The way in which businesses operate has changed drastically over the past 20 years. The internet, social media, and other new technologies have made almost every company more accessible and transparent. In addition, these changes have created a more collaborative environment. People are working together to achieve the same goals instead of competing against each other for limited resources. This change has also extended to the legal field, where smaller firms are growing and collaborating with each other in different ways than they did in the past. As a result of these innovations and collaborations, law firms are also evolving very quickly. These changes aren’t just affecting large firms but also mid-sized firms so that now even small law firms are changing how they operate to compete with their larger counterparts while still maintaining their unique identity as smaller law firms. Keep reading to learn more about what is happening with law firms today and where we’re headed in this rapidly changing industry...
What is Happening in the Legal Industry Today?
Small-sized and Mid-sized firms are the majority, though they, like Big Law, face the challenge of surviving the competition caused by the rise of alternative legal service providers (ALSPs) and the growing trend of law firms merging and acquiring one another. According to a 2018 report on the state of the legal industry, the merger and acquisition (M&A) trend has been accelerating in the past few years, with the number of deals between law firms substantially increasing in 2017 compared to 2016. Experts expect this trend to continue, with the expectation that more law firms will merge with each other. These deals are expected to continue to be driven by mergers between larger firms that are seeking to increase their scale with acquisitions of smaller firms.
Law Firms Are Diversifying Their Services and Expertise
The future of law firms isn’t about big law firms versus small law firms. Rather, it’s about how different types of law firms can work together to provide better services for their clients. This is being facilitated by the growth of ALSPs and the increasing collaboration between law firms of all sizes. As a result, law firms are diversifying their services and expertise to provide a wider variety of solutions to their clients. For example, law firms are expanding the types of litigation they handle. They’re also expanding their services to include non-litigation services, such as contract drafting and regulatory compliance. Other services that law firms are expanding into include insurance defense, regulatory compliance, cybersecurity, and intellectual property. In addition to providing a wider range of services, law firms are also collaborating to bring a variety of expertise to each project. This means that law firms are partnering with other firms to provide a better, more comprehensive service.
Big Law Firms Are Combining for Synergy and Scale
When mid-sized firms choose to merge with larger firms, it’s often to achieve synergy and scale. Synergy is when two firms benefit from combining their skills and expertise to provide better services and better cost savings for clients. Scale is the ability of larger firms to have more clients, which means they won’t have to turn away as many potential clients due to lack of capacity. Synergy and scale are also the reasons why big law firms continue to acquire smaller, mid-sized firms. Those acquiring firms often choose to take on the name of the mid-sized firm so that it can retain the culture of the acquired firm while benefiting from the scale of a larger firm.
Conclusion
The evolution of law firms will continue to be driven by the need to provide better, more innovative solutions to clients while also making sure firms are financially sustainable. To achieve this, law firms will need to continue to collaborate with each other, diversify their services, and increase their scale. It’s important to note that the evolution of law firms is a change that is happening at all types of law firms, not just the largest law firms. These changes will affect all law firms so that the future of law firms will be better for everyone.