The coronavirus has had a debilitating effect on most sectors of the economy, both in the United States and around the world. Those same sectors are now looking for a way to get to the so-called “new normal” and to thrive in it. The legal industry is certainly among this group and there were some positive trends in a recent study examining the COVID-19 impact on law firms.
The study showed that the industry hit its low point in terms of billable hours in May, roughly 6 weeks after shutdowns began occurring in the U.S. There was a sharp decrease to incoming revenue during those months. The same study shows that June saw a rebound. While the road to a full recovery is far from complete, a beginning has been made. The question now facing the industry is what changes, spurred by COVID-19, are going to become permanent features on the landscape?
The most obvious example is the question of working remotely. More people have gotten used to working from home. The managers at law firms have figured out ways—through videoconferencing and other technological tools—to establish accountability and ensure that work gets done. It’s going to be very difficult to order people back into a regular 5-day-a-week office grind. At least, it will be difficult to do that and retain talent worth keeping.
What’s more, bosses may not even want to return to the “old normal” of everyone in the office. As they get their firms moving efficiently, there’s an opportunity for significant cost savings in the area of office space. Let’s say a firm currently leases 2 floors in an office building. What if they cut back to 1 floor and had office attendance staggered?
Lease expenses are the second biggest cost in operating a law firm. Why would a firm’s partners pass on the opportunity to cut that expense in half when not doing so would only antagonize their best young talent? One group of lawyers this is not good for is real estate attorneys. If demand in the commercial marketplace dries up, the lawyers who represent the property owners will take a hit.
While law firms are feeling the financial crunch right now, the coronavirus shutdown will likely spare them the problems of increased competition. When difficult economic times hit, startup funding becomes harder to acquire. Those younger partners who might have been ready to strike out on their own in February are now faced with a different reality. That means more talent on-hand for the established firms and less competition.
Personal injury lawyers might be the most anxious for life to return to something resembling a normal flow. While all lawyers can conduct basic business from home, a personal injury lawyer can’t win a case until courtrooms reopen. And since most of them work in contingency, that means they can’t get paid.