• • • Understanding is critical 鈥� Law firms must seek to deeply understand their clients鈥� businesses and proactively use data and AI to build trust and deliver value.

    • Transparent communication is needed 鈥� Conversations with clients around pricing, value, and staffing 鈥� supported by clear metrics 鈥� strengthens client relationships and helps firms demonstrate their worth.

    • Pull a lot of levers 鈥� Proactive business development, creative billing models, and leveraging advanced technology are critical for law firms to differentiate themselves and meet evolving client expectations.

WASHINGTON, DC 鈥� Today, law firms are facing unprecedented pressure to deliver more value, build deeper relationships with clients, and differentiate themselves in a crowded market. The recent 成人VR视频 Institute鈥檚 24th Annual Law Firm COO & CFO Forum brought these developments into sharp focus, highlighting how client management is now seeping into every aspect of law firm operations.

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The 24^th Annual Law Firm COO & CFO Forum Executive Summary

The message from industry leaders at this event was clear: Law firms must prioritize deep client understanding, proactive business development, and transparent use of data and AI to build trust and deliver 鈥� and demonstrate 鈥� value in client relationships.

The not-so-new imperative: Deep client understanding

As many speakers underscored at the Forum event, the foundation of any successful client relationship is understanding 鈥� not just of the client鈥檚 current needs, but of their business, market, and future ambitions. While not new, this sentiment is now echoed more strongly by many clients who expect their law firms to act as true partners, invested in their growth and success.

For clients, that even seeps down into the minutiae of running a firm, said one corporate counsel. 鈥淲hat clients really look for is outside law firms that have a track record of good work, meet deadlines, and don鈥檛 overstaff 鈥� of course, those are just table stakes now,鈥� the counsel said. 鈥淏eyond that, clients are increasingly looking at how law firms train and retain their lawyers 鈥� because it鈥檚 a trust issue, and we don鈥檛 want any surprises around who is working with us.鈥�

Increasingly, clients seem to be using their legal spend to speak to those priorities, our research shows. The portion of total legal spending going to outside counsel increased this year to more than two-thirds (67%) of the total. And almost one-quarter (24%) of clients鈥� outside counsel spend goes to the law firm they use most, with 15% of clients saying they plan to use their most-used firm more this year, compared to last year.

To meet these deepening expectations around collaboration and value, law firms are increasingly leveraging advanced, AI-driven technologies that enable them to gain deeper insights into their clients鈥� industries, anticipate challenges, and proactively offer solutions. Indeed, these pathways to partnership, it seems, run directly through AI, several panelists suggested. 鈥淚t鈥檚 not just about being reactive to client needs but about anticipating those needs and demonstrating value at every turn,鈥� said one speaker.

However, law firms 鈥� for the sake of their own economics 鈥� need to train their partners to hold sometimes difficult conversations with clients around pricing and be able to explain the value the firm is offering. 鈥淲e need to show what鈥檚 working and what鈥檚 not working in a client relationship,鈥� said one law firm leader. 鈥淣ot just once a year when we set rates, but in conversations all year long.鈥�

Building trust through transparency & metrics

While trust is the cornerstone of any client relationship, it鈥檚 built on transparency. Clients want to know not only what their law firms are doing, but also why, and how value is being delivered, several panelists explained, adding that this means having open conversations with clients around pricing, value, and staffing that are supported by clear, objective metrics.

At the Forum, several law firm leaders emphasized the importance of ongoing, transparent dialogue with clients that backed by data, which helps eliminate any surprises and ensures that both sides are aligned on expectations and outcomes.

鈥淚 mean, clients are why we鈥檙e in business, and client expectations should be a priority for every firm,鈥� said one panelist. 鈥淚t鈥檚 shocking how frequently we ask ourselves, How will this affect the client? 鈥� we ask it a lot, because everything naturally does.鈥�

鈥淟aw firms will need to get better on their own metrics so they can see 鈥� and explain 鈥� what is happening.鈥�

Not surprisingly, many firms are beginning to leverage advanced technology to build out these critical metrics to demonstrate value to clients 鈥� yet, it鈥檚 not a panacea. Lawyers will still need to review and validate AI-generated work, and the anticipated cost savings may not always materialize as quickly as clients hope. This makes ongoing communication and expectation management all the more important.

Clients and law firms must move forward together, several panelists suggested, adding that firms regularly need to ask their clients, 鈥淲hat do you want to do? What problems do you want to solve and what opportunities do you want to seize?鈥� This collaborative approach ensures that the firm鈥檚 efforts are always aligned with the client鈥檚 goals.

Proactive business development and creative billing

As many speakers at the Forum contended, gone are the days when law firms could rely solely on traditional billing models and reactive business development. Today鈥檚 clients expect more flexibility, creativity, and initiative from their outside counsel.

To that end, firms are getting better at using data to help sharpen their pricing prowess, offering more alternative billing structures, flat-fee arrangements, subscription models, and even tech surcharges. 鈥淵ou have to get creative, and you have to have options,鈥� one speaker explained. 鈥淟aw firms will need to get better on their own metrics so they can see 鈥� and explain 鈥� what is happening.鈥�

As evidenced by this, many law firms are taking multiple approaches to addressing pricing issues and questions of value with clients. For example, one firm leader said his firm looked at its own billing and revenue data and the client feedback it had gathered and saw with which clients the firm was most successful and where growth opportunities could be identified. 鈥淭his is extremely helpful information to guide your lawyers as they prioritize their actions,鈥� he said. 鈥淚t helps you determine where you want to go as a firm.鈥�

Another firm鈥檚 goal was to find more green space 鈥� those law firm service offerings that clients weren鈥檛 using but could, adding that the firm had much more success finding added value for current clients than locating new ones. Yet another firm did tariff modeling by using data analysis to determine how their manufacturing clients could save money by changing locales. The firm provided the tool, trained clients鈥� in-house lawyers on the tool, gave the data results to clients, and then worked with them on solutions.

Another argued for tech surcharges 鈥� fees charged to the clients to help offset the high costs of law firms鈥� tech investments. While admittedly controversial, the speaker explained that clients may not balk at reasonable charges because they want their law firms to succeed too 鈥� an idea that didn鈥檛 draw immediate objection, even from the corporate counsel in attendance. 鈥淎nd I think if one big law firm does it, the industry will follow along,鈥� he added.

Putting clients at the center

As many of the panels at the Forum underscored, clients are the reason law firms exist, and their expectations should be the driving force behind every decision. By prioritizing deep client understanding, embracing transparent communication, and proactively seeking new ways to deliver value, law firms can build stronger, more enduring partnerships 鈥� while setting themselves apart in a challenging market.

