A. Vince Colella
With the speed of today’s technology, law firms are always striving to keep pace. Recently, I came across a report published by Clio, a legal technology company that offers software many law practices employ today. The Clio 2023 “Trends in the Law” report is based upon survey results from over 1,446 legal professionals and 1,012 adults in the general population. The data and surveys are purported to provide insight into how technology used by law firms is impacting their performance. The report also analyzed a range of methods and data sources to determine the current state of law firm practices as they relate to shaping future growth and performance.
A critical factor in the “trends” report was the impact inflation and lending rates had on the cost of legal services. Interestingly, while lawyer hourly rates have steadily risen by nearly 30% over the past 7 years, they have kept pace with inflation. In the past, hourly rates for lawyers rose at a much faster pace than increases in the consumer price index (CPI). However, this year, lawyer rates remain consistent with CPI — suggestive of a reasonably priced service cost compared with other industries. Of course, personal injury lawyers have provided legal services on a fixed one-third contingency fee, a practice that has remained unchanged since the industrial age. Because it is difficult to calculate actual average hourly compensation of contingent attorneys given the absence of billable hours, only a few studies have been undertaken. One of the studies, based upon a survey of Wisconsin attorneys, suggested that contingent lawyers earned slightly more per hour than non-contingent ones. Other studies suggest that contingency lawyers earn far greater hourly rates when compared to hourly lawyers. Nevertheless, because the contingent percentage does not increase at the rate of inflation, to keep pace with hourly lawyers, contingent attorneys must handle greater volume and obtain significant jury verdicts to keep pace with their counterparts.
The Clio study also found that legal productivity is higher than ever before. The metric of productivity is what the average legal professional earns for their firm. Today, the average legal professionals are reported to be working over 25% more cases and recording 35% more billable hours than 2016. Accordingly, law firms are collecting a higher proportion of revenue for every hour worked. This would also suggest that the collection rate is equal to or better than the performance indicators, i.e., case loads and billable hours. A key measurement of productivity is the “utilization rate.” This measures how much of a lawyer’s eight-hour day is spent toward billable work. Since 2016, non-contingent lawyers have significantly increased their utilization rates by 32%. Yet, despite the incredible boost in lawyer productivity, nearly two-thirds of the day is largely underutilized in terms of billable work. On the other hand, personal injury lawyer productivity is based on results not billable hours or collection. Because “winning” is the ultimate goal of the personal injury lawyer, time is not of major concern. In fact, if compared to the non-contingent model, ideally, the less time a personal injury attorney spends on a case where the results are significant the more “productive” the lawyer would be perceived.
The other predominant development taking the legal field by storm is the advent of generative artificial intelligence (AI). This technology has progressed so quickly that it now has the capacity to perform many of the complex tasks that only the human mind has been capable of. “AI solutions” has become all the rage and many law firms — previously weary of the technology — are now beginning to embrace it. A recent breakthrough in new “deep learning architecture” known as a “transformer” has resulted in the development of large language models that have the ability to understand and create text. In terms of the day-to-day functions of a lawyer, writing is the most taxing time-occupier. However, with the emergence of artificial intelligence, letters, emails, briefs and other original legal writing will likely become extinct.
Some see AI as an extreme risk to the legal profession and fear of mass eliminations of jobs is creating trepidation. Of course, we have seen examples of this where occupations are losing to technological substitutes, i.e., grocery store cashiers. However, those who embrace AI rather than resist it are more likely to have a greater capability to create knowledge and perspective with minimal effort. From the personal injury standpoint, AI is not generally perceived as a threat to the profession given the need for jury trials. The technology, while useful in the day-to-day working lives of the personal injury attorney, will not serve as a substitute for actually taking their cases to a jury.
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A. Vince Colella is a co-founder of personal injury and civil rights law firm Moss & Colella.
