Are you looking for the 2020 Legal Trends Report? Alistair Vigier, the CEO of ClearWay Law, read the 91-page report, and you can read the main takeaways if you are short of time below. If you are attending Clio Con 2021, reach out to Alistair on his Linkedin to share your thoughts about the legal industry. We will be writing more articles throughout Clio Con. We are happy to share thoughts of lawyers and attorneys on our website, so let us know! All photos and graphs in this article are from the Clio Legal Trend Report unless otherwise indicated.
What Is New In The 2020 Legal Trends Report?
It focuses on COVID-19. It gets deep into what has happened with SARS-2, and how that has hurt many people who need legal services. The virus has also of course hurt many law firms. There are graphs below in this article that show the impact on each practice area and city. The data came from law firms and legal services consumers. Around 20,000 people were interviewed.
How law firms can recover. Lawyers and attorneys need to be clear about how they are going to survive the market crash. They need to set a plan for the next month, year, and five years.
How attorneys can get clients. Given that Clio is a cloud-based technology provider, they show in the 2020 legal trends report how the cloud can help lawyers. Clio says that this is especially true during SARS-2. Further, the cloud will help lawyers, clients, and law firms have a better experience.
Where Does Clio Get Their legal trends Data From?
Clio gets their data mostly from harvesting the data they get from law firms. The data is anonymized, so there are no privacy breaches. All of the data comes from the USA. However, for law firms in places like Canada, Australia, and England, the data is still very useful. The data comes from over ten thousand law firms all across the USA.
Clio also did in-depth research on over ten attorneys as they tried their best to deal with SARS-2. The most valuable things that came out of the 2020 Legal Trend Report were the graphs.
How legal practice areas and geography were affected by SARS-2
Below you can see the graphs to see how your state (if you live in one of them) and/or your practice area was affected. New York was the hardest hit by COVID-19, so it makes sense that it hit the legal industry the hardest. Florida did the best, possibly because the warm weather kept people’s immune systems stronger than New York
New York State also has a very dense population, whereas Texas and Florida are more spread out.
It is clear from the graph above that once COVID-19 hit North America, everything ground to a halt in March 2020. However, by June 2020, California, Florida, New York, and Texas were back to normal.
n terms of practice areas, business law has now stayed mostly the same as before SARS-2. Some areas of law, like Intellectual Property and real estate law, are actually up. I see business law struggling over the next few months with the second Coronavirus wave. I am surprised that real estate is up, and I wrote a detailed article on why we are in a housing bubble.
Traffic offenses seem to be the hardest hit area of law, as people stayed home and stopped driving.
Family law and divorce was the least affected of these four practice areas. However, unlike what the memes suggest, there was not a massive increase.
Criminal law and personal injury were not affected much.
How Hard Did Sars-2 Hit The Legal Market?
The average lawyer does around $10,000 in revenue per month. When you look at the graph below, it’s clear that revenue per lawyer was down around 20%.
As can be seen in the graph above, revenue started to drop in March 2020. April and May were the worst months for law firms.
Things started to get better over the summer. However, in September 2020 (not shown in the graph), COVID-19 started its second wave. It is likely that people’s immune systems were stronger in the summer. With fall now among us, people are getting tested more often as they are harder hit by the Coronavirus.
Legal Trend Report 2020
The events of 2020, specifically the outbreak of the coronavirus pandemic, have been very hard on law firms. Lawyers have been forced to work remotely, regardless of whether they wanted to or not. If clients wanted to meet their attorney in person, too bad. Lawyers have had to figure out how to adapt to the legal-service model that will be better suited to the needs of clients.
ClearWay Law operated a virtual law firm for two years before moving to an online marketplace for legal services model.
Improving The Legal Market
There have been problems with the legal market in Australia, Canada, and England for a long time. People have a hard time hiring a lawyer. Sometimes it’s because of price, other times it’s because they can’t find a law firm they like or trust. COVID-19 has now made things even more difficult for clients and attorneys to connect.
The discussion has been about legal aid and pro bono work. However, it’s time to look at this as the larger, more systemic issue that it is: a product-market-fit problem. Lawyers need to make a living, they can’t work for free. Unless the governments of Australia or Canada want to offer universal legal care. This would be the same as how doctors are paid in Canada. In Canada, a doctor gets $166,400 and helps the public. Could this work in the legal industry? Would lawyers see the public from 9 am-5 pm and get $166,400 per year?
It’s unlikely that this would happen any time soon, due to the massive government tax deficient.
The Product Market Fit For Law Firms | Legal Trends Report
The product-market-fit problem is one characterized by a business delivering a product that is out of sync with market demand. The issue manifests itself in the form of a massive latent market for legal services, where the majority of those needing legal help don’t get it. This is a missed opportunity for law firms.
77% of legal problems don’t receive legal help, and 86% of civil legal problems faced by low-income individuals receive either inadequate or no legal help at all.
A lot of people have legal problems, they just don’t get the help they need. The legal industry needs to come together to fix this problem. Clients need to get legal advice, and attorneys need to earn more money. It’s because of Hollywood that the public thinks that the average law firm is rolling in money.
“The legal industry must change, now. Things are not working the way they are.” – Alistair Vigier
Clio Legal practice management
Due to SARS-2, the economy is destroyed. There is now low employment, the courts are far behind, and there are countless other issues. Hearings are now happening over the phone, and it is unlikely that this will change anytime soon. I have my first trial since COVID-19 coming up in July 2021, and I’m still not sure if it will be in person, on the phone, or over Skype.
