This maxim has played out repeatedly over multiple arenas, through many shifts in the law firm landscape and across geographies. In fact, according to responses from in-house counsel about why they would favor hiring one law firm over another, there鈥檚 not even a close second. About three-quarters (75%) of corporate counsel at companies with more than $1 billion in annual revenue cited expertise as a primary driver of favorability, while client service ranked second with just 33%, according to .

There is a new shift, however, that may change the idea of what it means to be a favored law firm. With the introduction of generative artificial intelligence (GenAI) comes a democratization of legal knowledge. While legal research and knowledge management tools have long been available 鈥� even those driven my earlier AI technology 鈥� GenAI now provides near-instantaneous access to top-flight legal knowledge, issued in plain language so lawyers work more efficiently and perform repetitive tasks faster and easier.

More than half of corporate clients actively want their law firms to be using GenAI, according to the 成人VR视频 Institute鈥檚 Generative AI in Professional Services report released earlier this year. Or to put it a different way, clients want their law firms to maintain high-quality performance above all else, but also bring forward the time-efficiency and other benefits that GenAI products provide.

Is it possible to exceed in time-efficiency while maintaining high-quality work? It鈥檚 certainly a fine needle to thread. However, according to those attorneys whom clients believe stand out from the rest, there is one key differentiator that will allow for marrying quality advice with GenAI use: The ability to explain what you鈥檙e doing.

Stellar performers are ready to talk

In another separate research report release in August, the 成人VR视频 Institute鈥檚 tells the story of how law firms鈥� highest achievers often can gain the trust of clients. These clients nominate those attorneys with whom they work to be recognized as high achievers, then our analysts study the qualities that make these stellar performers stand out from the crowd. Unsurprisingly, these stellar-performing lawyers share a number of traits, including flexible communication skills that allow for improved client relationships, clearly defined goals to help grow the client relationship, and yes, high-quality and strong advice.

And that flexibility and planning also extends into the world of technology. More than three-quarters (79%) of stellar performing lawyers said that they are excited about the possibilities that GenAI opens up for improving client service. Roughly the same percentage (78%) also disagree with the idea that GenAI will adversely affect their role in the future. By and large, those attorneys identified as stellar performers are on board with GenAI鈥檚 increasing relevance to the legal industry.

The critical component of communication

However, what does that have to do with what clients say they want more than anything else 鈥攖hat top-quality advice? As our research has shown, there are a number of lawyers that are embracing GenAI and believe it should be used for legal work. However, it鈥檚 how the stellar performers talk to their clients about GenAI that may set them apart.

While previous GenAI reports have revealed that many law firm attorneys have not yet had frank conversations about GenAI with their clients, about two-thirds (63%) of the stellar performers said that they enjoy talking about GenAI with clients and colleagues. The combination of GenAI usage with standard communication skills, it turns out, means more confident explanations on how GenAI is being used at the firm, and thus better client service than average.

Of the stellar performing attorneys using GenAI directly on legal matters for clients, for instance, more than three-quarters of them (76%) feel confident explaining their firm鈥檚 GenAI use to clients than those who do not feel confident (20%). This trend also holds for different levels of interaction of GenAI, such as those legal professionals who have used it directly for client communications (74% feel confident explaining their firm鈥檚 use) or even those who use it personally (60%). Among even stellar performing attorneys, those who do not use GenAI at all have a lower rate of confidence (24%) explaining their firm鈥檚 GenAI plans to clients.

To stand out from the crowd, therefore, it鈥檚 not enough to just use GenAI. What we鈥檙e learning from our research on stellar performing lawyers is that they are not only using GenAI, but when they鈥檙e doing so, they鈥檙e thinking about it critically in a way that allows confident explanations how they鈥檙e using it to improve client service.

The future of quality advice

Looking at the Stellar Performance Report data, it鈥檚 interesting to see that many top-performing attorneys believe GenAI is progressing at the right pace 鈥� 61% said they believe adoption rates are about right, while just 26% believe it is going too slowly. (Meanwhile, 4% said they believe it is going too fast, and 9% are unsure.) These top-performing attorneys are not only keeping up with the pace of change but are capitalizing upon it to provide better service of their clients.

That feeling certainly isn鈥檛 universal among all attorneys, however. For some, GenAI鈥檚 introduction is moving quicker than expected, and questions about GenAI are appearing seemingly out of nowhere. GenAI has the potential to uproot how lawyers work on a day-to-day basis, and in times of great change, it鈥檚 understandable for some to feel overwhelmed.

It鈥檚 important to understand, however, that efficiency and expertise are not an either/or proposition. Clients expect 鈥� and in many cases demand 鈥� both. That will increasingly come to include expertise that is based on GenAI output, but with the expectation that their favored law firms will go above and beyond what the technology is telling them.

鈥淲e pay for work from legal minds, especially in the realm of litigation, we want the briefing to be completed with the trial strategy in mind,鈥� one corporate counsel said in the Generative AI in Professional Services report. Another added: 鈥淲hen instructing outside law firms, we have a reasonable expectation of the professional competence of the lawyers we have engaged. Both individual lawyers and firms must remain responsible for their work output and advice.鈥�

Clearly, corporate clients want quality advice from their outside law firms above all else, and the top attorneys will be able to deliver on that expertise in a quick and cost-efficient manner. The way to get there then, may just begin with a confident conversation about what GenAI is adding to the equation.

You can download a copy of the 成人VR视频 Institute鈥檚 Generative AI in Professional Services report here.

Following sustained expectations of growth in corporate legal spend since the pandemic, key in-house legal decision-makers are becoming more cost-conscious. For law firms, that means the commercial value of the advice they can offer 鈥� from both a business and sector perspective 鈥� is becoming a more important part of their own value proposition and can play a key role in helping law firms avoid rate erosion or discounting.

