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Casework Up, Billing Down: Law Firms Experiencing Delayed Recoveries

by Giulianno Lopez


Although the COVID-19 pandemic triggered sudden and dramatic changes to the legal industry, more firms are now taking on new matters, yet revenues have declined considerably. As a result, many law firms are adopting technologies necessary to meet clients’ needs and enable remote work. A growing number see technology as being more important to them since the start of the pandemic.

According to a survey of 208 practicing lawyers and 2,400 legal consumers conducted by Martindale-Avvo, over 80% of all U.S. law firms experienced a significant drop in revenue during the pandemic. Also, 27% of those firms reported a business decline of 50% or more that forced them to lay off and furlough employees, a decrease that came even as 95% of law firms reported accepting new clients. However, there are more challenges law firms could still encounter during 2021 and into the future.

Why Has Revenue Declined?

Citing another recent surveyLaw Sites said that the decrease in billing volumes was primarily due to an earlier drop in new matters. The average law firm reported 14% lower billing rates in April and 27% lower in May than during the same period in 2019. Also, high unemployment rates reaching over 14% in April prompted over 70% of the responding attorneys to express concern about their clients’ ability to pay their legal fees due to pandemic-related job loss.

How Have Firms Responded?

Out of the attorneys surveyed by Martindale-Avvo, 62% said that they estimate that it will take up to a year for their firms to get back to the financial footing experienced before COVID-19. In response to this dramatic loss of revenue, firms are temporarily cutting compensation, reducing equity partner distributions, resizing their workforces, and increased operational flexibility for attorneys and staff members, particularly for those with young children. 

However, some firms see technology as their way out of the downturn experienced during the pandemic. According to Jennifer Leonard, head of the Future of the Profession Initiative at Pennsylvania Law School, COVID-19 has resulted in “forced experimentation” within the legal industry. Leonard said this situation has prompted law firms to quickly adopt technology to allow attorneys and staff to work remotely, utilize videoconferencing technology to conduct litigation remotely, shift their operations to the cloud, and reduce their physical footprint to cut costs and maximize shrinking revenue.

Firms are also looking to diversify their practices or change focus entirely, with 42% of the attorneys surveyed by Martindale-Avvo indicating that they were considering adding at least one new practice area to their firm’s offerings post-pandemic.

To find out more about how technology can help propel your firm move forward, contact Everlaw today.