And, several speakers noted, this is going to be increasingly important going forward. 鈥淚f the legal market is going to get rocky,鈥� one panelist said, 鈥渋t鈥檚 going to be tech investment and client management that will become critical differentiators for many law firms.鈥�

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a full copy of the 成人VR视频 Institute’s “The 24^th Annual Law Firm COO & CFO Forum Executive Summary” by filling out the form below:

3 key takeaways

• • • Law firms are adopting AI to stay competitive 鈥� While AI adoption remains robust, law firms鈥� biggest challenges are around data, metrics, pricing, and client management.

    • AI investment may be driven by fear 鈥� Law firms fear being outpaced by clients鈥� in-house legal teams, which are often ahead in AI adoption, and this is prompting law firms to invest more in AI tools and solutions.

    • Many priorities are vying for attention 鈥� Key priorities for successful AI integration include training lawyers to use new technology, creating pricing teams to set profitable rates, and focusing on metrics that demonstrate clear value.

WASHINGTON, DC 鈥� One of the most impactful issues in the legal industry today 鈥� to hear many of the law firm leaders attending the 成人VR视频 Institute鈥檚 24th Annual Law Firm COO & CFO Forum tell it 鈥� isn鈥檛 AI. Rather, it鈥檚 locating and cleansing proprietary data so the firm can properly use AI, identifying what the firm can do with AI, developing the AI metrics to measure performance, and then determining how to price AI-driven legal work in a way that shows clients real value.

Those, to hear attendees, panelists, and speakers tell it, are the real issues.

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The 24^th Annual Law Firm COO & CFO Forum Executive Summary

鈥淎I isn鈥檛 the hard part,鈥� one panelist said. 鈥淟aw firms just have to understand what they鈥檝e done in the past, then see what needs to change in order to give clients what they say they want.鈥�

Sounds easy, right?

Others at the annual event weren鈥檛 so sure. 鈥淢y greatest fear is that somewhere there鈥檚 a lawyer right now typing into ChatGPT: 鈥�Please show me how to price you for clients鈥� 鈥� and that鈥檚 concerning because lawyers need to be looking to firm leadership for how to price legal work differently in this environment.鈥�

Still in the early years of AI

Fears aside, the debate at the annual Forum around whether AI 鈥� and more specifically generative AI (GenAI) and agentic AI 鈥� will have an impact on law firm operations is pretty much over, and most lawyers know that. Now, the debate has morphed into questions about the level of impact, how to use AI to stay ahead of the competition (and that includes clients鈥� in-house legal teams), and how law firms are going to remain profitable as charging by the hour continues to move slowly off the table.

In one of the many Forum panels that discussed AI and its impact on law firm operations, several panelists suggested that some law firms may have been scared into using AI before they were ready and before they actually knew what problems they wanted AI to solve. 鈥淲e are in the early times of this technology, even though it seems to be moving very fast,鈥� one panelist said. 鈥淓veryone is just trying to figure out what AI can do for them.鈥�

And while process automation seems like a no-brainer, it鈥檚 important to give thought to that also. Ryan Alshak, CEO of Laurel, an automation specialist company, explained that law firms need to automate those tasks that will allow lawyers to be more effective. “AI should automate the laundry and the dishes, not the science and the arts,鈥� Alshak said. 鈥淔or lawyers that means automating the business of law, not the practice of law.鈥�

Indeed, several panelists said they remembered that it wasn鈥檛 that long ago that more than a few clients didn鈥檛 want their outside legal providers using AI. Now, in many cases, corporate legal teams are already running ahead of law firms in AI use 鈥� a fact that is not going unnoticed by law firm leaders. Indeed, one law firm executive related how the firm developed a use case for AI around proactively analyzing markets and their clients鈥� positions in them after one lawyer came back from a meeting with a client in which the clients鈥� in-house legal team had already used AI to better understand its own market position. 鈥淭he lawyer was worried,鈥� the executive said. 鈥淗e knew if things didn’t change, the firm was going to lose the work.鈥�

Questions begetting questions

In fact, several panelists said it was this fear of being eclipsed by their own clients that is pushing more law firms to expand their investment in AI-driven tools and solutions. Of course, as they said, that is the easy part.

As many panels at the Forum discussed, the decision to even dip a toe into the AI pool leads to a plethora of ensuing questions, from best ways of training lawyers to use the new tools to figuring out exactly what problems you want AI to help you solve. Then, there are also the inevitable questions of how to price legal work that takes your team much less time to do, how to measure your performance in a demonstrable way, and how to manage heightened and often-changing client expectations around speed, execution, and value.

鈥淓very client wants to talk about AI, but only in the sense of how their outside law firms are going to use it to the client鈥檚 benefit,鈥� noted another panelist.

Not surprisingly, there often seemed to be as many different tech-driven priorities as there were attendees at the event. One firm executive contended that AI-guided metrics were the key 鈥� that a firm鈥檚 ability to deliver on measurements that can demonstrate clear value was critical to future success. Another said it was pricing, because that was the area that GenAI was primarily going to up-end. To address that, he explained, more firms will need to create pricing teams that leverage AI and data to determine how to set rates and create profitable business models for firms. Yet another said training lawyers to properly use this new technology was the factor upon which all else depended.

Overall, it became clear that the final brew was a heady mix of all of it 鈥� and much of it depended on a firm鈥檚 lawyers themselves. 鈥淭here鈥檚 a technological aspect to all of this, certainly,鈥� one law firm leader noted. 鈥淏ut there鈥檚 also a human psychology aspect as well.鈥�

In short, legal professionals have to be ready for the change that鈥檚 coming. However, that also means understanding that for law firms to move successfully into the future, they will need a business model that works both for their clients and for them.

“Law firms aren’t asking themselves,聽鈥�What’s in it for us? What’s best for the firm?鈥�鈥� noted Laurel鈥檚 Alshak. And that may be where the next big questions lie for the legal industry.

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Key takeaways:

• • • The legal market is experiencing uneven growth 鈥� While some law firms are emerging as performance leaders due to their effective use of technology and client management, others risk falling behind.

    • Law firms are increasingly investing in AI technology鈥� They鈥檙e doing this in order to stay competitive, meet client expectations, and address concerns about being left behind as clients themselves adopt advanced tools.

    • Clients now expect law firms to use AI 鈥� Clients want this not just for efficiency鈥檚 sake, but so that firms better understand their clients鈥� businesses and provide more valuable, tailored guidance and solutions.

WASHINGTON, DC 鈥� As the opening session of the 成人VR视频 Institute鈥檚 24th Annual Law Firm COO & CFO Forum began, presenters painted a somewhat rosy picture for the state of the legal market. After all, legal demand is climbing as are billing rates, which is a net positive overall, explained Jen Dezso, Director of Client Relations at 成人VR视频.