Indeed, it is critical for law firms to understand the strategic weight that in-house legal professionals are giving to certain concepts, many of which are often reactions to shifts in social, economic, and geo-political behavior.

How have strategic priorities changed among clients?

While many key priorities of corporate general counsel have remained the same, there have been a few critical shifts of which law firms must be aware if they want to effectively deliver what is of value to their clients. While factors such as controlling costs, finding efficiencies, and protecting the overall company from risk remains the fundamental concerns of in-house legal professionals, there have been some shifts in some strategic priorities. And one of the biggest shifts in strategic priorities among in-house legal professionals since 2019 is that many corporate clients are looking to simplify their internal legal processes.

While clients still place some importances on the day-to-day advice being offered by their outside counsel, for example, law firm leaders should know that this perceived importance has waned since the pandemic. And for outside lawyers, this makes it all the more difficult to maintain strong points of contact and engage in discussions about company strategy.

Indeed, as corporate general counsel become more proactive and less reactive in their approach, reducing their organizational need to outsource legal work, such as regulatory compliance, to law firms, law firms need to adapt to this reality and understand GCs efforts to limit the financial burden of the legal department on the wider organization. Therefore, to remain top of mind, an outside law firm must look for ways to serve these needs and ensure that client engagements are conducted from the perspective of a strategic business partner, not just as an outside legal advisor.

What can law firms learn from C-Suite executives鈥� perspective?

Another way law firms can more deeply understand the legal needs of their corporate clients 鈥� and especially find ways to offer the most valued advice 鈥� is by understanding how C-Suite executives see the role of their internal legal function. In some areas, business leaders鈥� expectations are largely in line with the priorities of their in-house legal professionals, particularly when it comes to driving efficiencies within operations through the adoption of new technology.

However, there are notable differences in business executives鈥� perspective, and how legal departments describe their own reality, as shown in the 成人VR视频 Institute鈥檚 recent 2024 State of the Corporate Law Department report. In-house legal professionals emphasize their role in safeguarding the business, through overall risk management and understanding the impact of regulations to the organization. Yet, C-Suite-level executives think that those in legal departments should be focusing their attention on the effectiveness of the overall business in both serving its customers and retaining top talent.

While many key priorities of corporate general counsel have remained the same, there have been a few critical shifts of which law firms must be aware if they want to effectively deliver what is of value to their clients.

So, what are outside law firm supposed to take away from this misalignment in expectations? It is far from surprising and is largely influenced by those internal biases which are influenced by the responsibilities individuals hold. If law firms want to help GCs and legal department heads be seen as strategic partners to top leadership, it is vital for outside lawyers to have as holistic a vision of the company鈥檚 overall business as do internal leaders.

This way, law firms can best determine their course of strategy, whether they should be leaning into efficiencies or technological innovations in their own legal delivery that could benefit the client, or helping the client develop new businesses or markets or expand existing ones.

For law firms, this strategy could raise their own profile among client leaders even as it helps provide clients鈥� legal departments with greater influence within their own C-Suite.

Positioning the relationship and differentiating from the crowd

To this end, law firms should position themselves to support the ambitions of their most important decision-makers within their top legal clients, especially those who oversee the law firm hiring process.

Indeed, successful execution of this strategy is where a law firm can both differentiate itself from the crowd offering fundamental expertise and instead begin making an impact in areas in which their clients are laser focused: proactively managing risk and ensuring cost control through efficient application of legal advice while bringing strategic direction into the legal department鈥檚 operating environment. Most importantly, law firms will need to consider how they can demonstrate the breadth and quality of their services in a competitive legal market focused on clients鈥� needs.

As clients have put less focus on the day-to-day advice they receive from outside law firms, diminishing what was once considered a prominent part of the value of the legal services provided, law firms have to adapt. Today, a heightened focus on cost control and risk mitigation are concepts which are much closer to home for the in-house legal department and its overall business 鈥� and law firm鈥檚 service offerings should reflect that.

In today鈥檚 legal market, value is becoming increasingly conceptual. Law firms must spend the time to position themselves as an internal stakeholder and bring solutions to issues with which they weren鈥檛 once involved. Indeed, this might feel like a step away from the historical path of the legal profession, but for those law firms that are dynamic and able to stay light on their feet amid times of change, today鈥檚 environment may be a place to shine.

For deeper insights around how law firms can address their clients鈥� top strategic priorities in 2024 and beyond, .

Yet for all the talk around increasing collaboration and institutionalizing client relationships, many law firms largely miss the mark in building effective cross-functional teams. Indeed, there are several key points that are most frequently absent from the discourse around collaboration in law firms.

Strong collaboration can increase your share of client business

Client institutionalization is the degree to which a client is integrated into a law firm’s services, culture, and network. Client institutionalization matters because it leads to higher client loyalty, retention, and satisfaction. Most importantly, it increases the share of wallet that a client spends with a specific firm.

Collaboration is the most powerful driver of client institutionalization. According to 成人VR视频’ research, clients who identify collaborative teams within an outside law firm spend an average of 56% of their wallet at that firm 鈥� more than twice the average share of spend received by the firms that clients use the most.

Inherently, most law firm leaders 鈥� and lawyers themselves 鈥� understand that working together across the firm to better meet client needs will also build stronger and more lasting relationships. However, because the benefits of collaboration are intuitive and there鈥檚 a built-in desire to leverage collaboration, firms tend to neglect addressing exactly how they plan to collaborate.

Increased collaboration requires structural & cultural change

Collaboration is an intentional effort that law firms need to make. Without an intentional approach to collaboration, most firms end up with social collaboration 鈥� or an environment of collegiality in which lawyers enjoy working with other people in the firm, but don鈥檛 do so in a manner that seeks to grow client relationships.

