Small Firms, Big Issues: Highlights of Thomson Reuters’ 2017 State of US Small Law Firms Survey
More than half of all lawyers in the United States and Canada work in small firms of less than 30 people. In a sea of reports on the state of the (large firm) legal industry, it’s nice to see recognition of their particular issues in Thomson Reuters’ State of US Small Law Firms Survey.
Here are my key takeaways from the survey.
Most lawyers consider themselves successful
86% of respondents report that their firms are “successful” or “very successful,” despite the pressures of the current legal landscape. Firms measure success differently. A quarter of the respondents identified overall profits as the most important element in defining success, but client satisfaction ratings, the ability to win repeat business, overall profits, and work/life balance were other common elements.
There’s a critical disconnect between knowing and doing
The survey respondents recognize they’re under significant pressure, but they aren’t doing much to deal with the challenges they’ve identified. A full 23% of respondents haven’t made any changes in the past two years.
This reminds me of Altman Weil’s 2017 Law Firms in Transition report, which revealed a “huge disconnect” between what leaders of some of the largest law firms know they should be doing and what they are actually doing. I would have expected less inertia in smaller firms. With fewer people, it should be easier to make decisions about innovation and change.
For those who did change, the majority reported that a desire to improve quality and reduce cost was the key motivator. Changes included:
- adopting new technology (47%)
- changing marketing strategy (34%)
- changing staffing ratios (28%)
- allocating work to lower cost resources (20%)
Lawyers are spending too much time not practicing law
Nearly 40% of each respondents’ workday is spent on administrative and other non-legal tasks.
No wonder managing the balance between client and administrative work is seen as presenting at least a “moderate challenge” to 70% of the respondents.
And no wonder becoming more efficient ranked second on the list of important positive factors in firm performance: 39% said improving internal efficiency was either the “most important factor” or an important factor in firm success.
The top-ranked factor for firm success? Growing relationships with existing clients
45% of respondents reported that better firm performance came from better client relationships. Changing the lawyer/partner structure and creating greater differential from competitors were both ranked by less than 10% of the respondents as driving performance in 2017.
2017 was just the second year for this survey of small US law firms. Since two data points don’t make a trend, it will be interesting to see what Thomson Reuters’ 2018 survey reveals.
Will parallels between large and small firms continue? Will more firms report having faced their challenges head on?
Only time will tell.