Here are three key trends we’re watching in the legal industry—and the data optimization strategies law firms can use to respond:
Trend #1: Accounting Encroachment
When you want a hammer, you go to a hardware store. Hungry for a Big Mac™? McDonald’s is the place.
And when you need a lawyer, you go to… an accountant?
Surprisingly, for a growing number of mid-market businesses, the answer is: yes.
Over the past two decades, the accounting industry has steadily expanded into legal services, shifting client expectations toward a “one-stop destination” rather than separate firms for separate specialties. The result: worldwide demand for legal services is expanding beyond traditional law firms, with accounting firms pulling meaningful share from the market.
Looking at data from 2003 to 2018, Mordor Intelligence studied four of the largest accounting firms—KPMG, Deloitte, PricewaterhouseCoopers, and EY—and found that “the total number of legal service professionals hired by these firms grew by 50%.” For example, Deloitte employed roughly 1,000 legal professionals in 2003. By 2018, that number had more than doubled, topping 2,500. Meanwhile, Deloitte still employed fewer legal professionals than the other three firms studied—PricewaterhouseCoopers reported more than 3,000, and KPMG announced “its intentions to almost double its market in the next few years.”
According to Mordor’s study, “the majority of law firms are struggling to cope with the increased competition from these accounting firms.”
Data Optimization Strategy for Legal Firms
How do you combat this trend?
First, implement a system to proactively monitor your 80/20 revenue split. Use Power BI to see—at a glance—how revenue is distributed across clients. Does Client A generate 1% of revenue while Client H generates 13%? Once you can instantly identify high-value and low-value clients, you can start making ROI-based decisions about where to focus time, service models, and relationship investment.
Business coach Karyn Greenstreet advises: “Find the 20% of your customers who bring you the least profit and either raise their rates or get rid of them.” Is that the right move for your firm? You won’t know until you can see the data clearly—and consistently—without pulling a dozen ad hoc spreadsheets every time you need answers.
Second, track client-centric ROI and aggregate it for business development. A data warehouse can help you compare fees charged vs. costs saved (or value created) for clients because of your work. Put that into a dashboard with drill-down capability and the numbers can do the talking during renewals, expansions, and pitches.
“It comes down to win rate,” says Jon Thompson, Director of Consulting at Blue Margin. “The amount the client has invested versus what they’ve won or preserved is how a law firm competes. One client in particular realized a 4x return of retained earnings from their investment into data intelligence.” When you can credibly show ROI for comparable clients—or across your book as an aggregate—your firm becomes harder to replace.
Trend #2: Increased Obstacles to Alignment
In November 2020, Gartner polled legal leaders on the top problems they expected to face in the year ahead. Still in the shadow of a global pandemic, it’s no surprise that the number-one issue—identified by roughly two-thirds (66%) of respondents—was: “Our department fails to align constrained resources against the highest-impact business need.”
Three-fourths (74%) expressed distrust that this would be solved any time soon. That pessimism isn’t unfounded: remote work created operational churn in the alignment of objectives, costs, processes, and communication. In the same poll, 44% cited “disconnect” from business partners, and 39% said their “current mix of talent and skills are out of step with new and emerging business needs.”
Gartner’s conclusion was direct: “Provide strategic insight and clarity as new or changing risks emerge… [and] solidify the GC’s role in informing corporate strategy and improving decision making.”
Data Optimization Strategy for Legal Firms
Jon Thompson recommends using your existing data to get everyone working from the same playbook:
“The reason for poor alignment is that there’s not a clear set of metrics that folks can follow up on. Implementing a common reporting framework, like Power BI, provides leverage for each functional department in a law firm to align on the metrics that matter most for their department—while also overlapping with other functional areas of the firm. For example, good dashboards allow attorneys to follow up on AR and work-in-progress sooner, and billings and collections can get an accurate view of booked income before year-end.”
Trend #3: Automation Domination
Attorney Kristin Gaston, a partner at Cascade Legal Planning, sees technology as the major driver of the future of legal and compliance services.
“I think we’ve been hearing for a while about automated services,” Gaston says, “and the risk to attorneys of having a process completely automated without any attorney involved. But I think attorneys are hearing about that less as a risk and more as an opportunity—to offer streamlined or tiered services as part of their practice.”
Leslie Ginzel of Beacon Law in Houston agrees. Beacon champions justice for homeless and low-income clients, and Ginzel believes automation can increase access for clients who need lighter-touch legal support:
“Legal aid across the U.S. has been really trying to look at ways to automate simple things because legal aid is so routinely underfunded… The vast majority of our clients need light support and forms, so let’s automate that and get them access as efficiently as possible. Save the heavier-duty resources for more impactful work.”
Automation isn’t localized to North America, either. It has become increasingly common across Europe and other regions, accelerated by the realities of operating during COVID-19. Business Day (Nigeria), for example, reported that technology adoption became ingrained in legal systems and processes during the pandemic—and predicted its familiarity would continue to increase.
“It is now close to impossible to be in the legal business sphere without utilizing technology competently,” Business Day’s Legal Business division reported. They added: “Expect significant change in document automation… automated software solutions… can produce, in minutes, a draft document for review—saving the hours it would have typically taken.”
In short: automation is here to stay—and law firms that operationalize it thoughtfully will compound their advantage.
Data Optimization Strategy for Legal Firms
Use a data warehouse to report revenue by service line and deliverable type—down to form function when helpful. Is your firm producing high volume in IP agreements and lower volume in small business startup documentation? A dashboard that allocates income by deliverable category will surface that instantly and create a baseline history you can actually act on.
Once you can see patterns over time, you can identify lower-value, high-repeat work that may be best served through automation. For example, if LLC operating agreements are a low-margin, high-frequency category, you might offer a self-serve client portal with a flat fee—freeing attorney hours for higher-value matters while still capturing the revenue stream.
Law firms can differentiate themselves with a clear, intentional data strategy. If you’d like to discuss your firm’s opportunities, we’d love to learn more and help point you in the right direction.
Three Key Thoughts:
“Worldwide demand for legal services has expanded outside of that industry, with accounting firms actually drawing significant business away from the traditional law firm environment.”
“The number-one issue for roughly two-thirds (66%) of attorneys was: ‘Our department fails to align constrained resources against the highest-impact business need.’”
“It is now close to impossible to be in the legal business sphere without utilizing technology competently.”