So, why don鈥檛 lawyers collaborate organically? There are two main types of barriers to collaboration: structural and cultural.

Structural barriers

Structural barriers are those that relate to the physical or organizational aspects of the firm that hinder collaboration, such as geographical or technological challenges could impede working together. For example, lawyers who work in different offices or regions may have less opportunities to interact and build relationships with each other and may face challenges in coordinating and communicating across time zones.

Further, lawyers who lack the tech tools or platforms to facilitate collaboration 鈥� such as knowledge management systems, project management software, or video conferencing 鈥� may find it harder to share information, expertise, and feedback with their colleagues.

Yet for all the talk around increasing collaboration and institutionalizing client relationships, many law firms largely miss the mark in building effective cross-functional teams.

To overcome these structural barriers, law firms need to invest in the infrastructure and technology resources that enable collaboration. Indeed, many law firms that have stronger levels of collaboration have invested in technology that supports collaboration, such as client relationship management software, internal knowledge management systems, and well-organized intranets. These technologies can help lawyers access and share information, communicate, and coordinate with their colleagues, thereby delivering more efficient and consistent service to their clients.

Also, many law firms would greatly benefit from a more formal mechanism to bring their lawyers together from across disciplines. Lawyers naturally tap into others with similar expertise when they need additional support on matters and are less likely to look across practice areas and work types. By developing industry sector teams or key client teams, law firms can provide a structure for all their lawyers to develop a deeper understanding of clients’ specific needs, identify opportunities for cross-selling, and leverage the collective expertise and experience of the firm.

Cultural barriers

Cultural barriers are those challenges that relate to the attitudes or behaviors that lawyers have towards collaboration, including selfishness or individualism and a lack of trust in the process.

Many lawyers may prioritize their own interests or goals over those of the firm, especially in situations in which they may perceive that a shared approach may threaten their autonomy or compensation. Further, a lawyer鈥檚 reputation is of utmost importance and handing a client over to another lawyer with whom they are unfamiliar can be daunting. Fear of another lawyer delivering inconsistent quality or service is one of the most common barriers preventing collaboration.

Overcoming these sensitive cultural barriers, especially if they鈥檝e unfortunately become the default attitude in a firm, is likely to be met with resistance by some of the firm鈥檚 lawyers and staff. However, there are solutions to this problem, such as financial incentivization, which aligns compensation and reward systems with collaborative activities, such as cross-selling, referrals, or teamwork.

Law firms also need to foster trust throughout their workforce by showing consistency. Indeed, as with many of the approaches already discussed, those law firms more effective at delivering a consistent quality of advice and service do so through formal initiatives, such as instituting client service standards and monitoring perceptions of consistency through client feedback programs.

Collaboration is an individual and firmwide effort

Even when firms build in better mechanisms to support collaboration, the reality is some individuals are less inclined to collaborate than others. Only about one-third of lawyers are high collaborators 鈥� those who are substantively more inclined to work with other lawyers across their practice and with lawyers in other practices, according to 成人VR视频 Institute鈥檚 research.

Those who don鈥檛 enjoy collaboration often can鈥檛 easily be forced to do it well. Leaning into those who are naturally inclined can both support efforts at client institutionalization while ultimately laying the groundwork for more satisfied lawyers.

To overcome these structural barriers, law firms need to invest in the infrastructure and technology resources that enable collaboration.

Firms should conduct an assessment of their lawyers to help identify which are more naturally inclined to collaborate and find out what they like about working in this way. Then, firms should identify those lawyers who enjoy the level of freedom and independence the firm provides, because they are likely not best suited to lead client teams and are less likely to enjoy collaboration. Instead, firms should place those who share a positive view of collaborative or cooperative work within the firm in that role.

When lawyers can work in a way that suits their natural preferences 鈥� whether more collaborative or more independent 鈥� they鈥檒l ultimately be more satisfied. To find out this information, firms should query their lawyers to better understand which barriers most are impeding their ability to collaborate and solutions.

For example, if a lack of trust seems prevalent among a firm鈥檚 lawyers, it should consider conducting a client feedback study to assess consistency in service and quality, thereby building its lawyers鈥� confidence in each other. Or, if understanding a firm鈥檚 resources is a challenge, firms could build educational programs and technology solutions that help their lawyers better understand and tap into colleagues鈥� expertise.

As seen, there are several important methods by which law firms can leverage data and other solutions to help overcome structural and cultural barriers to collaboration, ultimately supporting those strategies that could then drive the firm toward better performance.

You can explore what metrics are alongside key benchmarking data.

As legal clients鈥� spend optimism begins to slow from record highs, law firms are looking to carve out more targeted 鈥� and intentional 鈥� growth strategies. Specifically, strategies that will deliver growth that outpaces the industry average.

In this article, we merge our 成人VR视频 Institute鈥檚 research with legal clients and our law firm financial data to examine the success of firms that put a unified strategy to good effect and see the tangible benefits which can result. This research presented draws on data from two key sources: our research, an ongoing, annual study conducted with more than 2,100 general counsel and senior corporate law department decision makers; and our Financial Insights data, a benchmarking tool that analyzes financial and operational data of more than 240 law firms.

What drives outsized growth?

There are many factors that contribute to law firm performance in a given year. Quality of work, brand differentiation, pricing strategies, expense management 鈥� the list is endless. Far fewer factors can be linked to the most important long-term factors of success: increasing a firm鈥檚 share of client spend and demand (seen as an increase in billable hours).

Our research shows one of the most influential ways to drive growth is to take a more focused approach to the market. The numbers are compelling. In short, law firms that prioritize one market approach over multiple approaches, on average, experience higher demand or share of client external spend than other firms.

