The Pandemic's Long-Term Impact On Law Firm Operations

By Brian Burlant
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Law360 (November 17, 2020, 5:08 PM EST) --
Brian Burlant
Brian Burlant
2020 has been a year of seismic change that has provided law firms the opportunity, if not the necessity, of evaluating and reshaping their business models and service propositions. We are starting to see a flurry of activity, from restructuring personnel to a broader rethinking of the workplace and practice mix.

Whether these actions are tactical and reactive to COVID-19 and the presidential election, or strategic for the long term, they all foretell a changed landscape for 2021 and years after. These actions will continue to affect staff, lawyers, vendors and the competitive landscape, and, I would expect, will continue to accelerate changes to the client relationship.

Here are a few observations and what will surely be imperfect prognostications for the coming year.

Talent: Restructuring, Retention and Training

Law firm layoffs this year are affecting staff and attorneys. From what I see and hear firsthand, I think this portends a more permanent strategic shift in law firms' organization and is a direct result of two trends this year, one permanent in my view and one more cyclical.

First, some layoffs of staff and, more subtly, of associates and partners can be attributed to the economic realities of our COVID-19 economy, which has slowed some practices, such as mergers and acquisitions, and elevated others, such as bankruptcy and restructuring, life sciences, and data protection and privacy.

More fundamentally, law firms, thrust this past spring into the crucible of a remote working model, have emerged tougher, leaner and substantially injury-free. Buoyed by technological investments and easy-to-adopt technology like Slack, Microsoft Teams, Google Meet, Zoom and Cisco Webex, law firms are reducing staff made redundant by a move to a virtual workplace, which has enabled a seamless service delivery to clients. This virtual shift has changed the way law firms work — from secretarial and administrative functions to back-office and catering support.

By way of example, the time-consuming — even if not higher-order — on-site aspects of secretarial roles have all but been eliminated during this period, including phone screening and office gatekeeping. Further, other tasks borne by these staff members are increasingly redefined and reallocated. For example, document production is being more easily shared across resources and geographies; billing is often moved to specialist centers; and calendaring is now maintained by the lawyers themselves.

I also typically hear that work production itself is more efficient. The productivity that is lost by our missing the everyday interactions of the office is somewhat offset by the time gained in eliminating commuting, in having immediate access to team members online and, to the chagrin of everyone I know, in an increased blurring of any traditional personal time-office time boundaries left to us.

As service efficiency, cost and competitive pressures continue, firm management are focusing, too, on collections, productivity, billing rates and utilization of their attorneys, and seeking to preserve existing margins as well as migrate to higher-margin practices. Firms are also moving to eliminate excess capacity to reduce costs and provide more cost-efficient service to clients, which themselves face the same competitive pressures and trickle that down to their vendors.

Some of this activity is no doubt temporary and tactical, just as we have seen with the rollback of compensation cuts made earlier this year. Yet, we continue to see a broadening divide that has been accelerated by COVID-19.

This gap is exemplified, on the one hand, by those firms that have chosen not to — or have been unable to — make whole those staff members and attorneys who bore those earlier cuts and, on the other hand, by those firms that have stepped forward with sizable COVID-19 bonuses for their associates and counsel. In addition, even the most successful of firms are adjusting their compensation practices to reward their most productive rainmakers, lest they lose talent to higher bidders.

Notwithstanding many law firms' successful adaptation to COVID-19, firm leaders are highly sensitive to the resulting challenges to developing future talent. The absence of on-site training, supervision, mentoring, observation, brainstorming and social interaction within the firm and with clients is incalculable.

Three years hence, we will likely start to know how well today's incoming and junior associates have developed. Perhaps 10 years hence, we will know what kind of partners they have become with respect to their legal, personal and professional skills and with respect to the depth and breadth of business relationships they have begun to develop. Let this be an opportunity for firms to take the business development training of their associates seriously, since it could not — and should not — be left to any given partner's taking a favorite associate under their wing.

Whether this year has been but a blip in associates' development, or something greater, firms are thinking hard about what they can do to make the virtual experience as similar to in-person experiences as possible. Ultimately, any amount of virtual work, training and socializing is a pale substitute to in-person interactions; in addition, it is difficult to integrate clients into those efforts.

Remote Working Is Here to Stay

How well firms have functioned while working remotely will, I believe, have long-term impact on how lawyers work. Notwithstanding the recent news of an effective vaccine, there will be a longer-term rebalancing of expectations of on-site time.

While there is a natural desire among us to be physically present and interact, the liberty of working remotely from home is a genie that will not be put back into the bottle. There will still be some baseline of in-person requirements — for example, for client meetings and training and supervising others — but that baseline will henceforth exist at a different level.

This trend is driven by partners as well as by Generation Z and millennial associates — both parenting and nonparenting — and likely portends further changes in parental leave policies and hopefully an increasing propensity among firms to provide meaningful partnership opportunities to those who have or share parenting responsibilities.

In addition, as real estate is a law firm's largest fixed cost, we are seeing efforts by law firms to rationalize their internal workspace and overall footprint, and we expect this to continue into the coming year.

Expecting a significant portion of their workforce to be remote at any time, law firms will have a reduced need for physical space and are increasingly configuring workspace for shared space and smaller and more uniform offices, much as leading tech companies do. Vaccines and office environmental adaptations to COVID-19 — such as special lighting, air filtration and office cleaning — should allay lingering concerns over shared office spaces.

The Election and Anticipated Work Mix in the Coming Year

The incoming administration will be able to do much in shifting the regulatory environment irrespective of whether the U.S. Senate remains in Republican hands. We can expect a greater emphasis on areas of practice such as antitrust, white collar, securities enforcement, renewable energy, environmental, and labor and employment practices, and have already seen indications of this in our recruiting activity this year.

M&A deals and broader finance work will hinge on more macroeconomic and global impact. Recent stock market activity has already favorably factored in a Joe Biden presidency and split government, not to mention recent news of a working COVID-19 vaccine.

Conclusion: Managing the Unknown

If COVID-19 has taught us anything it is that global circumstances can change on a dime. Hence, managing rapid change and an increasingly competitive environment is essential. A firm's future success in this new reality will hinge on management that is adaptable, resilient, agile, flexible and focused.
             

Brian Burlant is a managing director at Major Lindsey & Africa.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

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