Block on Trump's Asylum Ban Upheld by Supreme Court
Equity partners at big law firms had a windfall in 2020. The Thomson Reuters Peer Monitor Index rose to a near-record high in Q4. Profits for equity partners increased by double digits. While demand slowed significantly early in the year, big law firms made up for it through increased rates and cuts to overhead, and by the end of the year, demand was back to near pre-pandemic levels. All signs point to another solid year of profits ahead. Of course, not to be lost amid all of that cheerfulness, it should be noted that big law associates bore the brunt of the economic fallout from the pandemic with massive layoffs for the first time since the Great Recession.
Meanwhile, small law firms are facing a much murkier future. Increased competition, managing technological challenges (including working from home and cybersecurity), and providing value for cash-strapped clients is a full plate. Many industries remain in economic tatters, including those served by small law firms. Getting clients can be difficult; getting those clients to pay on time even more so.
Small law firms are an often under-researched segment of the legal industry. However, last September, the Thomson Reuters Institute released the 2020 State of U.S. Small Law Firms. The results suggested that billing and collections were a large area of concern for firms with under 10 attorneys, with competition from other firms being the biggest barrier to attracting new clients.
So, while the rich get richer, what are small law firms supposed to do? Below are some suggestions.
With a crowded marketplace that will only see increased competition in the coming year, small law firms will need to adapt to a changing industry. While it's good to see big law managed to mostly survive the pandemic, small law firms still face difficulty ahead. Here's to having a successful 2021.
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