鈥淚t鈥檚 a pretty good time to be a law firm,鈥� Dezso said. 鈥淢ore so than we thought it would be at the beginning of the year.鈥�

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The 24^th Annual Law Firm COO & CFO Forum Executive Summary

Despite the good times, however, there are darker clouds behind the silver linings. For example, all this growth isn鈥檛 being distributed evenly, and this bifurcation seems to be driving some firms into a group of performance leaders and others into a group of laggards. 鈥淧reviously, the rising tide lifted all boats,鈥� Dezso said. 鈥淭his time, we鈥檙e not seeing that.鈥�

Other metrics, such as realization and expenses, are moving 鈥� albeit slowly and tentatively 鈥� in the wrong direction. This hasn鈥檛 really been seen since 2008-鈥�09, which were not great years for law firms, she noted, adding that this may add a wrinkle of worry to forecasts for the current fourth quarter and for next year.

Still, there are a lot of positives, Dezso said, especially around law firms鈥� opportunities for growth and the largely optimistic view of many large corporate clients. Indeed, recent research shows that about one-third of corporate clients 鈥� including 41% of those with annual revenues of $1 billion or more 鈥� plan to increase their legal spend over the next year.

As the big questions shift

The annual COO & CFO Forum attracts not only its namesake executives and corporate clients but an alphabet soup of C-Suite roles that range from Innovation and Legal Operations Officers to Chiefs of Strategy and Growth.

鈥淚t鈥檚 a pretty good time to be a law firm. More so than we thought it would be at the beginning of the year.鈥�

Many of the legal professionals gathered for this event in the past may have been seeking answers to the age-old questions that puzzle lawyers every time they gather: What do clients want and how can I best deliver it to them? Now, however, those questions have evolved, quickly morphing during this time of AI-driven innovation. Today, the question is: How can I best use advanced technology to not only give my clients what they may not know they need, but also to demonstrate the value of what I am offering?

Not surprisingly, top of mind for many speakers and attendees were the twin and intertwined concerns of technology investment and client management. Indeed, if the legal market is going to become rocky over the next year, these questions around tech investment and implementation will become more critical than they even are now.

The AI question鈥� and answer

During a panel on formulating business strategy during turbulent times, one panelist said that it wasn鈥檛 that long ago that some corporate clients said they didn鈥檛 want their outside law firms using AI, whether out of fears over data security or potentially damaging hallucinations. Now, however, it鈥檚 not whether an outside firm will use it, but how and to what impact on service and price. 鈥淢ost clients want their outside firms to use AI because their corporate teams are already using it,鈥� the panelist noted.

In fact, several panelists said it was this pressure 鈥� fears of being left behind by their own clients 鈥� that is pushing more law firms to expand their investment in AI-driven tools and solutions. Of course, that is only part of the battle. 鈥淎I is already here,鈥� another panelist explained. 鈥淏ut the next part of this equation is how law firms are going to invest in training our lawyers to use this technology to clients鈥� advantage.鈥�

How to train lawyers to leverage the most of a firm鈥檚 investment AI is a key question that hinges not only on aspects of lawyer training, hiring, and retention, but also on aspects of AI implementation and client management.

鈥淲e don鈥檛 have the advantage any more of walking the dog slowly on this,鈥� said another law firm panelist, adding that firms need an implementation strategy to get ahead of the game in areas such as pricing, because clients are already thinking about that. 鈥淭hey want their law firms to use it, for example, to look at trends in business data and create specific solutions for clients while keeping their data secure.鈥�

A little understanding… okay, a lot

In fact, that鈥檚 what ties law firms鈥� use of AI so closely to issues of client management: Clients, more than anything, want their outside law firms to more closely understand them, their business, their market, and their internal operations. Only in this way, clients say, can their outside lawyers offer the best service and provide the best guidance 鈥� and if AI gets them there faster, so much the better.

鈥淲e want to see that our outside counsel does not just understand where we, as a business, are now, but rather that they understand where we want to go,鈥� said one corporate client, noting that these relationships should develop into true partnerships. 鈥淚f you help us grow, we can help you grow.鈥�

Again, many corporate clients and their outside firms now see that the pathway to becoming true partners runs directly through AI. It is this advanced technology that can best and most rapidly allow firms to deepen their understanding of clients鈥� businesses and needs while providing the metrics that can help firms demonstrate the value they are bringing to clients.

As these two factors 鈥� AI investment and client management 鈥� continue to swirl around together, each influencing and impacting the other, it鈥檚 the firms that can best use the implementation of AI-driven technology to understand their clients and articulate the value of the services they can offer that will end up in the performance-leader group, rather than in with the laggards.

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While admitting there were many unanswered practical questions about implementing emerging technologies and how the market would shift as a result, the discussion focused mostly on what seemed inevitable: Within the next 10 years, law firms are going to be a different beast. And for firms to make it through to the other side, they were going to have to start adapting sooner rather than later. Indeed, the panel asserted, AI is no longer a shiny new toy but rather the inevitable train rolling down the tracks.

Redefining legal roles and education

The panel began with an observation that while firms seem to be getting bigger, the largest ones are cutting back, especially on hiring summer associates. This trend was largely attributed to the transformative potential of GenAI, which could make the law firm of 2034 feel drastically different from today’s firms in structure, size, and operations. It was suggested that instead of large law firms, we might see the rise of smaller, more profitable ones.

As AI systems become more adept at performing tasks previously done by junior associates, there also was growing concern expressed by the panel about the future employment prospects for new law school graduates, as fewer associates are hired in the largest firms. However, rather than predicting a desolation of the talent base, the panel鈥檚 consensus was that this would in fact lead to more solo practitioners and smaller law firms, which, in turn could generate even more demand for legal services and greatly diversifying the legal landscape.

The panelists unanimously agreed that GenAI鈥檚 impact on traditional roles would necessitate changes in how the next generation of lawyers is trained. Indeed, AI was going to transform lawyers in two ways, one panelist explained: First, it was going to automate grunt work, the goal of legal technology for the last 20 years; and second, it would also shift how lawyers generate new ideas and plan legal action by acting as a sparring partner to promote creativity. Want to test a legal argument? Have the AI produce ideas that the lawyer can use to accept, reject, or refine their own ideas. Enabling AI to spar at the highest level and help lawyers produce the best ideas in this way, however, would be another new skill to learn 鈥� one that currently has little educational foundation.

Enabling AI to spar at the highest level and help lawyers produce the best ideas in this way would be another new skill to learn 鈥� one that currently has little educational foundation.

With traditional first-year tasks and summer programs potentially becoming obsolete, law schools must adapt to ensure that new graduates have the necessary skills to thrive in an AI-augmented environment. Yet such a shift in the educational foundation of young attorneys didn鈥檛 seem to be on the imminent horizon, in great contrast to the need for those very skills. Without traditional training pathways, new lawyers would then require hands-on experience with advanced legal technologies and AI tools, a new wave of mentorship, and even greater attention and nurturing from the law firm that hires them. In other words, firms were going to have to step up to buy the universities time to rebuild legal education in a way that had never been done before.

