Law firms need to abandon pursuing growth for growth’s sake  and instead look to develop new business models in what is now a buyer’s market. The warning came in a New Year report from Georgetown University and Thompson Reuter’s Peer Monitor which exhorted law firms to wake up and realise that the market has fundamentally changed.
The report said that most law firm leaders, both before and after the Great Recession, appeared fixated on building a bigger boat as the keystone of their vision for moving their firms forward.   Last year saw an overall continuation of this trend, although the report noted that some firms had begin to retrench.  They should, however, focus on building ‘a better boat’.

More competitive

The report noted that the legal market had become much more competitive than five years ago. It also pointed out that there is a very low correlation between law firm size and profitability and added that ‘once a firm achieves a certain size, diseconomies of scale can actually set in.’  Large firms with multiple offices in multiple countries were much harder to manage than smaller firms, it noted, whilst there were also ‘unique challenges in maintaining collegial and collaborative cultures, particularly in the face of rapid growth resulting from mergers or large-scale lateral acquisitions.’  Source: Georgetown University and Peer Monitor