The legal sector COVID-19 impact is one of the more multifaceted changes occurring as the virus impacts the globe. Legal industry trends are rapidly changing, and law firm innovation is at the forefront of practitioner's minds. Luckily, many American law firms anticipated the economic crash and acted accordingly, almost immediately implementing work travel restrictions and bans to hot spots and cutting down staff to maintain vitality.
"transactional practices are primed to suffer"
Support workers were the most affected by these cuts. Many firms were forced to close by state governments when nonessential businesses were shut down, leading many firms to wonder whether or not they will ever reopen as demand changes play out across the law realm. Practices based in restructuring may see an influx in demand, whereas transactional practices are primed to suffer.
The legal players most negatively impacted by the pandemic shutdowns will likely be litigation lawyers and those working on contingency cases, since hearings, depositions, and general legal firm processes cannot be continued while the courts and administrative offices are closed. This may give way to a lack of pressure placed on litigants to actually settle their cases, which in turn may increase the financial uncertainty of contingency lawyers and their firms, as they can only collect their fees once cases are resolved. Also on the list of sidelined companies are legal departments and law firms that specialize in providing legal services to business mergers and acquisitions, as many of their clients have decided to wait until this global crisis passes before making any firm decisions regarding M&A.
Despite the dire circumstances, many law firms - especially those under financial strain - are seeking to have their banks extend their credit lines, and implementing technological tools to continue to operate their businesses via video conferencing and remote work. Some firms are even seeing a surge in business - insurance lawyers and employment attorneys have proven vital towards helping businesses navigate the COVID-19 crisis. Cybersecurity attorneys are also in high demand as businesses shift to remote work and digital transformation. Bankruptcy attorneys are rising to the challenge as well as the financial crisis worsens and more organizations find need for their services. This legal industry transformation demands rapid law firm innovation - practices must pivot to continue meeting demand.
Lessons from previous recessions are going to be vital as law firms progress through the pandemic induced economic downturn. For instance, law firms have previously done better in downturns than the overall economy - of the past 3 recessions, only the 08-09 financial crisis saw a decline in aggregate Am Law 11 revenue. However, regional exposure played a role in who suffered the most in 08-09 - market weaknesses were felt most acutely by New York, national, and international law firms. Firms should note this moving forward in the pandemic economy, and plan accordingly.
No matter what, some firms will fare better than others.
It is important to poise your firm to come out on the higher end at the end of all this. Ensuring your law firm process is following long term secular trends will work in your favor as these tend to be accelerated during recessions. It can also be beneficial to review what other firms are doing to mitigate the negative impact of COVID-19, all while bolstering their reach. Here are some noteworthy instances:
COVID-19 will continue to change legal industry trends so drastically that firms must be prepared to alter their operations to best meet the transformation of the legal industry. In this increasingly digitized commercial realm, firms need to innovate and implement as many technological advances as they can to stay on top.