Evaluating lawyer performance in the age of AI

The rise of GenAI also calls for a rethinking of how lawyer performance is evaluated, the panel suggested, explaining that current metrics, such as billable hours, may become less relevant as AI takes on a greater share of the workload. Indeed, if firms continued to rank lawyers by the standard metrics of the industry as they exist today 鈥� hours billed, revenue generated 鈥� a terrifying disconnect could lead to firms incentivizing the wrong behavior, making their lawyers less efficient and skilled.

Part of the solution suggested was for law firms to embed an AI focus into their core competency reviews that would ensure that lawyers are proficient in both traditional legal skills and AI-enhanced practices, actively adjusting the compensation equation to account for AI skills. Yet this might not be enough, as the panel worried about whether there would be enough work to go around if AI could handle a significant portion of legal tasks. Unless the formula was adjusted constantly to account for the impact of GenAI, entirely new metrics may be required to enhance our outright replacement of traditional systems of evaluating lawyer performance.

Further, the panel argued that here is where the classic issue of economics in law firms rears its head: Law firms measure inputs to gauge productivity, while corporations focus on measuring outputs. For a technology to drastically change the input side of the equation, something was going to have to give, and a little bit of tuning to the current system may not be enough.

The impact on client relationships

As GenAI transforms the way legal services are delivered, the nature of client relationships will also evolve, the panel said, adding that such a shift was already underway.

About 60% of the attendees polled said that their firm was actively experimenting with a GenAI product and thus was having to sketch out what its practical use may look like for their firm. Opportunities were already starting to open as a result, with work actively being won because of the new technology. For example, one attendee said their firm had a single day to process 1,500 pages of data and offer a strategic analysis of the contents. Without using advanced tech, the firm couldn鈥檛 have done the work.

In many ways, the panel shed light on what seemed like a microcosm of the broader implementation discussion around GenAI: The legal profession stands on the brink of a transformative era, one in which AI could redefine the very essence of legal practice.

At the same time, the panelists and many in the audience stated that they鈥檇 received intense instructions from clients on the use of GenAI and that it was a constant topic of discussion. Indeed, the feeling from panelist and attendees was that some clients were already incredibly sophisticated in GenAI use and were driving their outside firms to utilize it as well. Other clients seemed completely out of their depth, writing guidance documents that went so far in barring the use of AI that decades-old innovations like spell check were being caught in the blast. In some cases, two divisions of the company could be at completely different ends of the spectrum, one setting AI usage objectives as the other is clamping down and forbidding its use.

Many law firm leaders said they hoped to avoid long battle with clients or having their arms twisted on AI use, by instead engaging in a series of ongoing discussions with clients across the knowledge spectrum.

In many ways, the panel shed light on what seemed like a microcosm of the broader implementation discussion around GenAI, illustrating both the immense potential and the significant challenges that lie ahead. The legal profession stands on the brink of a transformative era, one in which AI could redefine the very essence of legal practice. However, as with any profound change, the journey will be marked by trial and error, adaptation, and continuous dialogue.

Indeed, the need for new metrics, updated training, and evolving client relationships underscores the complexity of integrating GenAI into the legal field. And law firms and educational institutions must collaborate closely, embracing innovation while ensuring that the human element of legal practice remains at the forefront.

In other words, to prepare to become the law firm of 2034, the firms in 2024 have a lot of work ahead of them.

For more on what you might have missed at the 成人VR视频 Institute鈥檚 23rd Annual Law Firm COO & CFO Forum, click here.

At the recent 成人VR视频 Institute鈥檚 23rd Annual Law Firm COO & CFO Forum, one panel took up this and other related queries, eventually painting a picture of a legal market and a law firm business model that may look very different in a few years from what it鈥檚 like now.

鈥淚 think AI will have an impact beyond what we even can imagine yet,鈥� said one panelist, adding that even considering these questions raises others that legal professionals will have to deal with in the years to come. For example, the panelist said, it鈥檚 obvious that GenAI potentially can save lawyers lots of time in work hours, but exactly which work will be impacted? Indeed, once you get past the low-hanging fruit of tedious, clearly automatable tasks, then what?

Further, the panelist explained, it鈥檚 common sense that freed-up work time then can be used to allow lawyers to perform more value-added tasks, but exactly what are those tasks and 鈥� more importantly 鈥� how do law firms convey that value to their clients, especially in a way that will allow firms to continue increasing their billing rates?

鈥淚f we say that AI is not replacing anyone, but it鈥檚 just making them more efficient, again, we have to be able to explain that clients who may be looking at firms鈥� new-found efficiency as a way to pay them less for their fewer hours of work time,鈥� the panelist added.

Beyond this hefty conundrum, the panel looked at other areas where they see AI having the largest impact on law firms and their clients.

Practical uses of AI 鈥� Law firms and other industries currently are looking for the practical uses of AI and asking how they can best protect their clients from the mistakes that AI use could bring. As one panelist explained, AI鈥檚 best uses are in three areas 鈥� finding things, creating things, and analyzing things 鈥� and none of these strictly require the use of client data.

鈥淚f we say that AI is not replacing anyone, but it鈥檚 just making them more efficient, again, we have to be able to explain that clients who may be looking at firms鈥� new-found efficiency as a way to pay them less for their fewer hours of work time.鈥�

For example, some members of the panel and the attending audience cited current uses of AI within their firms, such as conflict tracking, tracking patent applications, time capture via a time entry generator, and even drafting terms from a raft of contracts to create a state of the industry template.

Talent management 鈥� Many on the panel suggested that law firms will have to bring in non-lawyer tech specialists and find possible ways to compensate them that do not run afoul of Rule 5.4 of the Model Rules of Professional Conduct, which effectively disallows non-lawyers from sharing in the profits of a law firm.

Indeed, one panelist suggested that might be impossible, leading to a re-thinking of that rule. 鈥淚 predict that some firm is going to finally just break this rule, saying we鈥檙e bringing in a tech professional and paying them in a way that is comparable to industry standards, so go ahead and sue us,鈥� the panelist said.

