The Legal Trends Report for 2018 has been released by Clio, and includes an abundance of information to help your law firm thrive. Up-to-date, in-depth consumer analyses, data on hourly rates and efficiency metrics, and how to assemble and relate this information to help your firm prosper. Data from tens of thousands of legal professionals is collated here to help you better understand what drives your customers to recommend your services, the critical metrics of a firm’s success, data on billable hours, and much more to help inform your own practice.
The introduction to the report states clearly the crucial importance of how lawyers must always consider the needs of their customers, and the importance of data to help instruct firms toward how to best meet client needs. Indeed, this data-driven study draws from aggregated and anonymized information from thousands of legal professionals, allowing for clear measures of business trends while preserving absolute privacy.
New to this year’s report is the inclusion of consumer needs to help shape your decision about hiring lawyers. Understanding what drives your client in both positive and negative ways will help you to improve customer satisfaction, retain clients, and earn new referrals.
Data sources included in this report come from Clio, whose trend information was gathered from nearly 70,000 legal professionals, a law firm survey which included 1,968 legal professionals, and a consumer survey from 1,336 who have hired legal representation or dealt with legal issues without representation in the past two years.
Survey respondents were asked what goals define their firm’s success and most of the legal respondents (a whopping 84%) placed increasing revenue at the top of the list, with improving the firm’s operations efficiency just below, at 80%. What was noticeably far down on this metric was growing a client base (34%), and billing more hours (23%). These are in fact two of the most impactful drivers for your firm’s success, and are too often overlooked.
Law firms also consistently struggle to dedicate time to billable work. In an average 8-hour workday, utilization rates (the number of billable hours worked divided by number of hours in a day) was just 30%; a mere 2.4 hours of the 8 hours worked. When you factor in the number of billable hours that don’t get reflected on an invoice and the amounts which never get paid, the average lawyer earns just 1.6 hours in billable work each day. This data suggests strongly the crucial need for efficiency to increase revenues and prevent serious profitability issues.
Being able to carefully analyze where your time goes each day is something that has been made easier by the data gathered for this report. It is already clear that tasks such as administration and marketing take up a lot of time which could otherwise be spent on billable tasks, and data suggests that building a client base in particular takes up much of a lawyer’s time. Breaking down the average hours a legal professional spends on certain tasks daily, lawyers spend most of this time on billing and financials, marketing and business development, and firm organization and administration. And although the average lawyer aims to spend 46.8 hours per week working, they most often find themselves working an extra 2.8 hours a week, which is roughly 3.5 weeks extra per year. Therefore, 77% of lawyers are working outside of their regular business hours, so it is important to find ways to streamline and automate non-billable tasks to ensure that each member of their team is at their most productive. Understanding the relationships between wanting to increase revenue, hire more staff, and reduce spending means a stronger focus on billable hours, as well as knowing what your clients want so that you can attract more business and drive those profits forward.
It is by understanding the legal client where your successes will take place. While many negative emotions are attributed to the legal process, lawyers should recognize that the most commonly felt emotion is relief when clients are dealing with a legal problem. By keeping in mind that you are in a position to help your clients with some of their most pressing problems, and delving more deeply into what factors influence people to use legal representation, shifts can begin to take place.
Just 59% of those surveyed said that they would utilize the law to face a potential legal problem. What is holding them back?
They’re not jaded: 45% of the general population sees the legal system as fair, whereas only 24% of lawyers believe that consumers believe this. There is a lot of disparity between what lawyers assume about their clients and how their clients actually feel. In a survey that included reasons to avoid legal solutions, respondents cited overall cost, value, and price transparency. Cost is a much bigger barrier than factors such as being confused or overwhelmed by the legal process, and statistics show that legal problems commonly faced without help include things like traffic violations and family concerns. Although many consumers are facing legal issues alone, 76% are still very likely to speak with a lawyer.
So why do people hire lawyers? Need and benefit trumped affordability. When a client was faced with an issue they felt they couldn’t handle alone due to its seriousness or their own lack of knowledge, consumers were much more likely to hire legal representation. We know that hiring lawyers is beneficial and more satisfactory to clients than facing a legal issue alone, but how can this lead to new business?Let’s look at a few factors which impact the likelihood of recommendations. Cost is hugely significant. If your clients feel that the services rendered are compatible with your fees, they are more likely to recommend you. It is important to look carefully at the data here, for personality of potential lawyers and initial conversations with legal staff are big indicators in recommendation, as well.
