LawVision and Iridium Technology (now part of BigHand) have today shared the results of their fourth annual law firm profitability survey.
The survey, with responses from 74 law firms covering over 50 questions is a unique, in-depth view of law firm profitability with top-of-mind questions on legal trends such as salary and talent wars, as well as strategic nuts-and-bolts approaches to cost allocation and reporting. With the survey now in its fourth year, many questions also now include four years of data comparison.
This year the survey respondents reported extraordinary results with firms experiencing strong growth and profit satisfaction. In order to maintain continued growth in the coming year, the findings confirm a focus on the return to profit fundamentals, with greater focus on pricing, utilization, client focus, and talent.
Some key findings include:
- 66% of respondents said they are focusing on rates and pricing
- 32% are also focusing on utilization
- 21% are addressing leverage
- 43% of the respondents are introducing new profit metrics
- 43% emphasized client development and hiring lateral talent
Talent attraction and retention continues to be a top agenda item when it comes to sustained profitability with 35% looking to hire dedicated Pricing roles, and a large uptick in firms looking to add Data Analysts/Scientists and Matter Management Professionals too.
This talent focus highlights the need to address a holistic, complete financial picture for effective profit management from top-line to net contribution. There is a cultural transition happening with firms moving away from looking only at top-line measures like originations and hours.
With this in mind, the report confirms that information transparency is a critical component of profit success, and there exists a movement in the evolving use of profit applications and visualization tools with profit metric production, analysis, and delivery. Running a profit-centric firm, while still early for many firms, is gradually becoming a familiar part of the lexicon. Process maturity is increasing, and firms are more profit-savvy.
Access the full report on LawVision and Iridium Technology.