New research suggests small and mid-sized law firms are feeling less bullish about the future than they were last year, with disparities emerging between how solicitors see themselves and what is happening in reality.
LexisNexis’s latest bellwether report, published today, shows that business confidence and performance have dipped since 2015. Nearly half (48%) of firms said business is growing, compared with 63% last year.
Questioning whether the drop in business confidence is a ‘temporary blip or an early sign of another downturn’, the report highlights several examples of a disconnect between perception and reality.
For instance, only one in three respondents said ‘increased specialisation’ is a priority, but most agreed that generalist firms are more vulnerable than specialist practices.
Almost all respondents believe technology is a ‘must’, but the report suggests lawyers are still ‘reticent’ about using it throughout their business.
Eight in 10 respondents use IT for forms, research and guidance. The figure drops to five in 10 using automated precedents and calculators, checklists and flowcharts. Two in 10 use drafting and proofreading tools.
The report states: ‘More widespread use of these technologies would almost certainly speed up the handling of matters, regardless of staffing levels and firm size.’
More than two-thirds agreed that change is not a strength for lawyers in general, while maintaining that they have made significant progress in their own practice. There is also a ‘great deal’ of uncertainty about the ideal size-to-profit ratio. Less than half of respondents believe they have got this ratio right.
When asked whether their firms were ‘optimally sized for profitability’, larger firms were least likely to agree that they get this right.
Some saw the need for growth ‘as almost a foregone conclusion’, while others questioned whether growth is sometimes implemented out of sheer vanity rather than for sound business reasons.