The next step after analyzing this data is to dissect it carefully to glean insights about how to deliver excellent client experiences. If this report shows us clearly that previously neglected attention to client needs is massively impacting your firm, it is time to figure out how to correct the issues by helping to understand and deliver client desires. By looking at some of the previously cited disparities in how lawyers believe their clients are feeling about working with law firms, and how clients actually feel about working with law firms, we can begin to work this out and better serve their needs. According to the survey, client expectations, therefore, should be the “baseline for how lawyers structure the delivery of legal services at their firms.
Discrepancies in the data continued with those surveyed, with lawyer and consumer information wildly divergent in their perceptions and expectations around communication. What lawyers think their clients want to discuss and what consumers actually expect is a great example of where there needs to be some work. Page 37 of this report shows a series of graphs which lay out some of these remarkable differences in plain sight. Expectations for in-person meetings were equally diverse between lawyers and their clients, as was using the phone for communication.
If 68% of your clients expect you to be available outside of your office, and 59% expect you to be available outside of your office hours, lawyers need to find some creative solutions to try to meet some of these expectations. Technology is a great method for balancing service with cost, as remote access and task automation can assist lawyers with availability without sacrificing time.
Online payments and client portal updates are included in this report as other methods which can improve both administrative and client payment efficiencies. Clients want electronic payment options and the ability to check online the number of hours spent on their case at any given moment. With 50% of clients who’ve dealt with a legal issue in the past two years more likely to hire a lawyer who takes electronic payments, 47% more likely to hire a lawyer who accepts automated payments, and 40% saying they would never hire a lawyer who didn’t take debit or credit cards, implementing these systems for the benefit of your consumers will see immediate positive effects on your own firm.
It’s not all about the customer, either. Focus on the needs of the lawyer is also stressed in this report. Utilizing communication that works for you helps manage efficiency within your firm, as well. Interruptions to lawyers by clients and the subsequent time it took to refocus took a lot of time away from work. The key here is to look at how lawyers’ tendencies to not communicate often enough with their clients initially can be contributing to these continual interruptions. Clients want to be updated on their case more frequently at 42% every week to how often lawyers expect their clients to want to be updated (24% every week). Takeaway from this part of the study suggests that lawyers need a more structured environment for communications so that excellent client service and not losing time for the lawyer are balanced.
Benchmark data for the legal industry includes all of the information that your firm needs to know how much your time is worth. Included in this report is the determination for hourly rates for the US as a whole and in individual states, metropolitan area, and practice area. The billable hour index for February 2018 indicates that while lawyer rates have exceeded or kept pace with the CPI over the past few years, non-lawyer rates have remained mostly unchanged since 2017.
Influences on hourly rates, frequency of discounting, actual and adjusted firm rates within different states over a three-year period, and highest and lowest hourly rates are clearly marked in the following pages.
Knowing that the most common factors which influence hourly rates include pressure from clients for deals and a lawyer’s reputation may be an area that legal professions could look at more closely when determining their own rates. Looking over the chart for discounting reasons within different firms can explain some of the reasons for low billable hours for certain practice areas. Information about rate increases can help inform how often the lawyers in your firm raise their own r, and when it is appropriate to do so. Actual and adjusted rates laid out by state is a great way to adjust your fees to reflect cost of living and purchasing power. Highest and lowest hourly rates by common practice areas on page 54 indicate averages which your firm should strive to match
Clio’s Legal Trends Report for 2018 explores the underlying causalities influencing trends, complemented and enhanced by surveys to help those in the legal field understand how best to drive both profits and customer demands for better business practice. These investigations can help to better align the analyses with the goals of legal firms, and the key consumer findings have helped to generate deeper insight into how lawyers are meeting their clients’ needs, and strategies to help in areas they are lacking. This report is instrumental in recognizing how to meet the needs of both your firm and your clients, and to support the future of both.
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