Others agreed. 鈥淚f you bring in tech people, you have to give them a seat at the table,鈥� said another panelist. 鈥淪omeone has to be in charge of all this in order for the firm to make progress and handle client-facing issues. You may in fact, have to staff a law firm unconventionally.鈥�

Tech adoption 鈥� Many on the panel said that law firms should be making better use of their own internal data and working with vendors and third parties to leverage the tech software they need. 鈥淵ou have to realize that all the smartest people in the world are not all at your firm,鈥� one panelist explained. 鈥淭hat鈥檚 why it makes sense to go to the outside for tech expertise.鈥�

Indeed, argued another, there is no law firm that is going to outspend tech companies in their investment in AI or GenAI. 鈥淰endors will always out-invest law firms,鈥� the panelist said. 鈥淪o let them, and we can just use the solutions they come up with 鈥� at least for now 鈥� or work with them to create something proprietary for us to use.鈥�

The panel鈥檚 consensus was that law firms should try everything 鈥� using third parties, leveraging their own internal data and tech, and a mix of the two. Ideally, panelists suggested that law firms will want to use their own internal data while getting their tech stack from vendors. In fact, it may be a bit easier than it sounds, one panelist noted, adding that firms can use off-the-shelf tech solutions for the simplest 鈥渂usiness of law鈥� operations, but for other tasks, such as pre-bill reviews, it may be harder to find products that can work for each firm.

“New lawyers can spend their time doing more than just simple rites-of-passage work. If training is used effectively, firms can get their new lawyers to see more of what clients need and understand what the clients鈥� main challenges are.鈥�

Training lawyers 鈥� As to the questions of what work will be impacted and which value-added tasks will fill that available space, one panelist stated: 鈥淎I is not replacing anyone, it鈥檚 just making them more efficient 鈥� but we have to explain that to the client.鈥�

And while some law firm partners may worry about the dearth of dues-paying work being done by new associates and how these new lawyers will be trained, some on the panel said that points to a lack of imagination as to what lawyer training can entail. 鈥淣ew lawyers can spend their time doing more than just simple rites-of-passage work,鈥� one panelist said. 鈥淚f training is used effectively, firms can get their new lawyers to see more of what clients need and understand what the clients鈥� main challenges are.鈥�

Changes to the business model 鈥� Perhaps most importantly, the impact of AI may shake the previously unshakable grip that the billable hour business model has on the legal industry, the panel predicted. While several panelists agreed that the billable hour won鈥檛 die, they noted that its market share may have peaked.

One panelist predicted that a couple years down the road, there will be a reconning: Law firms are going to have to demonstrate how and why their work quality is better, given their freed-up time 鈥� and they will have to justify this to clients in order to be able to raise (or even maintain) their billing rates.

Indeed, others agreed, saying there will be an evolving view of the billing cycle, and it may take years for everyone in the legal industry to figure this out 鈥� from outside law firms to their corporate clients, and from GCs to the rest of the business units within the overall organization.

鈥淚n the future, the billable hour will be among a mix of billing and pricing options,鈥� one panelist forecasted, adding that law firms will still face stiff questions once these options are impacted by AI鈥檚 ability to shave off time from lawyers鈥� tasks. 鈥淲ill less hours mean cheaper? How will firms explain their value-added to clients? For many firms, this is an unknown, even now.鈥�

You can find out more of what you missed at the recent 成人VR视频 Institute鈥檚 annual Law Firm COO & CFO Forums, here.

Further, sustainability as part of the risk and regulatory environment is a new reality for CFOs. No longer a peripheral concern, environmental, social & governance (ESG) factors are now central to corporate strategy, impacting everything from investment decisions to financial reporting. For example, say climate change is a serious or moderate risk for their companies, according to a survey conducted by PwC.

This shift has placed CFOs in a unique position, demanding they navigate new challenges and leverage opportunities presented by this evolving landscape.

Centering data quality amid a regulatory labyrinth

One of the most pressing concerns for CFOs today is the constantly evolving web of ESG regulations. With various frameworks and reporting requirements emerging globally, ensuring data quality and consistency is paramount, according to , Executive Director of , a United Kingdom-based foundation that works toward creating more resilient business models and a more sustainable economy. More specifically, Sparks said that CFOs are particularly concerned with:

• • • Meeting regulatory requirements鈥� A key challenge for CFOs lies in guaranteeing that the ESG data collected is robust and reliable enough to meet the stringent demands of regulatory bodies. This includes ensuring that the data is complete, consistent, and timely.
    • Establishing internal controls鈥� Robust internal data control mechanisms are essential not just for accurate external reporting, but also for making informed internal reports to management to aid in decision-making.
    • Harmonizing reporting standards鈥� For multinational companies, navigating a fragmented landscape of reporting standards across different jurisdictions and customer demands presents a significant challenge. Many CFOs are eagerly awaiting the harmonization promised by bodies like the International Sustainability Standards Board that will allow CFOs and their companies to move beyond the current alphabet soup of voluntary disclosure standards.

Building sustainability into the capital allocation & investment process

As companies commit to ambitious net-zero and other sustainability targets, effectively evaluating capital investments becomes crucial. However, aligning capital allocation with these goals presents its own set of challenges, says Sparks, which include:

• • • Bridging the knowledge gap鈥� A significant hurdle is the lack of understanding within finance and accounting teams about the company’s sustainability goals and the potential impact of capital investments on these goals.
    • Valuing sustainability鈥� Quantifying and incorporating sustainability-related factors into traditional financial models can be difficult. Unlike tangible financial metrics, ESG factors often involve less quantifiable elements, requiring innovative approaches to valuation. For example, factors such as tax incentives, credits, and financial assistance awards for specific projects because those factors can affect how much a project will cost, its optimal location, and the potential return on investment.

To overcome these challenges, fostering collaboration between sustainability and finance teams is necessary so that, jointly, these teams can develop a shared understanding.聽Moreover, finance teams need to be educated about the company’s sustainability targets and their implications for investment decisions.

In addition, teams must collaborate to explore ways to quantify or monetize sustainability factors, even if it involves developing qualitative measures in places where traditional metrics fall short. The Stern School at New York University鈥檚 is an excellent starting place to demonstrate how sustainable business is good business.

Embedding sustainability into a company鈥檚 DNA

Integrating sustainability goes beyond simply checking boxes; it requires embedding ESG principles into the very fabric of an organization’s operations, strategy, and business models. To start, Sparks suggests that CFOs need to work closely with their companies鈥� boards of directors and audit committees, providing those groups with a clear understanding of how sustainability impacts organizations鈥� overall strategy and disclosure requirements. 鈥淭his ensures buy-in from the top and fosters a culture of accountability,鈥� Sparks adds.

One noteworthy development over the last 24 months is the establishment of the position of ESG or sustainability controller. These are typically new positions, responsible for ESG data management, with the individuals in these roles often coming from finance and accounting teams.

Indeed, ESG controllers assist in building sustainability into core company operations, strategy, and business models through an integrated approach that involves various financial workflows and operations. Key areas of focus include establishing a robust ESG data management system, integrating sustainability into capital allocation, and expanding the lens through which capital decisions are made to include the sustainability perspective. One example of the latter is the , which suggests altering capital expenditures (capex) forms to align sustainability with the company鈥檚 long-term strategic focus. This can be done, the Guide suggests, by demonstrating how potential investments improve environmental and social impacts while listing how risks can be avoided by undertaking the project.

