Peer to Peer Magazine

March 2014

The quarterly publication of the International Legal Technology Association

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WWW.ILTANET.ORG 35 which to focus, as the only investment required is time. With continuous pressure to maximize billable time, finding opportunities to train and develop lawyers on the tools needed to perform their jobs efficiently is a challenge. Historically, significant attention might not have been given to lawyers' abilities to use technology efficiently — if the work took longer, it was just added to the bill. Enter the Over the past several years, we have seen an acceleration in the number of law firm mergers — both in the United States and internationally. 2013 was a record year for mergers, as firms remained focused on growth as a strategy for preserving market share and reducing costs. It would be safe to assume the pace of mergers will continue for some time. A recent Georgetown University Law Center study concluded, though, that there is no direct correlation between law firm size and profitability, and most mergers fail to generate any real savings; staying competitive in the legal market requires more than simply growing headcount. Thus, for mergers to be considered a success, they need to at least serve the purpose of preserving or growing market share. This means ensuring clients' needs are being met. In survey after survey, clients have stated they want predictability with regard to cost. That is forcing firms to find ways to be more efficient in their work and more transparent in their pricing. Meanwhile, alternative fee arrangements (or fixed fee agreements, as they're known in the United Kingdom) have become increasingly popular. As clients seek predictability in costs, fixed fees achieve this in the most effective way. Even for matters not handled via fixed fees, there has been a downward pressure on fees, resulting in a greater need to complete work more efficiently and effectively. Thus, firms need to remain focused on finding ways to reduce internal costs through either process improvement or technology implementations — or both. Results from the most recent PwC Law Firm Survey suggest the majority of firms are facing flat margins and an ever-increasing struggle for differentiation. In such an increasingly competitive landscape, savvy managing partners have started to place stronger emphasis on client service and the overall client experience. Firms have begun to recognize their value as a differentiator to help them win and keep business. NEED FOR TRAINING One of the most challenging aspects of law firm operations is convincing lawyers (and, oftentimes, management committees) of the value, benefit and need for training. However, this is one of the most effective areas on About the Author As the Chief Strategy Officer for Phoenix Business Solutions, Ben Weinberger helps guide the product strategy and direction for a global software and consultancy organization focused specifically on law firm solutions. Ben is a lawyer and technology leader with more than 20 years of experience in the strategic development, transformation and direction of IT and operations. He previously served as the director of IT and facilities for Bond Pearce Solicitors and has held similar roles at two Am Law 200 firms and at the Los Angeles City Attorney's Office. Contact him at ben.weinberger@phoenixbs.com. Pricing pressures, effective utilization of fee earners and cost reduction have all been major challenges, driven by shrinking markets, new entrants and consequent oversupply for legal services. At a global level, U.K. firms have found conditions challenging. For the Top 10, global fees per fee earner increased by a modest 1.2%. During 2013, average global profits per partner fell by almost 11%. Approximately 80% of firms identified their top priority as the need to implement or upgrade IT systems. Firms are looking at new and innovative ways to deliver legal services, with the use of technology being key. Pricing will also be key to future success. Fixed fee pricing structures, standardization of legal services and "downshifting" of work to paralegals or less experienced staff will become increasingly common in the battle for the most cost-effective delivery of legal services. Knowledge management and IT are most frequently seen as "a weakness that needs improvement" (23% and 20%, respectively). Future priorities for business support are to "improve the use of technology" (81% of responses), "standardize business processes and ways of working" (74%) and "cost reduction" (56%). Within functions, some of the key areas being given attention include: finance processes to support commercial management of matters and IT solutions that improve fee earners' abilities to be more responsive to their clients. 5 FACTS FROM THE PWC SURVEY Our annual benchmarking survey on law firms Law firms' survey 2013 Executive summary www.pwc.co.uk/lawfirms view the full survey results at PWC.com

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