You may have noticed that small-firm lawyers sometimes get a bad rap. Whether it’s reports of less-than-appealing income levels or suggestions that in the rapidly changing landscape, small-firm lawyers will go the way of the dinosaur, small-firm practices aren’t always described in favorable terms.
But the truth is, the future of small law firms isn’t necessarily grim. Some small-firm lawyers are thriving in the midst of an ever-changing and competitive legal landscape. For example, the results of the 2018 Citi Hildebrandt Client Advisory show that greatest successes in the prior year were found in the largest and the smallest law firms. As explained by the authors of the report:
In 2016 and thus far in 2017, we saw firms with strong brand names outperform the market. Interestingly, in the same period, we saw this phenomenon manifest itself at both ends of the market, as a number of the largest firms in the market and the smallest (many of them boutique firms) capitalized on their brand names, producing stronger results than mid-market firms.
And it’s not all gloom and doom when it comes to small firms and technological change. In the recently published second edition of the groundbreaking book, “Tomorrow’s Lawyers: An Introduction To Your Future,” renowned legal futurist Richard Susskind clarified his earlier conclusion (made in the first edition of his book) that most small firms wouldn’t survive past 2020 and suggested that small firms that provided unique, customized, responsive legal services would survive the transition. Sounds a lot like the successful boutique firms referred to in the Hildebrandt survey, doesn’t it?
His advice to small-firm lawyers is that they envision their place in the ever-evolving legal industry and then pivot in order to succeed in the midst of rapid technology-driven change. In the book, he suggests small-firm lawyers take into account the following factors when adjusting course:
Ask… in the 2020s, what unique value can we bring as a small legal business? Here are a few answers that pass muster: our clients have told us unequivocally that they do not want us to change; our community requires a wide range of legal services and there are no obvious competitors to our traditional offering; we are acknowledged specialists and, although small, we are as expert as anyone; although we are lawyers our clients come to use because we are their general business advisers; because we are smaller, we can offer a higher quality of service at significantly lower cost than any other legal businesses; our clients come to us because they are prepared to pay extra for a high touch, face-to-face service.
Further proof that small-firm lawyers are thriving can be found in the results of the recently released 2018 Martindale Legal Compensation Report. According to the Report, small-firm attorneys earned an average of $226,000 in 2017. The top three compensated practice areas were intellectual property ($240k/year), personal injury ($237K/year), and employment law ($225K/year).
In other words, not too shabby. It would seem that many small-firm lawyers are achieving success outside the rat race of Biglaw. And those firms led by forward-thinking lawyers are the most likely to be positioned to prosper in the years to come.
Given this data, how does your small firm compare? Which practice areas are most profitable for your firm? What steps are you taking to ensure your law firm’s future success? Certainly the path won’t always be easy, but if you plan ahead and make intentional, informed decisions about technology today and innovate to achieve efficiency and personalized client service, your firm will no doubt be in a better place tomorrow.