Legal Tech and AI

¿Why are some law firms losing their most valuable assets: clients and lawyers?

The legal market looks nothing like it did five years ago. It was already changing fast, and the Covid-19 pandemic simply added rocket fuel to accelerate that. 

There are three key trends sweeping through the legal industry, and some law firms are failing to keep up with the change. That means losing clients and losing talented lawyers. 

Working closely with lawyers from global firms, including Baker McKenzie, Jones Day, and Hogan Lovells, we’ve pinpointed three areas firms must focus on to stay ahead of the curve.

1. Legal Tech and AI

It’s no secret that law firms have been relatively slow to embrace technology. The lack of innovation is compounded by snail-paced changes in legislation to allow the use of legal tech and by ethical issues with access to justice – it’s not surprising that human-generated AI replicates many of the old biases in legal systems. 

Forbes was straightforward in their assessment: “legal can no longer operate as an insular, self-contained department”. The time for change is not tomorrow, it’s now.

Top law firms are already investing heavily in legal tech which provides a way to reduce attorney workloads and associated costs; integrate law into all areas of the business; deliver a better customer experience that retains clients, and keep up with changes in the modern workplace economy. Automation maximizes margins and allows scalability old-school law firms could only dream of.

The problem is that lawyers need to change too and the new breed of lawyers coming through want to work in the most advanced firms. 

2. The Lawyer of the Future 

Look around you and it’s easy to spot law firms that were big in the early 2000s that are now a shadow of their past glory.  

Visiting a once-top law firm in Mexico, we discovered their turnover of associates and interns was over 50% a year. They were even regularly losing new Partners within 12 months. The financial and operational costs were out of control.

Why was a once leading firm losing over half of its lawyers every year?

The answer came from Tide Changer Consulting’s LLM admissions clients who had previously worked there. They expressed how the legal associate’s job description looked like it was written in the 1980s. No innovation, no openness to new ways of doing business. Associates were expected to follow the same career path lawyers had been following for 30 years. 

The lawyer of the future needs (and wants) to be more than just a lawyer. Next-generation lawyers will be experts in areas such as business administration, financial strategy, entrepreneurship, and artificial intelligence.

Moreover, further integration of law with other business functions, e.g. operations, customer experience, finance and human resources, means that the most influential talent driving change won’t necessarily be in the legal team

The most ambitious lawyers will be able to build an exceptional legal career inside or outside the legal team, rising to partner or C-suite level while also running a side hustle. Innovation can come from within the industry and lawyers are looking to work at law firms that support their interests rather than stifle them. 

The challenge is for law firms to know how to handle this hungry, upcoming talent. 

3. Ambitious Young Lawyers

This is where many old-fashioned law firms are going wrong. They simply cannot accept that young lawyers graduating from university are more ambitious than ever before. 

Young professionals want to climb to senior positions faster and more efficiently and they are willing to move if they don’t see the growth they expect.

Our LLM coaching clients come from global firms like Jones Day, Baker McKenzie, and Cleary, Gottlieb, Steen, and Hamilton, as well as top Latin-American firms such as Creel, Galicia, Ritch-Mueller, and Nader. 

What do they have in common? Thomas Guy Scott, Tide Changer Consulting’s CEO, explains that today young professionals are willing to take risks, job-hop and invest big bucks in top-tier universities to accelerate their growth. 

It may seem that loyalty to one firm is at an all-time low, and there is some truth to that. In reality, however, many of our clients walk away from law firms because the career path to partner is ten years long, the law firm doesn’t offer financial support for studies, or the Partner wants to keep them doing clerical work. 

Loyalty goes both ways and firms should be looking to invest in lawyers as paying for an LLM can be a great way to get someone’s buy-in for 2-3 years post-masters. People don’t walk away from firms when they see a way upward. 

Law schools are teaching new lawyers to be confident and fearless, so law firms need to start embracing this rather than complaining that young professionals need to lower their expectations.

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