To this end, companies can , such as geospatial analytics, natural language processing, and data analytics to optimize sustainability investments and strategies to reduce their carbon footprint, identify decarbonization opportunities by location, and then map those efforts to available tax and financial assistance incentives. By leveraging data and technology, companies can gain new insights into their operations which can potentially lead to more informed action and the identification of competitive advantages and growth opportunities.

CFOs are facing significant challenges and opportunities as they navigate the complex landscape of sustainability. By understanding the key concerns and challenges, CFOs can take a proactive approach to integrating sustainability into their company’s operations, strategy, and business models, ultimately driving long-term value creation for their company, its stakeholders and the environment overall.

For more on the challenges that CFOs face, which were discussed at the recent 成人VR视频 Institute鈥檚 23rd Annual Law Firm COO & CFO Forum, click here.

An economist opened the panel by describing a still-tight labor market, particularly for skilled workers, despite a slight rise in overall unemployment. While inflation has generally cooled, wage-based inflation persists, making the search for talent as competitive as ever since the end of 2020.

Compensation: Rewarding excellence

One of the key topics discussed was, not surprisingly, lawyer compensation. The era of double-digit compensation increases may be over but retaining standout talent remains crucial in a competitive market. The focus is now on ensuring that overachievers are properly rewarded and retained.

One panelist highlighted their organization鈥檚 dual focus on the what and how as part of their review process and the resulting emphasis on those factors that should be used to enhance compensation. The panelist described their firm鈥檚 approach as one that鈥檚 anchored in clear financial metrics and three broad parameters: i) resilience in the face of challenges; ii) proficiency in training and adaptability; and iii) confidence in leadership.

In the ongoing competition for top talent, if a law firm fails to grow and accelerate their overperforming lawyers early, there is a tendency to lose them.

These metrics are crucial for evaluating performance and driving the firm’s success, the panelist explained, adding however, that one of the growing challenges they were tackling involved those lawyers who are just starting to grow and overachieve. In the ongoing competition for top talent, if an organization fails to grow and accelerate these overperformers early, there was a tendency to lose them. As such, the panelist said their firm now spend a great deal of time at this point to identify these emerging talents and seek to retain them.

Another panelist discussed the significance of rewarding innovation. They pointed out that support for people who use tools like Alteryx, which empower frequent users to automate repetitive tasks and reduce the time spent on monthly processes, is crucial. This, in turn, enhances employee morale and productivity, and thus firms should promote greater compensation for the people who make it possible.

The shift towards automation and efficiency is particularly relevant in the legal sector, where increased use of artificial intelligence and automation tools is becoming a defining feature in the legal industry. By incentivizing innovation, law firms can not only improve operational efficiency but also create a more dynamic and motivated workforce. Indeed, offering the right incentives to the people who make this happen is thus all the more important, especially in a labor market in which poaching top talent remains a constant threat due to competitors鈥� ability to offer hybrid and flexible work options.

Flexible work arrangements

As the conversation moved away from compensation and towards other employee benefits, one potential perk in particular came to dominate the discussion: flexible work arrangements.

One panelist noted that while there is a clear need for lawyers to be present in the office on specific days, there is also considerable flexibility available regarding which days these are. The general expectation at their firm was for a minimum of two days in the office, with a goal of three days to facilitate collaboration and teamwork.

Another panelist pointed out that dedicated spaces for teams can really help make in-office days productive. However, they acknowledged that a fully remote culture is not feasible for law firms, which thrive on in-person interactions and spontaneous exchanges of ideas. That panelist said their organization succeeded by merging their offices into a new location, hosting regular lunch events, and cultivating an atmosphere where FOMO (fear of missing out) about office events was a major motivator for attendance.

The still-ongoing “war for talent” is pushing many law firms to seek talent in unconventional locations, leading to cross-geographic teams and frequent teleconferencing.

Yet according to another panelist, the still-ongoing “war for talent” is pushing firms to seek talent in unconventional locations, leading to cross-geographic teams and frequent teleconferencing. This reality raises questions about the necessity of in-office presence, as virtual collaboration becomes increasingly effective and the norm. By having these types of teams in which someone is always remote, it means that even those members in the office spend their days on virtual meetings, raising the question of why they have to take these meetings in the office in the first place.

The panel determined that the hybrid work dilemma remains unresolved in the legal industry and elsewhere, and that the current new normal has legal organizations maintaining a balancing act between luring people into the office and trying to make online work as effective and collaborative as possible.

The pandemic hangover

Prior to the panel鈥檚 discussion, Institute, offered a comprehensive view on how the pandemic has affected the labor economy. He noted that the pandemic has fundamentally altered how organizations function and engage with their employees. Issues like quiet quitting, talent retention, and cultural development have become central topics as firms navigate the post-pandemic environment.

Yet, significant progress has been made in tackling these challenges over the past 12 to 24 months, Abbott explained, adding that still more effort is needed to fully comprehend and adjust to the new conditions of the labor market.

While the panel didn鈥檛 venture into this territory explicitly, it was difficult to escape the impression that a solution had been found to the hybrid work issue, that the 2 to 3 days in the office with additional work to make sure those who were in the office benefitted from it, had become the solution de jour for law firms. Much like major banks and companies that continue to grumble about this new status quo, many legal organizations merely do not like the answer as much as they may wish they did. However, they are increasingly spending time smoothing down the pain points rather than seeking to overturn the entire paradigm.

For now, the panel鈥檚 conversation seemed to cement that this new reality may be here to stay.

For more on what you might have missed at the 成人VR视频 Institute鈥檚 23rd Annual Law Firm COO & CFO Forum, click here.

Further, corporate clients are expressing a net spend optimism in which those thinking their legal spending will increase in the coming year are outpacing those that think it will decrease.

Yet a panel of law firm executives and corporate general counsel, gathered to discuss the state of the legal market at the 成人VR视频 Institute鈥檚 23rd Annual Law Firm COO & CFO Forum, held this week, said that despite these signs of strength in many areas of the market, there are still factors that are keeping legal organization leaders up at night, including challenges in areas such as talent and technology鈥檚 impact on law firms鈥� business model.

鈥淚 would urge all firms 鈥� if they haven鈥檛 already 鈥� to begin coordinated client programs to keep close in touch with a firm鈥檚 top clients.鈥�

鈥淲e鈥檙e still in a war for top-quality talent,鈥� said one law firm panelist. 鈥淥ur firm has lost people to their ability to find full-time remote jobs.鈥� Indeed, several panelist agreed that law firms need to be more creative with how they are attempting to lure new associates to the firm, and that while it鈥檚 important to match levels of compensation, it is becoming equally important to demonstrate a firm鈥檚 commitment to technology innovation in order to make work easier and more efficient as well as its commitment to employees鈥� mental health and work/life balance.

