LexisNexis Bellwether 2022 Report: Transformation troubles
More than 80% of small and medium law firms reported financial performance at or better than expectations. But the post-COVID boom is receding, and the ‘great resignation’ has led to renewed pressure. Ambitious firms are turning to legal tech to help them thrive.
Today, LexisNexis Legal & Professional released the 10th Anniversary edition of the Bellwether, titled “Transformation troubles”. Building on a decade of sharing insights on the independent legal market, this report suggests that the post-lockdown boom has continued into 2022. 91% of the market voiced confidence in the future of their firm and 33% noted they had outperformed revenue expectations – maintaining the highs of 2021.
Having endured several tough years, firms are starting to feel the benefits of the tough decisions they made to survive. However, external pressures continue to challenge profitability. A staggering 81% of respondents, with knowledge of their PII, reported that their costs had increased at renewal.
Whilst there remains a clear desire to grow organically, the number of firms actively open to a merger or acquisition has climbed almost 10% since 2021. This may be because we are seeing signs that the post-pandemic growth boom is plateauing. 51% of respondents stated they were growing, a notable slip from the 66% in 2021 and 57% in 2019.
Just as growth projections return to the pre-pandemic ‘normal’, the traditional problems for the sector have also returned. The ‘great resignation’ has left its mark on the sector. Around 50% of contributors commented that recruiting and retaining good lawyers is now one of their top 3 challenges, with sizeable unease that they would be able to compete effectively for talent. This is clearly causing pain, as winning new business is seen as an equally big challenge.
To combat these threats, ambitious firms are investing in cloud-based tech to drive greater efficiencies and win more business. 36% had already increased their investment in technology and 24% were planning to do so. When asked which tech tools are currently in place, perhaps unsurprisingly, teleconferencing software such as Microsoft Teams had the highest adoption rate at 79%. This was followed by legal research tools, such as LexisNexis, at 69%.
Whilst some firms have welcomed technology with open arms, 47% say they have no plans to invest in any technology at all. 74% say they still use Google for free research and guidance – even though 63% of the survey acknowledged this was riskier and slower than using legal tech.
The divide in the industry continues when looking at business generation activities and ways of working. Only 46% are investing in their marketing spend and 55% are developing a social media strategy. Almost 50% are insisting their teams come into the office 5 days a week.
Rakhee Patel, Senior Marketing Manager and the report’s author, commented “It is wonderful to see that the industry has found its feet again after such a challenging period. But with continued challenges with recruitment and business generation, firms must be open to embracing new technologies so that they can survive, grow and thrive.”
Read the report here: https://www.lexisnexis.co.uk/insights/bellwether-2022/index.html