Into this, we introduce the Apex Strategy Framework, which is simple in theory. A firm makes one corner of the framework its primary focus and uses that focus to drive decisions and investments as it travels around the square.

Naturally, firm performance is dependent on more than growth. For example, making sure expenses aren鈥檛 outpacing growth on an ongoing basis is critical. That said, it is typically easier for firms to control expenses than it is to find a recurring source of new dollars in the market.

Avoid the trap of diluting focus

The below example uses a hypothetical law firm that might want to make its focus the Technology sector. Using the Apex Strategy Framework, this firm will look at the market through the lens of the Technology sector when it comes to hiring, selecting new office locations, and pursuing new work and clients.

The beauty of the model is a firm can make any corner its apex focus. Even a large, global law firm with a diversified portfolio of practices can use this strategy. This approach helps communicate to the firm鈥檚 lawyers 鈥� who then communicate to clients 鈥� what the firm鈥檚 point of differentiation is within the market.

The challenge most firms face is limiting themselves to a singular focus. The unintentional error we see most frequently is one in which firms create a strategy that sends conflicting messages out into the market. For instance, these conflicting messages might include touting a global presence, but also strongly pursuing domestic, high-stakes work; or deciding on an industry-focused go-to market approach in more than three unrelated industries.

A structure to promote better collaboration

In addition to sending a consistent cohesive message to clients (and prospects) as to what makes a firm different than others, the Apex Strategy Framework provides a formal structure around which lawyers can collaborate.

Indeed, collaboration is the golden goose for law firms. Our research shows that those law firms seen by clients as having effective collaborative teams earn, on average, more than half of their clients鈥� external legal spend. We also see that those lawyers who are high collaborators, on average, see nearly three-times the originations of lawyers who are lone operators, and those same super-collaborators bill 17% more hours a year than less collaborative lawyers.

Despite the financial impact of collaboration, law firms have struggled to create an environment where intentional, business-generative collaboration is the norm. And this is where the Apex Strategy Framework offers additional help. Firms with a distinct focus on how they approach the market tend to work together more easily. Looking at different apex strategies, we can see the tools firms use to bring their firm鈥檚 offerings to clients in a cohesive manner. Grouped by strategies, these offerings include:

• • • By client type 鈥� These firms tend to use key account management (also called client teams) to build a holistic suite of offerings to their target client types. At the heart of their messaging is, 鈥淣o other firm will understand your business and goals better than we do.鈥�
    • By industry sectors 鈥� These firms use industry teams in which lawyers across multiple disciplines can approach clients and prospects with a clear message about helping navigate clients through the unique demands of a particular industry sector.
    • By geography 鈥� Whether a hyper-regionally focused firm (鈥淲e bring together our lawyers across work-types to handle all your Midwest needs鈥�) or a firm with large-scale global pursuits (鈥淣o other firm can navigate more jurisdictions for your global business鈥�), a message that lets clients know exactly in what areas a firm can help them is a magnet for work in those regions.
    • By expertise 鈥� Even for law firms with a single or focused offering of expertise, the ability to collaborate across sub-practices is critical to become a one-stop shop for every need that clients might have in this specific area.

Conclusion

Success stories are not built overnight. The best written narratives are about those who come from an underdog position to take the king鈥檚 reward, and this is known to take time. Working individually might be an organization鈥檚 culture, but team leadership can structure future success for all those around them.

Of course, that means using evidence to help choose messaging carefully and establish a firm鈥檚 apex strategy, attracting both the clients and the talent that firm leadership wants in order to ensure productive relationships.

To find deeper insight into an Apex Strategy or the wider research that underpins this article,.

In the latest round of research from , we attempt to provide a quantitative measure of this interest. The research presented here is part of a broader quarterly update that seeks to provide high-level insights on the state of the market as a whole, while also providing further segmentation based on region and work types.

During interviews with general counsel and legal decision-makers of global companies, survey respondents were asked: 鈥淚s a focus on ESG issues going to be high, medium or low priority for your organization as a whole in the coming 12 months?鈥� This question was asked previously in a survey conducted in the first quarter of 2022, and so the recent iteration provides a benchmark to capture prospective changes in sentiment and movement around ESG. As noted below, we see that 66% of legal clients report that a focus on ESG issues is going to be a high priority for their organization in the coming 12 months.

This is a 10-percentage point increase from the previous year, highlighting a prospective trend around this topic. Taking a more fine-grained analysis, we see that on a sector level, nearly 70% of clients from within the Energy & Natural Resources and Manufacturing sectors assign a high priority to ESG issues. Not only is this consistent with the results from the previous year, but it should be noted that five out of the six reported sectors saw more than half of the clients identify ESG as a high priority. This indicates that while there are a few sectors driving the growth in the most recent survey, ESG remains an important priority for clients across many work types in the legal market. As a result, those law firms engaged in conversation around this topic have the potential to capture existing market opportunities.

From a regional outlook, we see a similar set of metrics to the sector data, with the recent growth around ESG topics being driven by a few standout regions, specifically Asia Pacific (APAC) and Mainland Europe. Both of these regions saw increases of 13-percentage points and 23-percentage points, respectively, in those citing ESG as high-priority compared to the previous year. Law firms in the United Kingdom, however, continue to see about three-fourths of its clients list ESG as a high-priority, a similar position it held last year.

Although the disparity is a bit more present among regional clients, interest in ESG-related issues should not be seen as a region-specific trend. While some regions assign a higher level of priority to ESG-related issues compared to others, nearly all regions have either slightly increased or remained the same when it comes to their assignment of ESG-related issues as a high priority. This is an important metric, especially within the context of recent political and economic pressures, (as specifically seen in the North American region), which in some cases can limit the number of clients focused on ESG.