鈥淭hose firms that can cater to this 鈥� especially around employee benefits and flexibility 鈥� will be the ones that benefit,鈥� explained another panelist, adding that those firms or organizations which order all employees back to the office, five days a week, may end up regretting that decision. 鈥淎s long as the work is getting done, and the lawyers are being responsive to clients, that鈥檚 what鈥檚 important,鈥� the panelist added.

Yet, it鈥檚 that chase that can be extremely frustrating for corporate clients, another panelist contends. 鈥淣ot being able to find enough of their outside counsel team available in person for collaboration opportunities can be difficult for many clients,鈥� the panelist said, adding that this also impacts younger lawyers who may not receive the training experience that in-person contact can bring. 鈥淪o, I think that鈥檚 why you may see a push for more in-office time.鈥�

On the horizon for 2025: Client conversations and billing rates discussions

Panel moderator Mike Abbott, head of the 成人VR视频 Institute, asked panelists what top issues they were expecting to see for the rest of this year and into 2025. Initially, some of the speculation involved in what direction specific practice areas might be heading 鈥� for example, many thought litigation was slated for a continued rise, and some predicted an increase in restructuring situations and, not surprisingly, regulatory guidance. However, the discussion shifted when several panelists explained that no matter what the practice area involved was, it鈥檚 becoming essential for law firms to open deeper and more frequent conversations with their key clients in order to more fully understand what those clients will be needing in terms of legal services in the near future.

鈥淚 would urge all firms 鈥� if they haven鈥檛 already 鈥� to begin coordinated client programs to keep close in touch with a firm鈥檚 top clients,鈥� suggested one panel member. 鈥淎nd it鈥檚 not just a specific practice area view, but rather an overall understanding of where the client is and what that clients is going to need or want.鈥�

The idea of what clients need and want reverberated through the panel, which also took up the issue of law firm billing rates, which have been consistently going up for the past few years. 鈥淭he pace of law firm rate growth has been phenomenal,鈥� said one panelist. 鈥淎nd while it seems mostly market-driven, it still continues to go up.鈥�

Avoiding the doom loop on rates

How long that might last 鈥� especially given the anticipated time-savings benefits of more AI-driven efficiencies in legal work 鈥� was a question not far from the minds of many on the panel. 鈥淲e are already seeing some pushback from some clients on their rates, although that is just in certain specific markets or legal matters,鈥� explained another panel member. However, the panelist cautioned that law firms were in danger of entering a doom loop of continually raising their rates and then expanding their discounting to ease clients鈥� minds. While this hasn鈥檛 been reflected yet in the level of rate realization and collection, which hasn鈥檛 dropped precipitously, legal market experts are keeping an eye on the situation.

“All the strategic planning in the world means nothing if you can鈥檛 read the market and pivot when you need to.鈥�

鈥淭o be honest, we鈥檙e seeing it in some of our lawyers,鈥� another panelist said. 鈥淭hey are becoming increasingly uncomfortable with charging more every year for what is essentially the same legal service year after year.鈥�

Indeed, many on the panel agreed, noting that many firms need to adopt strategic pricing by mixing billable hours with alternative fee situations, while explaining to clients the real value proposition of the work they鈥檙e doing on the clients鈥� behalf.

Overall, the panel agreed that the legal industry is entering a phase in which more client communication and a focus on finding the right talent will become the essential differentiators among law firms. 鈥淏asically, firms need to identify what they鈥檙e good at and prioritize their investments in that direction,鈥� said one panelist. 鈥淏eyond that, finding out how you can get close to your clients and identify the talent your firm needs will be critical.鈥�

Many panelists agreed, adding that while strengthening client relationships is important, keeping an ear to the overall legal market may be more so. 鈥淚t鈥檚 a matter of listening, being nimble, and being innovative,鈥� said a panelist. 鈥淏ecause all the strategic planning in the world means nothing if you can鈥檛 read the market and pivot when you need to.鈥�

For more on what you might have missed at the 成人VR视频 Institute鈥檚 23rd Annual Law Firm COO & CFO Forum, click here.

Best laid plans

At the session, David Schaefer, Co-Chief Operating Officer and Managing Director at legal consultancy Calibrate, noted that sometimes law firm strategic plans can be like New Year鈥檚 resolutions: nice platitudes, but ultimately empty. He noted that successful strategic plans have a few common elements.

First, Schaefer said, they should an actionable anchor point for the firm. When changes in law firms occur, 鈥渢hey鈥檙e often not anchored to their mission or values. 鈥hen things are disruptive, they can drift a little bit.鈥�

Also, he added that strategic planning should not have a beginning and endpoint. 鈥淚t鈥檚 a little bit like trying to be healthy, you have to do it all the time,鈥� Schaefer explained, adding that law firms should thus approach strategic planning knowing that it has to happen periodically, over and over again. Otherwise, 鈥渢hat鈥檚 not a strategic plan. That鈥檚 just a document that people spent a lot of time and money on.鈥�

Jeffrey Connor, Chief Financial Officer at law firm McGuireWoods, agreed, noting that many law firms need to learn how to properly evaluate those strategic plans during periodic review. 鈥淵our strategic plan should evolve, but it can also serve as a backboard to make sure things are still working,鈥� he said.

Connor also provided two initiatives through which firms can evaluate their own strategic plans by evaluating both their highly skilled staff and their technology implementation success. For example, with business development personnel, he proposed measuring not just by RFP wins, but losses that still received positive client feedback, as well as engagements that have fully formed budget and plans, productivity, and more. Regarding technology, Connor suggested not only measuring how tech works, but also keeping track of what鈥檚 not working and being prepared to drop those tools. He also noted that when efficiencies are gained through technology, it鈥檚 important to track how attorneys are re-filling their plates.

These sorts of measurements may take more up-front thinking, but several panelists noted that these plans will not only guide firm strategy, but firm employees鈥� own direction as well. Kate Stonestreet, Global Chief Operating Officer at Baker McKenzie, noted that especially when measuring skilled staff, firms need clearly defined expectations of people before they can be measured. 鈥淚t鈥檚 the accountability to deliver against expectations, because if you don鈥檛 know what expectations are, you鈥檙e never going to deliver against them,鈥� said said.

New tech can still be planned for

Of course, even the best planning cannot account for every outcome. Take the emergence of a technology like generative artificial intelligence (Gen AI), for instance, which within the past year has thrown into flux everything from how associates are trained to how business development work is done throughout the firm.

