Over the past 5-10 years the legal industry, especially in the U.S., has seen a 3-5% decrease in revenue on a regular recurring basis. When revenues do pick up, collection rates are still decreasing.*
*Note the chart to the right here: this is the 2013 Report on the State of the Legal Market from Georgetown Law.
Despite the fact that this ACTUAL risk is regularly occurring, rather than proactively investing in mitigation strategies the way we do for Business Continuity Plans and Disaster Recovery, law firms largely seem to take a reactive approach such as investing more in business development or after-the-fact project management training. We can chalk this up to Risk Bias:
Work that we used to charge hourly for — is increasingly becoming automated, and more difficult to bill at standard rates.
- Clients are either pushing back, bringing work in house, or simply going to a lower-cost provider.
- Legal outsourcing companies have popped up all over the United States, China, and India to name a few.
- Decision Support, Workflow, and Document Automation technologies are decreasing the cost of services without sacrificing quality – and in some cases improving quality through the regular application of standards.
So how do you prepare an economic risk mitigation plan in the face of these challenges?
To boil it down to the main components:
- Understand your options for entering new markets — either different industries, different types of work, or how to provide existing services at different price points
- Evaluate the process and technology options your firm would require to enter that market
- Put a “failover” plan in place — so that the technology and key stakeholders are prepared in the event that your firm needs to esecute on this contingency plan.
Examples of Economic Risk Mitigation initiatives can include Automated Document Review & Assembly Tools, Intelligent E-Discovery, Workflow Standardization Tools, and more!