As mentioned earlier, given the wide scope that ESG entails in terms of the concerns and legal issues it involves, it鈥檚 important to be able to drill down the specific areas within ESG that are relevant to clients and outline how this can drive expectations about the types of ESG-related advice that may be required from law firms.

To this end, survey respondents who were expecting to seek advice from law firms on ESG were further asked: 鈥淲hat specific types of ESG-related advice do you expect to require from law firms?鈥� As expected, given the ongoing discussions around global climate change, environmental issues were cited by nearly 26% globally as a potential expectation of where advice would be needed. As one respondent noted: 鈥淧articularly on the environmental side and in regard to the policies that would apply to different territories. So, for example, within the E.U. [European Union] or how it may affect the U.S. and what we would write as an organization to have credibility for environmental policy.鈥�

One Chief Legal Officer even mentioned having a separate department in this area, noting that it exists 鈥渂ecause we need to measure, it is all about measuring. I think it would be for help measuring carbon and methane reduction.鈥�

Environmental concerns top list

Regionally, concerns about the environment are cited as the top issue by clients in Asia Pacific and the U.S., with nearly one-third of APAC clients citing environmental issues as an expected ESG topic upon which they will seek advice. As one Chief Legal Officer from the APAC region responded: 鈥淲e definitely can expect certain issues coming up because we are moving to a lot of environmentally friendly norms, so there’s a possibility. Whether it could be contracting to get services, or it could be certain litigation to protect our interest.鈥�

Along with the environmental issues, concerns around regulatory work were also cited as a top expectation for clients seeking advice from law firms. While it was cited by 26% of respondents globally, regulatory issues were cited as a top area in both Mainland Europe and the U.K. with 43% of clients highlighting it in both regions. Given the evolving stages of regulation and the complexity of managing new developments, it鈥檚 no surprise to see regulatory work being cited to that degree. Speaking on a potential regulatory policy, one Chief Legal Officer said: 鈥淚f the new due diligence directive on ESG criteria, the European directive, will be implemented, then we will probably need advice on how to rearrange the obligations within the organization.鈥�

Overall, the ongoing conversation about ESG-related issues has shown that law firms should be paying special attention to the types of advice their clients are seeking around these issues. There is indeed a growing prioritization of ESG among corporate clients, with nearly two-thirds stating that a focus on ESG issues was a high priority for their organization in the coming year.

While this growth is concentrated more strongly in some regions and industry segments, ESG nonetheless remains a notable priority that is leading to new expectations from law firms in every regional market and sector.

Narrowing the focus of potential areas upon which clients are seeking guidance, such as environmental and regulatory issues, shouldn鈥檛 distract law firms from the fact that ESG-related advice is an incredibly complex web of concerns that often includes several legal issues at one time.

As one Chief Legal Officer summed it up: 鈥淭he important thing is sustainability, governance, and particularly in going into business with new countries, we want to always ensure that the business that we do overall impacts the country, the communities, and betters the environment. If our practices can do that, we strive for that.鈥�

Delve deeper into the latest ESG trends and create market-aligned strategies for sustainable growth based on .

A key indicator tracked by聽聽is the health of the market; specifically, understanding on balance whether growth in corporate legal spend is likely. On the whole, GCs are incredibly adept at protecting their budget for legal spend, showing remarkable resilience during challenging market conditions, with very few fluctuations year-on-year while demonstrating positive signs of growth.

In the past five years, however, we have seen unprecedented challenges, in the shape of the global pandemic which caused huge swathes of the market in every region to shut down at various times. Despite this, the market recovered fairly quickly and retained a net positive level of spend optimism.

Since this impact, we also have noted that spend optimism levels have increased to heights not seen pre-pandemic, even as almost 70% of GCs report experiencing pressure from senior business leaders to control their legal costs, according to Market Insights data from Q1 2023.

This is the tricky situation GCs find themselves in, ensuring on one hand that their organization is supported with high-quality external legal counsel to manage risk posed from constantly changing market conditions, while on the other, doing so within the financial ambitions of their organization. To do this, there has been a notable shift in the drivers of favorability seen among the GC community over the past two years. And those external law firms and lawyers that are able to demonstrate an understanding of individual business needs and bring in wider commercial acumen to their legal advice are standing out more prominently in GCs鈥� minds.

How can law firms help?

Law firms can support those clients that are facing this challenge by demonstrating added value within their client relationships. A key area in which law firms can stand-out in is by building into client conversations clear references to the tools, technology, and processes the firm already is utilizing to ensure efficiency is provided on work matters. This is an opportunity for law firms to lift the curtain, so to speak, and give a behind-the-scenes perspective to their clients. This could prove immensely useful, since ultimately clients don鈥檛 know what they鈥檙e not being told.

By engaging in conversations at this level, not only does the law firm build a sense of transparency and added value, but it simultaneously arms its clients with information that matters most to business leaders 鈥� the cost-benefit-risk analysis needed to make sound business decisions in line with an organization鈥檚 risk threshold.

Many client organizations have a dedicated risk management team outside of the corporate legal team; however, this does not mean that GCs are sidelined from senior-level discussions on risk management.

In fact, at the end of 2022, key strategic priorities for corporate clients included compliance with regulatory changes as well as litigation prevention. The increased spend allocation over the past three years on regulatory legal support further emphasizes that GCs are closely in touch with identifying and mitigating risk.

This of course presents another area of opportunity in which law firms can support their clients to build greater value and long-term relationships. Indeed, roughly 70% of GCs in the market don鈥檛 feel fully protected from risk despite many having risk mitigation in place, according to Market Insights data from Q2 2023.

Tapping into clients鈥� formal risk review processes offers another touch point to ensure a law firm鈥檚 brand remains top of mind, especially when the very risks which you have been discussing with clients end up becoming their reality. While many clients undertake annual reviews of their risk, it鈥檚 important to note that one-third of clients are conducting quarterly or even more frequent reviews of their risk.

