Let me start by saying I had initially hoped to start the year out on Monday January 4th with this blog piece but as my Irish grandmother used to say….”the road to hell is paved with good intentions.” Furthermore, the last thing I want to do is turn anybody off with our very first blog, but anybody who had followed the market for legal services knows that the downturn that started in 2008 is still very evident. Below is that blog as originally written:
I hate to start the year out sounding like Scrooge in my first blog of 2016, but what follows is my assessment for the legal marketplace in the coming year. None of this should come as a surprise to any of you who have been paying attention to the market dynamics of the past few years.
Let’s start with the defense bar, where traditional insurance defense firms have been plagued by diminishing bill rates, reduced billable travel times, increased competition, 60-180 day payment cycles, and greater use of “captive counsel” by the carriers. The bad news is the forecast for 2016 is more of the same, as carriers further attempt to “commoditize” cases by categories and move closer to “fixed rate” billings per case or, even worse, the dreaded “AFA” word, where you and your partners will be asked to assume greater financial risk for what amounts to the privilege of being slow paid at lower margins.
On the plaintiff side the outlook is equally dismal. New case filings continue to drop and juries in venues that were previously considered by the defense bar to be “judicial hellholes” have become somewhat mean spirited recently when it comes to both verdicts and jury awards. Med Mal cases in particular seem to have been negatively affected by this trend. The construction industry in most cities across the nation continues to remain in a downturn, which has had a significant effect on those plaintiff firms that formerly specialized in handling construction injury cases. Many of those firms have morphed their practices to replace that void by going after nursing home related cases with varying degrees of success.
Subrogation firms find themselves facing similar troubling issues. Subrogation has come of age, which naturally means there is more competition than ever for the subrogation dollar. There seems to be a spate of newer firms in the marketplace that have grown out of some of the original pioneering firms. Carriers have been negotiating lower recovery percentages and getting away with it because of the market dynamics. A more troubling trend is the use of “captive counsel” in the subrogation arena – the jury is still out on how successful this experiment will be.
Even transactional firms will be affected by the current market situation as they, too, are plagued more than ever by increased competition and attempts to “commoditize” what they do. The additional problem these transactional firms face is that, with the recent flurry of mergers and acquisitions, there are fewer companies out there to do business with; sort of like a game of musical chairs – when the music stops, will your firm have a chair?
There is a solution to rising above your competition and doing profitable business in 2016 no matter what area of law your firm practices. This solution might seem overly simplistic, but you need to bring in new clients and maintain your existing clients. Easier said than done, right? Our job is to show you how to get your firm to that “sweet spot.” Stay tuned for more on how to do this as we venture into the unchartered waters of 2016.
