Attys Fear For Jobs, Client Bills Despite June Rebound

By Michele Gorman
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Law360 (July 15, 2020, 5:58 PM EDT) -- While law firms in June showed signs of steady recovery with an uptick in new casework and monthly billings, the impact is unclear for July, and some lawyers are still anxious about their clients' ability to pay their bills during the pandemic as well as potential layoffs, research out Wednesday has found.

After a notable drop in new legal matters in April and May, a spike in casework from the first days of June lasted throughout the month, according to new data released by legal technology company Clio. The report shows the amount hovered above 10% below baseline during that time.

But work again dropped at the start of July, according to Clio.

"This drop coincides both with the week of Fourth of July celebrations, as well as a steep increase in the number of new daily coronavirus cases," Clio said in the report. "While we would expect to see caseloads recover in the week following the holiday, it is unclear whether the steady increase in virus cases will have a negative effect on business for law firms."

Clio's report is based on data collected by the company's legal practice management software, which captures aggregated and anonymized data from tens of thousands of legal professionals. The company also conducted surveys between April 3 and June 22 of about 3,000 U.S. legal professionals.

The report is the third installment of Clio's research into the challenges legal professionals are facing amid the pandemic.

Last month's report found several weeks of decreased business for firms, which affected monthly billing volumes. After experiencing that decline, law firm billing has recovered slightly, Clio found in its most recent report, with the average firm billing 23% less in May than the previous year and 13% less in June than in the same month last year.

"As a lagging indicator for firm revenues compared to new matter creation, the relative increase in billing volume compared to the previous month indicates that firm revenues are recovering along with new casework," Clio said in the report.

But even with the signs of recovery for firms, some legal professionals are worried about their clients' inability to pay fees. In June, 28% of firms forfeited revenue due to unpaid bills, a slight increase from previous months during the pandemic, according to the data. In mid-May, 25% of firms said they were losing revenue for this reason, and 23% said the same at the beginning of that month, the data show.

And although Clio found that 22% of firms have hired furloughed or new staff in the past month, legal professionals said employment is another concern. While 24% of survey participants said at least one person from their firm or practice has been laid off since the start of the pandemic, 27% think more layoffs will happen in the next three to six months, according to the new report.

The economic downturn stemming from COVID-19 led to firms across the globe for weeks enacting cost-cutting measures such as furloughs and layoffs.

As Clio points out, certain parts of the U.S. are experiencing surges in new coronavirus cases. Perhaps a silver lining is that survey data from the middle of June show 68% of firms were more prepared to deal with future waves of the outbreak, largely with the help of technology.

Through June, the report also found that signs of bouncing back were apparent across the practice areas that Clio tracks, including those that had been hit especially hard with a slowdown in business earlier this year. Traffic cases, which in early April dropped to 71% below compared to baseline, in late June grew 45 percentage points to 26% below baseline, the data show.

Business-related practice areas such as intellectual property continue to show strong representation among new matters, Clio said.

As Clio reviews a live data set each month, the company said it's possible for data to shift slightly based on new information shared by its users.

--Additional reporting by Aebra Coe. Editing by Adam LoBelia.

For a reprint of this article, please contact reprints@law360.com.

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