Therefore, engaging with clients on risk management should not purely be viewed as a once-a-year opportunity, but rather an ongoing dialogue, while also giving firm lawyers a chance to bring their wider market knowledge on tools and technologies.

Differing levels of sophistication exist among client organizations around their risk management processes 鈥� from clients who design and run their own AI intelligence software, to those who have a methodology but no supporting tools or technology. Law firms who advise on alternative options that could be brought in-house to support GCs in tightening their risk management process will create client loyalty and demonstrate wider commercial acumen, which is a key driver of client favor.

Bringing in these wider commercial pieces and being conscious and considerate of the very real pressures organizations find themselves facing can go a long way to not only building strong relationships with GCs but ultimately supporting that privileged access to the corporate boardroom.

While law firms may view the GC as a gatekeeper to the C-suite, they can turn this paradigm on its head by understanding that increasing numbers of GCs feel less confident in their voice with the board. Those law firms that can work alongside their GC clients and make them look good in front of their board are more likely to see more doors open for the firm itself.

Transform the quality of your strategic decisions by leveraging

In exploring the differences between Emerging Tech decision-makers and those from the broader legal market, we can evaluate how law firms can first capture the attention of Emerging Tech, and then how they can maintain a connection to these companies as they grow, go public, or get acquired, gaining through their corporate lifespan their own more-sophisticated in-house legal teams.

Differences in buyers鈥� role

One of the primary distinctions between Emerging Tech and the overall corporate legal markets is the decision-maker. In general, founders and CEOs make outside legal hiring decisions for Emerging Tech companies, while that responsibility falls to in-house council for larger corporations. The contrast of making legal hiring decisions as a lawyer rather than as someone on the business side has a meaningful impact on what factors the buyer is paying attention to.

In both sectors, recent contact is the strongest driver of awareness 鈥� meaning that to stay top-of-mind for buyers in Emerging Tech, as with buyers in the wider legal market, law firms need to establish regular, personalized outreach. Reputation, by contrast, has a much bigger influence on awareness for emerging tech buyers than it does for larger companies.

In fact, those founders and CEOs surveyed cited the variety of awareness drivers at a higher rate across the board 鈥� using the connections they have in the market to ensure that their external counsel has experience working with companies similar to theirs. A law firm鈥檚 reputation and past experience is therefore key to standing out in the Emerging Tech sector.

We see similar trends in favorability. In both segments, the main driver is expertise 鈥� but Emerging Tech buyers are significantly more likely to call out reputation as a reason to favor a particular law firm. Without a legal background, Emerging Tech buyers are ill-equipped to evaluate firms on quality, and therefore rely more on reputation as a proxy.

Differing landscapes

It鈥檚 no surprise that with different criteria driving both awareness and favorability, we鈥檇 see dramatically different landscapes when comparing the two sectors.

Latham & Watkins is the most mentioned law firm among general counsel from companies that have more than $50 million in revenue. When we shift to the Emerging Tech landscape, however, Latham & Watkins remains strong, but we also see Cooley and Wilson Sonsini Goodrich & Rosati, two tech-focused law firms headquartered in Palo Alto, California, emerge as leaders, even though they both have much smaller footprints in the wider legal market.

These two smaller firms also generate stronger awareness among larger tech buyers than they do in the broader market, a position that certainly serves to boost their reputation among technology buyers across all company sizes.

Sector knowledge

The success that these top law firms see among Emerging Tech buyers in part stems from their reputation as having strong knowledge of the tech sector more broadly, including among legal services buyers from larger companies. Law firms that have been identified as sector specialists by legal buyers can capture a higher proportion of their clients鈥� external legal spend 鈥� a useful lesson for any firm considering a sector-focused strategy.

鈥淚 think Cooley does a really good job of being ahead and aware of all the things that are happening in the technology space. And I think one thing I really enjoy is that their client alerts are very clean and clear and include a lot of the substance of information that you really need.鈥�

鈥� a legal buyer, speaking about Cooley

Growing with Emerging Tech

For an entry point into Emerging Tech companies, law firms should look to expand existing relationships with larger tech companies as a way to support a market reputation as a sector specialist. Participating in events like roundtables that bring together industry leaders, on both the legal side and the business side, can help a firm grow its sector specialist reputation and can become a learning touchpoint for the firm.

As Emerging Tech companies get larger and more complex, they will naturally look to bring in an in-house legal department. This can be a challenge for law firms that have already established a relationship with business leaders. A new general counsel or law department leader inevitably will come in and often bring in the firms with whom they鈥檝e worked in the past.

That means that no matter what stage your firm is at with a company, it should look to build a presence with GCs across the board so that when they come in, your firm is a known entity that has spent time developing that relationship and maintaining regular contact, thereby staying top-of-mind.

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In 成人VR视频 Market Insight鈥檚 latest research with General Counsel and corporate law department leaders, 68% said they were looking to bring work in-house over the next 12 months. This puts in-sourcing second only to process efficiency as the top tactic that GCs said they would be employing to control costs throughout 2023.

Even as spend optimism remains positive, buyers are under substantial pressure from their business leaders to contain costs.

The mobility of work鈥攚ork buyers are willing to take on themselves, move to a lower cost provider, or move to an ALSP鈥攊s a trend law firms can either view as an opportunity or threat. Partnering with clients on efficiency and better management of legal matters can position a firm to win a larger share of a client鈥檚 legal work.

This shift to bring work in-house isn鈥檛 necessarily a new tactic; however, in the last 12 months, there has been a significant shift in legal budget allocations. Less than 60% of corporate legal budgets are currently allocated to external providers 鈥� a new low over the last five years.

