New Casework Up, Law Firm Billing Volumes Down, Survey Finds
In a survey of law firm respondents, 25% are forfeiting more revenue due to unpaid bills compared to the months leading up the COVID-19 outbreak.
June 17, 2020 at 05:39 PM
5 minute read
A new survey by Canadian cloud-based legal software company Clio found that after an initial pandemic-fueled drop-off, more firms are taking on new matters in May than April. But they're also more concerned about clients' ability to pay than in the previous two months.
The survey, based on aggregated and anonymized data from tens of thousands of legal professionals, includes data collected in early April, late April, the beginning and end of May and the first week of June.
Unsurprisingly, the survey found that 71% of legal professionals are more concerned about clients ability to pay their legal bills now than prior to the pandemic. Among law firms, 25% are forfeiting more revenue due to unpaid bills compared to the months leading up the COVID-19 outbreak.
The survey also found that, compared to Clio's initial COVID-19 survey in early May, new matters have rebounded through May and into the first week of June, with overall client matters down 14% from pre-pandemic days, compared with 26%. The survey notes that firms may have been able to rely on "work in progress" from matters opened prior to March to buttress their revenue numbers as the pandemic heated up, but the shortfall in casework from March through April had an impact on billings that is just now starting to be mitigated.
"Especially in the first week of June, we saw a significant jump in new matter creation velocity," Jack Newton, founder and CEO of Clio, said in an interview. "I would describe the data in this month's briefing as a promising sign of partial recovery through the new matter creation lens, which is a good indicator of how busy lawyers really are."
The survey also found that legal work, again unsurprisingly, has ticked up as states begin to reopen their economies.
New York, for example, saw a 50% decline in new casework in mid-April compared the previous year. That has since rebounded in the last three weeks, going from -40% in late May to about -5% June 1.
California, Florida and Texas, all states with a strong legal industry presence and still-rising COVID-19 cases, hit an average decline of -35% in new matters in early April before rebounding to about -15% June 1.
Newton noted that the rapid drop-off in business as well as its return to levels almost on par with pre-pandemic levels in New York was likely due to the state's more stringent containment strategy. States such as Texas and Florida, which used less drastic measures, saw less of a decline in business but also a slower, less impactful recovery than the Empire State.
"Texas and Florida could be in for a longer-term period of moderate economic pain," he said.
Corporate work has been less affected by the pandemic than other areas such as personal injury and criminal services, potentially due to the many court systems operating at reduced capacity, the survey found.
Compared to a baseline Jan. 6 of this year, work involving insurance, commercial goods and construction is actually up since the beginning of the year as of June 1, the survey found. Intellectual property and business-related work is down slightly over that same time period.
Newton said the technology adoption rate was one of the more interesting elements of the survey. The survey found that 74% of the respondents said legal professionals were equipped to handle electronic documents and e-signatures, 77% were equipped to handle video conferencing, and 85% are using videoconferencing more than before the pandemic.
When asked about the 7% who said they were using video conferencing the same or less than before the pandemic, Newton said it was most likely due to individuals already using video a great deal, and not an actual drop-off in usage.
The overall use and adoption rate of tech in the legal sector was impressive, Newton said.
"COVID-19 has taken a decade of technology transformation in the legal industry and condensed it into a couple of months," Newton said. "If you would have shown me these survey results and asked me what year it was, I would have said 2030."
Among the survey's more worrisome findings: Compared to early April, when 23% of respondents thought the economic impacts of COVID-19 would subside within three months, the latest outlook is more dire. Only 16% of respondents thought the same by the end of May.
Legal professionals' take on layoffs has also shifted. In early April, 11% of responding firms had laid off staff and 22% of respondents anticipated layoffs. In late May, 27% of firms had laid off staff and 29% expected layoffs.
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