Business Strategy & Development
It’s one of our favorite moments of the year — Clio’s 2023 edition of the Legal Trends Report is finally here. Since the inception of the Legal Trends Report in 2016, it’s evident that emerging technologies and systems are revolutionizing how legal professionals operate. As the influence of artificial intelligence grows stronger, law firms are on the brink of another monumental shift.
However, amidst all technological advancements, one principle remains timeless: a client-centric approach. We dove deep into all 110+ pages of this year’s Legal Trends Report and pulled out the key points. Here’s what you need to know about the report’s biggest takeaways and how to capitalize on these trends to amplify your impact.
Download your copy of the 2023 Legal Trends Report from Clio.
1. Law Firms Are More Productive Than Ever
Clio data shows that legal productivity is up in almost every sense (pg. 17). Firms are taking more cases, tracking more billable hours, and bringing in higher revenue — more than double what they billed and collected in 2016. How is this possible? The answer lies in many small efficiency gains, which add up to a bigger top line.
Lawyers continue to improve their utilization rate — how much of their workday goes to billable hours. In addition, more hours are actually being billed to clients. The payment collection rate also remains high, contributing to higher revenue and greater productivity. Firms are getting paid for their work, but not always in a timely fashion.
Improvement of all these key performance indicators made a big difference in revenue growth. However, there is room for improvement as it’s easy to lose track of some billable hours and get bogged down with administrative tasks and business development. Investing in business development through marketing and outsourcing administrative work can take some of the burden off your shoulders and help generate more revenue.
2. Reducing “Lockup” for a Healthy Business
The 2023 Legal Trends Report introduces the concept of “lockup” as a new way of thinking about cash flow for law firms. When revenue is unbilled and uncollected, days of work are “locked up,” leading to lower cash flow. Lockup comprises two primary measures: “realization lockup” (work yet to be billed) and “collection lockup” (billed work yet to be collected). The cumulative effect is “total lockup.”
Poor cash flow can be a death sentence for a law firm. If you minimize lockup, you’re more likely to have a healthier cash flow and, therefore, a healthier business. Adopting electronic billing solutions can significantly reduce lockup durations; some firms putting this in practice are retaining nearly a week’s worth of revenue (pg. 40).
Specific workflows, such as direct email billing and client apps, can further decrease lockup by up to 12 days. In short, leveraging modern billing technologies and online payments can put more money in your pocket sooner.
3. Get Paid Faster with Electronic Options
Billing and collecting payment is a pain point for both law firms and clients. Nearly a third of legal professionals agree their firm takes too long to bill clients, and a similar portion of clients say they received a bill long after their lawyer did the work (pg. 49). Failing to send invoices soon after the work is done only makes it harder to get clients to pay in a timely manner.
Going back to reducing lockup, one solution to the issue of timeliness is to offer online payments. Doing so eliminates the need for clients to write a check, deliver it in person, or send it by mail. Electronic payments aren’t just a win for law firms — clients like the option, too. Nearly half of those surveyed said they would prefer to pay their lawyer via credit card (pg. 57). Online payment portals are becoming a more common sight in legal web design, and they’re an easy way to meet clients where they are and collect what you’re owed more efficiently.
4. Leverage These Tools for Better Performance
Law firms are taking advantage of more tools to track billable hours and manage payment collections. According to Clio data (pg.65), the top three “levers” that make the biggest impact on collection rates are:
- Sending an outstanding balances summary
- Email billing
- Trust requests (notification of automatic collections from trust deposits)
Clio also identified three more levers commonly used by successful firms:
- Billing and accounting software for expense and revenue tracking
- Digital marketing services and intake platforms
- Electronic document management
Noticing a common theme? Clients appreciate these features, many of which can be automated. Improving operations frees you up to do other billable work and ultimately generate higher revenue.
5. AI in the Legal Space
2023 marked the mainstream breakout of generative artificial intelligence. If you’re skeptical about what AI can do, you’re not alone. Over 60% of legal professionals are curious to learn more about it, but nearly as many believe it’s unreliable (pg. 79). Even if you’re on the fence about its capabilities, know that AI isn’t going away anytime soon.
The Legal Trends Report frames AI as a new, different type of lever law firms should take advantage of. While AI is often weak or just plain wrong about specific legal topics, it can be used by legal professionals for tasks such as:
- Editing and proofreading
- Analyzing and summarizing large amounts of information
- Recommending business development strategies
Some legal professionals have embraced AI, and nearly one in five say they use it in some form in their practice (pg. 97). Clients also share positive sentiments about their prospective lawyer using AI. They see AI’s potential in making legal services more efficient, and affordable (pg. 94), and they clearly understand the value of hiring an attorney who knows the latest developments in the legal space.
AI also has use cases in marketing, such as generating social media copy and identifying content gaps.
Postali Knows Legal Marketing — Contact Us
In the ever-shifting landscape of the legal world, staying in touch with the latest trends is not just beneficial— it’s essential. While the 2023 Legal Trends Report contains tons of useful info, translating these insights into tangible marketing strategies requires expertise. A legal digital marketing agency like Postali can help you integrate a payment portal on your law firm’s website or advise on the best tech tools for lawyers.
At Postali, we pride ourselves on staying at the forefront of these trends, ensuring that our clients are not just up to speed, but ahead of the curve. From web design to SEO and PPC ads, our team knows how to execute the work to amplify your firm’s digital marketing impact.
Get in touch today to learn more about how we can help.
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