The level of legal spend among corporate law departments

Clients aren鈥檛 only talking about moving work in-house, it鈥檚 a process that is already underway.

How law firms can leverage their advantages

It鈥檚 undisputed that outside law firms bring high-quality expertise and regulatory know-how to the table. That said, many clients are quick to point out a few qualities in which their own internal teams prove to be more advanced than the lawyers at the outside firms that clients use most.

When it comes to business savviness and efficiency, many GCs say their own internal teams are more advanced 鈥� ratcheting the pressure on law firms to up their game in these areas in order to stay in step with their clients.

It鈥檚 undisputed that outside counsel bring high-quality expertise and regulatory know-how to the table. That said, buyers are quick to point out a few qualities where their own internal teams are more advanced than the lawyers at the firms that they use most.

When it comes to business savviness and efficiency, General Counsel say their own internal teams are more advanced 鈥� putting the pressure on law firms to up their game in these areas in order to stay in step with their clients.

Business savviness is a perennial topic in our research with General Counsel. It鈥檚 one of the strongest drivers of client satisfaction, yet is an area where many law firms are 鈥� at best 鈥� inconsistent in their delivery. On average, legal services buyers rate the firm they use the most an 8.4 out of 10 in terms of their business understanding. Not a tragic score, but still one containing plenty of room for improvement, especially given the fact that more than half of GCs say their internal teams have the advantage when it comes to business savviness.

As one GC in the technology/media/telecom industry replied when asked about what they wanted to see from their outside law firms:

鈥淓nsuring that the advice provided to the in-house counsel was easy-made, business facing. Quite often you will get back in-house advice and you have to translate it to the business, so making advice more business facing so the business understands it.鈥�

Another GC, in government services, advised outside counsel to 鈥�talk more widely about our business plans and ambitions, and then to use that as a platform to explore things they could do to help me achieve them.鈥�

Not only does business savviness help provide more actionable advice for clients, it also has an impact on perceptions of efficiency.

鈥淭hey [outside counsel] should be a bit more commercial at times rather than showing off. I say this because they have a tendency to over-comment on drafting points which have no impact on the legal documents,鈥� noted one legal leader in the banking sector. 鈥淚n other words, they need to think about what the client wants to achieve efficiency and focus their comments more on legal points rather than drafting points, unless it has an impact on the legal documents.鈥�

Finally, a law department leader in the energy industry said: 鈥淚 think they could be more cost efficient. Sometimes they do well on matters that really didn’t require that much attention. So, I just it’s a commercial element of paying attention to what really matters for the client.鈥�

Efficiency 鈥� on its own 鈥� fares worse when it comes to how clients rate the law firms that they use the most. On average, firms receive an 8.2 out of 10; which, given the push for efficiency on the minds of corporate law department leaders, is potentially a deal-killer to being hired.

With budgets under scrutiny and many GCs willing and able to move their legal work, law firms need to remember that one competitor with which they often have to contend is in fact, the client itself. That said, those outside law firms that are able to demonstrate a more efficient approach to managing legal work and are able to help corporate law departments become more streamlined in their own operations will be better positioned to win the work that does remain with outside counsel.

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Fears of missing out on opportunities or alienating rainmaking lawyers trap some firms in the ambiguity abyss 鈥� that largely undifferentiated position of saying, We are a full-service firm that鈥檚 able to meet the complex needs of sophisticated clients.

Our analysis of the last 15 years of law firm brand positioning, recently reviewed alongside law firm financial data, has produced a compelling argument for law firms to build a differentiated approach to the legal market.

A differentiated approach

There are four ways to think about segmenting and differentiating a firm鈥檚 approach to the market:

1. 1. 1. Expertise 鈥� We are smarter than other firms in this area of law.
      2. Client type 鈥� We understand this kind of client better than other firms (e., public vs. private companies, start-up vs. mature companies, etc.)
      3. Geography 鈥� We offer strength in a defined geographic region.
      4. Sectors 鈥� We can navigate the dynamics of this sector and are well-positioned to serve all client needs in this space.

While law firms need to consider each of these factors as part of their strategic plans, competitive advantages are created when one factor is considered the key strategic priority that then informs the other three. Let鈥檚 look at this concept in action.

Case Study 1: A sector-focused approach to the market

Law firm ABC has a clear sector-focused approach to the market and is heavily entrenched in the technology sector 鈥� from traditional tech companies to fintech and e-retailers, this firm serves them all.

The good news for Law firm ABC is that their stated strategy is strongly corroborated when looking at our research of more than 2,300 General Counsel and senior corporate law department leaders. (Sadly, this isn鈥檛 always the case, which may indicate a poorly executed strategic plan.)

When looking at the types of companies that keep Law firm A top-of-mind, nearly 70% of those senior legal decision-makers are from organizations in a tech-related sector. This, unsurprisingly, also means a large proportion of these companies are based on the West Coast of the United States.

More proof of Law firm ABC鈥檚 effectiveness in executing this strategy comes when assessing the firm鈥檚 ability to gain access to new work or generate more legal demand.

Our Market Insights team undertook a conversion analysis, which involves looking at what proportion of legal buyer respondents who name a law firm top-of-mind then go on to say that firm is the one they consider hiring for different types of legal work. In other words, how well does a firm convert mindshare into market share.

Law firm ABC is twice as effective at turning awareness in new work with legal buyers in the technology sector compared to all other sectors combined 鈥� an impressive proof point that underscores how the firm鈥檚 focus in this sector is more than just lip service. And the firm鈥檚 financial performance? When looking at demand (billable hours), this firm has nearly 50% higher demand growth than the average firm over a three-year timeframe.