According to the 2020 Legal Trends Report, around 42% of people believe that a virtual trial would negatively affect their case outcomes. I don’t agree, as it would make things harder for both sides to present their case. As long as things are even, and there are no advantages, I see no problem with virtual trials. However, it adds stress to an already stressful situation.
A few months ago, I watched the first appeal happen in British Columbia. It happened over Skype and there were thousands of people watching. I had never done an appeal before, so it was interesting to see how the process worked. It went on for seven hours, and I watched the whole thing, it was great!
Cloud-based legal technology
“Each passing day this week, I feel more gloom and doom that the virus is coming back.” – Attorney
Law Firm Success | Legal Trends Report
Since law firms are earning less money, they are going to need to make tough decisions. This can be layoffs, closing down, or starting to practice in new areas of law. The report said that revenue was down 26% in May 2020. If the average law firm has profit margins of 15%, that means that law firms were taking a loss. I don’t know a lot of law firms that have large savings in the bank.
There has been hope that the law societies and state bars would decrease fees to make things easier for attorneys. As you can see in the graph below, many attorneys are afraid their law firm isn’t going to make it. This has varied between 52-67%.
“Many law firms are close to shutting down.” – Alistair Vigier
As you can see in the graph above, lawyers were most afraid in April 2020, and things got better in July 2020. However, I know many lawyers are just as afraid in October 2020 as they were in April 2020.
It is clear that attorneys and lawyers are not the only ones worried. If consumers feel they cannot afford to deal with a legal problem, they are more likely to seek free legal advice. Also, more people will qualify for legal aid if they lose their jobs. If you are a lawyer, you should consider taking on some legal aid work for a while. It’s interesting that consumers were most worried in July 2020 instead of April 2020.
Get Paid Easier As An Attorney
Every law firm should have online payments. Waiting for a cheque in the mail is ridiculous. You need to use e-transfer, Paypal, or other payment systems. Clio also has its own payment system that you can use. If you have an online client portal, that’s even better! If clients are not allowed to see you in person, it’s even harder to get paid. You can’t ask your client to bring the cheque to your next meeting. You can also set up automatic credit card authorization.
“More people have access to the internet than have access to a lawyer.” – Richard Susskind
Firms using electronic payments also have a strong advantage in overall revenue collection on a per-lawyer basis. This means that lawyers working at law firms using electronic payments, on average, bring in more revenue. This advantage increased during the pandemic. You can see in the graph above that there are three main things that are important when someone hires a lawyer.
1. That the law firm has great reviews online (Avvo, Google Maps)
2. Low prices
3. Payment plans
I think a lot of people want fixed fees, but they don’t like the amount. They want a low fixed fee, which likely won’t work for the law firm. I stay away from fixed fees, they lead to problems. For example, someone might say you promised you would go to court as part of a fixed rate for a separation agreement. In short, clients can lie.
How can people communicate better over video calls?
Video calls are hard because it’s not in three-dimensional space. There’s a lot of information that is lost. In an office, you bump into someone at the coffee machine or outside the washroom. It’s spontaneous.
You can have one on one conversations with your team. Meeting with five people on Skype is hard. In order to build relationships, you need proximity; repeated, unplanned interactions; and a setting that encourages people to let their guard down and confide in each other. Hard over zoom! Eustress (moderate or normal psychological stress interpreted as being beneficial for the experience.)
What Clients Don’t Care About | 2020 Legal Trends Report
Using cloud technology does not matter to clients. It simply makes running a law practice easier.
I was disappointed that clients don’t seem to care much about electronic payments. Firms using electronic payments recovered faster from COVID-19. This happened on the revenue side.
The three least important things were:
- Uses cloud technology
- Subscription plans
- Office space
Who Are The Best Lawyers?
In the above graph, you can see what a lawyer thinks is important is somewhat different than what consumers think. However, both consumers and lawyers think that getting reviews is the most important. However, attorneys rate software as a key reason why one law firm is better than another. Lawyers also see serving the community as extremely important.
Low prices were ranked #2 for consumers, however, it was #9 for lawyers. This is obvious. However, attorneys also don’t like payment plans, unbundling legal services, or subscription fees.
Again, office space was seen as the least important factor. This is bad news for people that rent commercial office space.
More law firms need to think about how they can offer better terms on legal fees.
Clio cloud conference | 2020 Legal Trends Report
The Clio cloud conference is amazing. I really enjoyed going down to San Diego last year. I met some amazing lawyers, including Cristiane Meitin Ie of J Legal Team in Brazil Mark Britton of Avvo of Seattle. It is too bad that this year it’s happening over the internet. I hope that next year it’s back to San Diego! I miss the sun!
Anyway, back to the report…
You can go to Clio to download the full report. This article was just to do a summary of the things I found the most interesting. Lawyers are losing a lot of money right now because of SARS-2. In the five years of the legal trend report, this year has been the biggest change in the legal market.
Revenue growth for attorneys | 2020 Legal Trends Report
The best way for revenue growth for attorneys is to get a CRM system.
You can go to Clio to download the full report. This article was just to do a summary of the things I found the most interesting.
You can watch the video below to see how things were only a few years ago when things were good. Hopefully, we can get back there soon…
Author: Alistair Vigier is the CEO of ClearWay Law