According to the Law Firm Business Leaders Report from Thomson Reuters, security concerns and economic pressures have displaced competition for talent as the biggest threats to law firm profitability. Security breaches, data loss, hacking, and ransomware were rated as high risks by 42% of law firm business leaders.
General economic pressures were cited by 32% of those surveyed, tied for the second-highest risk with associate salaries. Last year, by comparison, general economic pressures tied for ninth among risks, cited by only 16%.
Concerns about competition for talent were clearly top of mind last year, when lawyer recruitment and retention, poaching of staff by competitors, and associate salaries ranked as the top three risks. These remain significant concerns for law firm business leaders, but poaching of staff dropped out of the top 10 risks.Despite the challenges, a majority of law firm business leaders expect moderate-to-high growth next year in demand for legal services and revenues-per-lawyer. Slightly less than a majority expect growth in profits-per-equity-partner and profits-per-lawyer. Expectations for growth are even higher looking ahead three years, with 84% expecting higher revenues-per-lawyer. However, more than two-thirds of law firm business leaders expect higher direct and overhead expenses over the same time periods.
Among practice areas, a majority of law firm business leaders expect health care, bankruptcy, and intellectual property to see high-to-moderate growth. Mergers and acquisitions, real estate, and personal injury are viewed as most likely to see contraction.