Why differentiation works

Of course, lots of factors go into a law firm鈥檚 ultimate success, and brand differentiation is one of the levers that law firms can control. In the case study above, Law firm ABC uses a sector-focused strategy to differentiate itself from other firms in the (extremely crowded) market.

And Law firm ABC is not a one-off example.

Our ongoing research with General Counsel shows that many outside law firms identified by clients as having deep sector knowledge earn, on average, 43% of their clients鈥� external legal spend 鈥� that鈥檚 nearly 2.5-times the typical firm.

With lack of time being one of the most pressing issues that General Counsel and other law department decision-makers face, a differentiated brand helps buyers quickly understand how your law firm can help them 鈥� rather than trying to figure out if yours would be the right firm to call in a specific situation.

For more on how your firm can differentiate in various ways, , which digs deeper into understanding the various ways firms can differentiate 鈥� and .

At a recent roundtable, leaders from across a variety of sectors, mostly legal and healthcare, came together to discuss their insights on well-being at work, including the importance of employee health and well-being to the organization鈥檚 business strategy. One major component of this discussion was the question of what contributes to employee well-being? Many roundtable participants felt the issue largely revolves around employees feeling supported, understanding their position within the organization, and being trusted to work flexibility while taking initiative to balance their own work and life.

Addressing barriers to well-being as a priority

The group also sought to identify the barriers that workplace culture faces to cementing well-being into organizations鈥� strategic business priorities; and most importantly, how to move the needle in the direction of prioritizing mental health while also meeting business demands.

Many participants agreed that the barriers that keep well-being from being a top organizational priority are somewhat of a moving target. While some may look to managers as a starting point, those in managerial roles traditionally haven鈥檛 had to offer the level of mental health support that has become expected of them during the pandemic and since. Managers are rarely hired or promoted based on any soft skills, like empathy for example. In fact, many took on their managerial role to better grow their career and raise their earning power, not necessarily to nurture and develop employees. A cynical view, perhaps, but it鈥檚 only recently that a manager鈥檚 responsibility has been turned on its head to include an emphasis on employees鈥� well-being and positive mental state. Even for those managers who are deeply invested in the well-being of their team members, it鈥檚 still a heavy burden to carry.

Yet there are some potential steps managers can take. For example, the re-branding of 鈥渟oft skills鈥� to 鈥渉uman-centered power skills鈥�聽has been shown to have the聽power聽to create a positive multiplier effect around employee satisfaction and build cultures of well-being, belonging, and inclusion.

Many participants agreed that the barriers that keep well-being from being a top organizational priority are somewhat of a moving target.

During the roundtable, participants noted that managers can鈥檛 be entirely blamed for low employee well-being, as they鈥檙e typically playing the role of the intermediary, passing along the pressure to hit certain key financial metrics from the leaders above them. And while there are leaders who buy into employee well-being as a sound business strategy, that鈥檚 not the case for all managers, especially in the legal industry, which is notoriously slow to change. Even for those managers that do fully buy-in, they don鈥檛 always know how best to balance business needs with ensuring that employees have strong mental health.

Industry disruptions & diversity needs

So, how have industry leaders successfully convinced the top bosses to embrace, or at least accept, well-being as a critical component of an organization鈥檚 talent management? Getting manager and individual contributor buy-in is critical 鈥� and having a critical mass showing support for well-being initiatives can get leadership on board, participants said. Another strategy is connecting well-being to financial metrics 鈥� showing the high cost that low well-being has on an organization鈥檚 productivity and attrition. Indeed, further research, echoed by our roundtable participants, shows how office locations that offer employees strong well-being initiatives actually have reduced medical costs.

To be sure, metrics are key to understanding where an organization sits in the well-being continuum; however, collecting such data is not the only piece of the puzzle, participants explained. A number of organizations have Organizational Health Index (OHI) surveys that can include well-being questions, but how companies approach these surveys will dictate their effectiveness. Those leaders that don鈥檛 act on the feedback from the surveys will find that in the future, employees will be less likely to take part if they feel that the survey is waste of their time, and nothing comes from the feedback they provide. Closing that feedback loop, then, is key to a successful well-being measurement program.

The group also broached the subject of disruption in the way we work and how that might affect well-being. Any discussion about the future of work is incomplete without the mention of ChatGPT and generative artificial intelligence (AI) 鈥� innovative technologies that certainly have the potential to disrupt a variety of industries, including the legal profession, in ways that we haven鈥檛 seen in quite some time. Participants pointed out that AI will likely take over the more routine and less complex tasks that lawyers currently do, leaving them with the more complex, challenging, and therefore rewarding work. While this shift has the potential be a boon to well-being, it all depends on how leadership engages with these technologies and how expectations may shift as a result.

Metrics are key to understanding where an organization sits in the well-being continuum; however, collecting such data is not the only piece of the puzzle.

Given the increased pressure on managers and leaders, many may be unsure of how to judge the potential for AI to transform work, especially legal work, several participants said. While it could lead to lawyers having a stronger sense of purpose at work because they can focus on more complex work that they enjoy, it won鈥檛 necessarily lead to a shift in the work/life balance if increased productivity brings the expectation that lawyers will produce exponentially more.

While it is relatively straightforward to identify the components that can lead to healthy employee well-being, how each individual employee can get there for is much more complex. People have diverse needs and challenges, leading many roundtable participants to suggest that establishing a work culture that promotes positive employee well-being is no one size fits all proposition.

In fact, one participant joked at the start of the discussion that he chose to participate in order to find the silver bullet to well-being at work 鈥� not surprisingly, the observation was met with laughter ringing throughout the room. Yet in the end, the group acknowledged that the complexity of the topic doesn鈥檛 mean it can be ignored 鈥� barriers to promoting healthy employee well-being at work should be addressed because the benefits to an organization鈥檚 business strategy are too important going forward.

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