Schaefer acknowledged that Gen AI has the potential to change a lot within law firms, but also noted that AI itself is not new to firms. There should be an expectation within the planning process that technology could change how firms operate, because it鈥檚 happened before. 鈥淎I is not the last stop, it鈥檚 just the next stop,鈥� Schaefer explained. 鈥淭here will be something after AI that means everybody will be telling us the legal industry is going to end.鈥�

At Baker McKenzie, Stonestreet said her firm has adopted the 鈥渇ast follower鈥� mentality 鈥� not wanting to be too far out in front of a technology to the point at which it鈥檚 not fully developed, but able to react quickly when use cases develop. With respect to Gen AI, she has three main goals: to get data in order, train people, and make tough decisions around which technologies to purchase or wait on. Ultimately, she said, it is all done 鈥渨ith the view of how is it going to help us serve our clients better.鈥�

Schaefer called familiarizing themselves with technology 鈥渁n important first step for most law firms.鈥� (That鈥檚 particularly true when undergoing data cleansing as Stonestreet suggested.) Attorneys 鈥済o to pull data and find they have five different systems that don鈥檛 talk to each other,鈥� Schaefer said, adding that the result often is a seven-figure job for large firms to clean up that data. And while some firms may balk at having to undertake such an onerous task, even saying they believe that AI is not worth the squeeze, Schaefer countered by asking, 鈥淚f not now, when?鈥�

Indeed, the panelists all agreed that AI and other related technologies will be an important part of strategic planning moving forward, so for reticent firms, it鈥檚 important to take action now. That鈥檚 doubly true because, as Stonestreet explained, AI systems aren鈥檛 plug-and-play but instead take work to train and maintain. 鈥淯nless we can organize and maintain data,鈥� she said, 鈥渋t鈥檚 not going to deliver the value that it should.鈥�

The looming effects of AI

Earlier in the Forum, Gretta Rusanow, Head of Advisory Services in the Law Firm Group at Citi Global Wealth, noted that law firm leaders are acutely aware of the pending impacts of Gen AI on the legal market, yet it is not something they anticipate having a dramatic impact before 2025.

However, over the next decade, more than half of respondents to a Citi survey said that they expect Gen AI will have an impact on their firm鈥檚 overall leverage model, including the potential to hire fewer junior associates and the development of new skills and roles within the firm. Accordingly, data scientists were the number one role law firm leaders anticipated needing to hire in the coming years.

While Gen AI thus far has had a relatively minimal effect on the practice of law, over the next decade, firm leaders expect widespread adoption of AI technologies to lead to increasing commoditization of certain types of legal work, with a premium being placed on higher-value strategic and advisory work.

This will also potentially change the way firms price and staff matters, as well as the amount of work clients are able to absorb in-house, Rusanow acknowledged, noting however that the full scope of the long-term effects of this new technology is difficult to discern at this point as much of the future impact of Gen AI is 鈥渢oo soon to tell.鈥�

成人VR视频 Institute鈥檚 William Josten added to this post.

This picture of the legal market 鈥� painted by Jim Jones, Senior Fellow with the Center for Ethics and the Legal Profession at the Georgetown University Law Center; and Gretta Rusanow, Head of Advisory Services, Law Firm Group at Citi Global Wealth 鈥� became clearer as the session explored key themes and challenges law firm leaders have had to confront this year and those that are likely to continue or arise.

For example, rate growth has been high across the board, and the disturbing inversion of law firm billing rate growth and the pace of inflation in evidence in 2022 and early-2023 has finally reversed. The continued strength of counter-cyclical practices 鈥� including litigation, labor & employment, and bankruptcy 鈥� has been a key driver of demand growth for many law firms, particularly Midsize firms. And interestingly, both the Am Law 50 and Midsize law firms, despite being at extreme ends of the headcount strategy spectrum, seem to have benefited from market conditions in terms of their overall profitability this year.

Is rate growth driving work away from law firms?

Jones pointed out that corporate general counsel still express a broad desire to bring more work in-house, which, he said, 鈥渇eeds into the question of whether clients are reacting to rate increases not by pushing back, but instead by simply moving work.鈥� Indeed, the report, released in mid-September by the 成人VR视频 Institute, posed a similar question in light of overall demand contraction among large law firms, demand growth for Midsize law firms, and overall effective rate favorability for clients.

Corporate GCs still express a broad desire to bring more work in-house, which feeds into the question of whether clients are reacting to rate increases not by pushing back, but instead by simply moving work.

Rusanow was quick to point out that, in her observation of the market, she鈥檚 never seen a correlation between rates and a loss of demand for law firms, stating 鈥渋f law firms have a strong brand, they can command premium rates.鈥� The pair also discussed that, while the data is far from solid, anecdotal indications are that, despite aggressive rate growth, new rate structures coming from law firms are largely holding with minimal loss in realization.

Differing pictures in headcount trends for large firms

Data from 成人VR视频 indicates that Am Law 50 law firms have been aggressively contracting associate headcount, to the point that today鈥檚 associate ranks are nearly equal with those of January 2022, despite two years of hiring cycles. In contrast, data from Citi鈥檚 survey of large law firms shows total Am Law 50 lawyer headcount actually slightly more than 3% higher than a year ago.

In exploring the discrepancy, Jones and Rusanow acknowledged that it was a bit of an indirect comparison, looking at associate headcount compared to all lawyers. There is also a difference in sampling that could account for much of the difference between the numbers.

However, both agreed that certain trends are absolutely influencing headcount among the largest firms. First, lawyer attrition is down considerably as a tight labor market and uncertain economy has led more lawyers to stay put. And while this year鈥檚 incoming associate classes may not be as large as last year鈥檚, they are still strong by historical standards. This is likely attributable to the fact that law firms, when offering employment to incoming associates, must engage in the difficult practice of trying to project associate demand years in advance, a difficult proposition in a volatile market.

Law firms have also reported engaging in more 鈥渄ifficult鈥� performance reviews with associates hired during the 2021 hiring surge, Rusanow noted. Prior to now, law firms have needed the additional capacity, and the lawyers have kept busy. Now that work is slowing, Rusanow explained, and law firms are taking a closer look at lawyer performance.

A look at 2024

The session also offered some suggestions as to what might be on the legal market鈥檚 horizon for 2024 and beyond.

Among the key challenges identified, Rusanow discussed that many law firms are concerned about challenges with attracting, retaining, and developing talent. Law firms also anticipate additional challenges from negotiating the evolving hybrid work landscape, managing the increasing costs associated with inflation, and responding to client pricing pressures.

Still, there are also ample opportunities for law firms. Many law firms, for example, are looking to maximize their opportunities from past expansion into selective practice areas through acquisition of key lateral talent, as well as doing more with their existing clients through cross-selling, Rusanow said. The key geographic area for growth appears to be in the United States, although there is optimism for some growth potential in Europe, more specifically London, as well as in Singapore.

On the pricing front, fully 72% of law firms responding to the Citi survey said they expect an increase in the use of alternative fee arrangements (AFAs) by 2025, a finding echoed in the recent LDO Index report in which 54% of corporate GCs said that AFAs will form a significant part of their future cost-control strategies.