While no one knows for sure how long, or how significant, a downturn may be in the legal industry, many firms are undoubtedly starting to look at cutting expenses after earning record profits last year. And for every firm, the biggest expense is people.
At the same time, talented people are the most important assets firms have—they’re the source of revenue. The war for talent we witnessed last year, and the resulting skyrocketing salaries, were the direct result of firms fighting so hard to hire and retain people.
While demand may be slowing, there’s still lots of work to be done. Firms need great people but may be wary of taking on more fixed expenses during a downturn. So, what’s the solution? For many firms, it lies in creating greater flexibility in staffing and operations so that demand can be met while fixed costs are shifted to variable ones.
In short, the nature of lawyer and paralegal services are becoming more flexible. Work can be done from anywhere. Clients are looking for creative, non-traditional solutions. And this environment creates opportunities for law firms to reinvent aspects of how they work and staff, especially in the midst of what could be a challenging downturn.
Practically speaking, what this means is moving past the idea that the only—or even best—way for law firms to get work done for clients is with fully staffed, fixed-cost teams. Instead, firms can and should, especially amid economic uncertainty, consider assembling flexible teams based on the specific needs of a project, allowing them to reduce fixed financial commitments in the process.
This sort of nimble, flexible approach is sometimes called the “Hollywood model.” In Hollywood productions, a producer assembles a team to work on a project, such as a movie, and the team works together for as long as is necessary to complete the project. The Hollywood model allows organizations to meet demand in real-time, by bringing together different people with complementary skills to tackle complex projects. It also allows them to scale up or down quickly because more of their costs are variable.
For example, by working with Lexitas’ Legal Talent Outsourcing team, a law firm can:
Fortunately, many talented lawyers, who may have previously had reservations about leaving a law firm to forge a more flexible legal career, are actively seeking new opportunities to work where they want, when they want. The embrace of remote work, as well as advances in technology, have helped knock down the geographic limitations that have historically served as barriers between legal talent and legal demand.
One of the challenges of the Great Resignation is that it has been harder than ever for firms to hire and retain lawyers. One of the opportunities is that many of the lawyers who left firms during COVID-19 aren’t necessarily looking to leave the practice of law altogether. They’re looking for opportunities that better suit their current needs and lifestyle, including where and when work is done. Forward-thinking firms will create more flexible opportunities, which can lead to more profitability, and more permanent solutions in the ongoing war for talent in the legal industry.
Contact us to learn more about ways to institute a Hollywood model with your firm.
While no one knows for sure how long, or how significant, a downturn may be in the legal industry, many firms are undoubtedly starting to look at cutting expenses after earning record profits last year. And for every firm, the biggest expense is people.
At the same time, talented people are the most important assets firms have—they’re the source of revenue. The war for talent we witnessed last year, and the resulting skyrocketing salaries, were the direct result of firms fighting so hard to hire and retain people.
While demand may be slowing, there’s still lots of work to be done. Firms need great people but may be wary of taking on more fixed expenses during a downturn. So, what’s the solution? For many firms, it lies in creating greater flexibility in staffing and operations so that demand can be met while fixed costs are shifted to variable ones.
More Flexible Firms Will Attract Flexibility Minded Lawyers
Over the last two decades law firm clients have relentlessly pursued more value from their law firms. One consequence of their more acute focus on value has been the decoupling of what were traditionally institutional relationships between law firms and corporate clients in which clients looked to one provider to address all issues. Clients have shifted from “one-stop shopping” to an approach that more discerningly plugs in the right expert—be it a law firm, an individual lawyer, or an alternative provider—as part of a legal supply chain.In short, the nature of lawyer and paralegal services are becoming more flexible. Work can be done from anywhere. Clients are looking for creative, non-traditional solutions. And this environment creates opportunities for law firms to reinvent aspects of how they work and staff, especially in the midst of what could be a challenging downturn.
Practically speaking, what this means is moving past the idea that the only—or even best—way for law firms to get work done for clients is with fully staffed, fixed-cost teams. Instead, firms can and should, especially amid economic uncertainty, consider assembling flexible teams based on the specific needs of a project, allowing them to reduce fixed financial commitments in the process.
This sort of nimble, flexible approach is sometimes called the “Hollywood model.” In Hollywood productions, a producer assembles a team to work on a project, such as a movie, and the team works together for as long as is necessary to complete the project. The Hollywood model allows organizations to meet demand in real-time, by bringing together different people with complementary skills to tackle complex projects. It also allows them to scale up or down quickly because more of their costs are variable.
For example, by working with Lexitas’ Legal Talent Outsourcing team, a law firm can:
- Bring on a team of lawyers to handle a large document review on a temporary basis
- Gain access to an expert in an area like intellectual property or tax, among other areas of specialization, for a particular project
- Have options to bring in talented, contract attorneys to fill gaps when permanent lawyers go out on leave for extended periods
Fortunately, many talented lawyers, who may have previously had reservations about leaving a law firm to forge a more flexible legal career, are actively seeking new opportunities to work where they want, when they want. The embrace of remote work, as well as advances in technology, have helped knock down the geographic limitations that have historically served as barriers between legal talent and legal demand.
One of the challenges of the Great Resignation is that it has been harder than ever for firms to hire and retain lawyers. One of the opportunities is that many of the lawyers who left firms during COVID-19 aren’t necessarily looking to leave the practice of law altogether. They’re looking for opportunities that better suit their current needs and lifestyle, including where and when work is done. Forward-thinking firms will create more flexible opportunities, which can lead to more profitability, and more permanent solutions in the ongoing war for talent in the legal industry.
Contact us to learn more about ways to institute a Hollywood model with your firm.
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