2021. It’s not farewell. Ransomware, Unicorns, Profits, and Work from Home

While we may be happy to wave au revoir to 2021, one midnight does not change world circumstances. I think that the following four trends that are not likely to go away in 2022.

  1. Our most popular blog post in 2021, by a factor of 10, was this post by our CEO, Seth Hallem, on the REvil vulnerability and the ensuing ransomware. Many IT and security people were kept busy over the July 4th weekend with the Kaseya VSA exploit. More law firms and more businesses overall were hit with ransomware than the public is aware of. At the risk of stating the obvious, this will only grow going forward.
  2. Unicorns, IPOs, M & A, and healthy funding rounds were undefeated by the pandemic. We covered the capital infusion in #legaltech here.
  3. Early in 2021, we learned from Thomson Reuters that Big and Mid sized Law had been very profitable in pandemic burdened 2020. Work from home meant more billable hours. Legal IT departments got attorney up and running from home in quite literally a weekend. In early 2021 the question was, would work from home end as quickly as it had begun? The profits lead one to conclude that it would not. The Delta and Omicron variants in 2021 ensured no quick ending.
  4. Finally, in the fall of 2021 companies such as Apple and Big Law firms were gearing up for early January or February 2022 “return to the office” dates. Then Omicron swept through the globe. Now all bets are off for when, and if, companies will return to the office.

Some good, some not so good. Overall, we can be grateful for the healthy demand for legal services and that so much of legal work can be done remotely.

I wish you the best for 2022!

-Maureen

Per the Data: Remote Work is Not a Phase in Legal

Is remote work merely a short-term necessity or will it have legs when it is again safe to work in the law firm office? As we head into one full year of remote work, I set out to see if there were data which would substantiate the direction of remote work.

What I learned paints a compelling rationale for remote work continuing. For some people, it might be for only one or two days a week. But the preference for a hybrid work model is clear.

There are two supporting dynamics:

  1. The economics of remote work were positive in 2020. Law firms will likely make changes, for instance in leases, to capitalize on this going forward.
  2. Attorneys made a positive adjustment to working from home and would like to retain some of that flexibility in the future.

In this post, I highlight a few of the interesting data points which I found. You can view and download (no registration) my full slide deck, “Remote Work is Not a Phase in Legal” here.

A key law firm financial metric is Profitability per Equity Partner. The results show that for Big Law and mid-sized law firms profitability grew significantly in the 12 months leading up to November of 2020. In part this was due to law firm rate increases established in December 2019 and to the Paycheck Protection Program (PPP), both on the income side.

Graph Profit per Equity Partner
Profit Per Equity Partner Growth 2019 and 2020

However, on the expense side, it is also due to law firms cutting overhead expenses in all but two categories, technology and Knowledge Management.

Graph Overhead Expense Growth
Overhead Expense Growth by Category 2109 and 2020

Both of the above charts are from a terrific resource, “2021 Report on the State of the Legal Market” by Thomson Reuters and Georgetown Law Center on Ethics and the Legal Profession. This report is chock full of data. I highly recommend reading it if you work in a law firm. And, as good attorneys say, “read the footnotes” for gems. You may also listen to the podcast, “Was the Pandemic a Tipping Point for Law Firms?” which is based on the report. Bob Ambrogi interviewed Jim Jones, Senior Fellow at Georgetown and Director of its Program on Trends in Law Practice. Mr. Jones is a contributor to the report. He adds interesting color to the report findings in this interview.

A funny thing happened while attorneys toiled from home. They appreciated the benefits. The greatest benefit to attorneys and staff is the time gained by not commuting. For time-keepers the extra hours per week can add up to several days per year of additional billable hours plus additional leisure time to boot.

Now 85% of attorneys want to work from home at least one day per week.

Image Remote Work
“Lawyers put in 20 extra work days when working from home,” Legal Cheek, Aishah Hussain, January 8, 2021

Finally, here is an infographic with a few of the more illustrative points regarding remote work in law firms. You may download the Remote Work infographic PDF here.

Remote Work is Not a Phase in Legal infographic

How does this compare to your experience of working from home this past year? What work model would you like to see going forward?

-Maureen