The future of BigLaw

December 24, 2010 Law firm managers may be feeling a sense of relief as the legal services market shows signs of recovery. But the changes wrought upon the industry are significant and there are seismic shifts ahead, according to George Beaton, managing director of Beaton Research & Consulting and a partner in Beaton Capital. Beaton makes an account of the legal industry, noting that the continued growth of revenue over the last decade is attributable to increases in price and not volume. He points out that profits were preserved over the course of the global financial crisis via continued reductions in expenses, but that there is little more fat to trim.

Firms will have greater trouble raising capital from banks, and will need to either retain earnings or make calls on capital from partners, while clients exert downward pressure on fees in a very fragmented and highly competitive market. Beaton predicts further restructuring in the industry and, looking to the Australian market, fewer big players. Corporate-style merger and acquisition activity is likely to become a fact of competitive life.

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