Drive Profitability amid Organizational Change and Legal Industry Shifts

Navigating the landscape of the legal services industry has become increasingly challenging amidst ongoing organizational change. Over the last decade, law firms have encountered significant shifts, prompting a reevaluation of strategies to uphold profitability. Many are turning to relationship intelligence as a key asset in this endeavor, aiming to fortify their organizations against risk while enhancing collaboration and efficiency across the board.

According to Thomson Reuters’ 2024 Report on the State of the US Legal Market, 2023 posted moderate gains for the legal sector in terms of demand, worked rates, fees worked, and lawyer headcount. But despite fee and demand increases, law firms have been expanding their headcounts at rates that surpass demand since 2012. This has led to more advisors competing for a share of work, resulting in lower productivity. At the same time, higher fee rates have been accompanied by more write-downs, affecting law firms’ realization and ability to generate high profitability.

Today’s forward-thinking law firms are leveraging relationship intelligence to maintain revenue growth and adapt to changing market conditions that have put the power in the hands of clients. The most successful law firms are utilizing this important data through  relationship mapping tools to maintain profitability and boost advisor productivity, helping to future-proof their organizations for the long term.

Dismantle firm-wide silos with relationship intelligence

Organizational change within law firms necessitates breaking down silos and fostering collaboration across practice groups to ensure sustained growth and resilience. Research consistently demonstrates that firms prioritizing effective teamwork experience increased revenue, while those failing to do so lag behind. According to a report that surveyed nearly 10,000 knowledge professionals, 55% at collaborative organizations reported revenue growth over the past three years, compared to 28% at companies that fail to prioritize effective teamwork. At the same time, research published in the Harvard Business Review found legal professionals who leveraged collaboration were able to risk-proof themselves from financial shocks during the 2008 recession and boost revenue more seamlessly when the economy recovered.

To embrace organizational change and future-proof the firm, many legal practices are turning to relationship mapping tools. These tools unveil the collective relationship networks within the organization, enabling different advisors and practice groups to collaborate strategically. When different advisors and practice groups gain visibility into various connections across their firm, they can collaborate more effectively and strategically to drive cross-selling opportunities and expand existing accounts. By identifying who knows who across the firm, advisors can also leverage warm introductions to generate new business and opportunities for profit.

Increase advisors’ productivity and billable hours

Part of the reason that law firms are struggling to maintain profitability is because of a dip in productivity among legal professionals, according to Reuters. Many firms may therefore be searching for ways to increase lawyers’ billable time and associated output, which is often hindered by administrative and non-billable tasks — such as client data entry.

While 80% of 70 US law firms use a client relationship management (CRM) platform, only 20% found it effective across both marketing and business development functions. This is partly because CRM software requires lawyers to manually input and update client data, leading to low adoption rates. Additive CRM tools increase the value of your firm’s CRM by removing barriers and simplifying the client data entry and enrichment process. In fact, relationship intelligence software has proven so useful that an independent study by research and advisory firm Forrester found it increased professionals’ productivity by up to 7.5%, which is helpful when it comes to maintaining firm-wide profitability.

Save resources spent on client research and briefs

In the current volatile legal market, many firms are searching for ways to cut down on costs and increase operational efficiencies. At the same time, firms want to ensure they’re providing best-in-class services that are of value to their clients. To differentiate themselves and deliver an optimal customer experience, organizations often hire individuals or teams to parse through data and develop detailed client dossiers so lawyers can show up prepared. However, these efforts are often resource-intensive and require additional time for fee earners to be briefed on client engagements. 

A recent Forrester study found significant benefits to relationship intelligence software when it came to saving time and resources on preparing client reports. In particular, one international law firm previously spent over 100 hours per month preparing customized client briefs. After adopting a client intelligence tool, that law firm was able to accelerate its productivity, so advisors could download detailed client digests in a matter of seconds, saving significant time and resources. To lower the time and resources needed for client briefs, many firms have started using relationship intelligence tools that automatically create and schedule detailed client digests. Embracing such technological advancements is an integral part of future-proofing operations and optimizing resource allocation as part of ongoing organizational change.

Boost client retention with relationship mapping tools

For law firms to risk-proof their organizations, they must ensure they’re taking the appropriate steps to prevent client churn and increase retention. According to UK-based BTI Consulting Group, the average law firm loses 15% of its top clients every year. At the same time, research shows that increased client retention helps to generate greater revenue for firms. While maintaining client loyalty is imperative for profitability, many firms struggle with developing strategies to prevent churn.

Embracing organizational change, firms are turning to relationship intelligence software to become more agile, equipping advisors with actionable insights for tailored client service. A joint PwC report found that relationship intelligence platforms utilized across firms’ cross-functional teams and practice groups deliver more detailed insights to attorneys, who then become better informed and prepared to serve clients. These tools help to optimize professionals’ output, leading to increased client retention and heightened profitability for the firm.

Navigating Market and Organizational Change with Introhive

In the midst of market fluctuations and organizational change, Introhive’s relationship intelligence platform serves as a crucial tool for law firms. By providing valuable client data, our platform facilitates enhanced collaboration, boosts employee productivity, streamlines operations, and fosters client retention. Through aligning firm-wide efforts, Introhive’s software aids in increasing profitability by freeing up professionals’ time and amplifying opportunities for referrals and cross-selling. 

Request a demo to learn more about how Introhive can support your firm through these transformative times.