5th Annual Law Firm Survey Finds 24% Drop in Profitability Satisfaction

Global News

19
Oct
2023

Editor

LawVision and BigHand have shared the results of their fifth annual law firm profitability survey. In its fifth year, the 2023 LawVision and BigHand survey provides a snapshot of the transforming legal landscape, as law firms balance longstanding profitability goals with the promise of AI. 

As described by Dan Roe on law.com, “The squeeze is on to extract as much profit from the 2023 fiscal year as possible… (the survey) shows declining optimism about year-end profits among law firm leaders and an increased emphasis on measures to improve them.”  

The survey found that law firms are emphasizing billing hygiene, conducting profit education, and improving utilization levels to improve profitability by the end of 2023. LawVision and BigHand have been conducting this in-depth study into law firm profitability for five years now and are able to include trends and data comparison to the findings. 

Some key findings from the survey include: 

• 63% of those surveyed reported profitability satisfaction, a 24% drop from 2022. This is not surprising as growth continues to be stagnant. 
• 65% of law firm leaders are proactively addressing financial hygiene and associated behaviors 
• 62% of participants are prioritizing education in profit management 
• 43% of participants are in the process of introducing new profit metrics. 

With profitability satisfaction down, law firm leaders are looking for operational improvements and gaps in firm-wide understanding of profit growth. Creating a culture of long-term profitability is top of mind as many are revisiting what profit metrics to apply to their daily analysis. Firms are becoming more sophisticated and looking for new tools to provide more detailed insights on practice and timekeeper profitability. 

Changing mindsets can be a long process. Year after year, the survey shows how the gradual shift to a profit-centric mindset for firms is continuing to grow. External pressures like reduced demand are catalysts for exponential change. Law firms around the world are taking steps to improve their own understanding of profitability and providing the much-needed data to drive decisions on growth.  

To access the full report, click here.