Ride the Lightning

Law Firm New Matters Rise a Bit, But Revenues Are Down

June 18, 2020

Since I am yet again citing a post from Bob Ambrogi, I am glad Jim Calloway and I had him as a guest on our Legal Talk Network Digital Edge podcast to thank him for his many years of podcasting and blogging. Bob's June 17 post contained both good and bad news based on new data from Clio showing signs that the legal market is recovering, with a spike of new matters through the first week of June from -26% to -14% compared to baseline.

OK, it's still a negative compared to the baseline, but Clio's Jack Newton sees it as a sign of recovery.

However, firms are still feeling the effect of the earlier falloff of new matters, which led to a drop in billing. The average law firm billed 14% less in April and 27% less in May compared to the prior year, Clio found. That is certainly not a good trend.

Having new matters rise is good and should result in more billing, but the high unemployment rates have resulted in 71% of lawyers worried about their clients' ability to pay their legal fees according to the survey. A quarter of firms report having to forfeit more revenue compared to before the pandemic because their clients aren't able to pay them.

Clio's survey of consumers during May found that a quarter of them anticipate having to deal with a legal issue in the near future, with the majority of respondents describing their anticipated issue as coronavirus related. Nonetheless, most consumers say they would put off addressing their legal issues until things have returned more to normal. Whenever that happens.

Among other findings included in Clio's report:

Business-related practice areas have been less affected than others. The areas that have seen the sharpest decline in new matters are traffic, criminal, and personal injury.

Fewer legal professionals working from home say it is having a negative impact on their practices. However, more firms report adapting their client acquisition strategies during May as opposed to April.

Layoffs at law firms are increasing. Clio reports that the number of staff layoffs at law firms increased in April and May. Of two surveys conducted in May, roughly a quarter of firms said they had laid off staff and roughly 30% said they anticipate doing so.

Approximately a third of clients continue to believe that lawyers have stopped offering their services as a result of the pandemic, though the survey found that only 2% of firms actually had.

It is highly likely that firms will need to lower their fees in the future. 15% of consumers have lost their primary source of income and 25% have had a significant decline in income.

On a brighter note, many firms are embracing technology which makes them more productive at home, particularly document sharing tech, e-signature software and videoconferencing platforms.

That sudden shift in thinking has advanced the practice of law significantly – and may be the salvation of many law firms.

Sharon D. Nelson, Esq., President, Sensei Enterprises, Inc.
3975 University Drive, Suite 225|Fairfax, VA 22030
Email: Phone: 703-359-0700
Digital Forensics/Cybersecurity/Information Technology
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