We spoke to several experts working in the ESG arena within the legal industry across the world to see what developing issues they see as critical ones to watch. These are what they considered the five most important themes for the year ahead:

1. Supply chain transparency

Supply chain diversity and transparency of material issues around ESG will mature because of upcoming deadlines on reporting by regulators in the United States, United Kingdom, and the European Union.

“As law firms realize that they are actually just a vendor in somebody else’s supply chain, they must recognize the need to start making efforts to comply with regulations,” says Aragon St-Charles, Global ESG Officer at Dentons, adding that these regulations are increasingly being driven by new reporting rule-making by U.S regulators and implementation of existing E.U. Corporate Sustainability Reporting Directive regulatory mandates in reporting that are coming in effect in 2024.

Omar Sweiss, CEO of JusticeBid, a technology platform that helps corporate law departments expand efficiency in outside counsel selection and gain increased transparency on ESG topics for Tier 1 and Tier 2 suppliers, agrees. “A burgeoning area of focus coming in 2023 is that every vendor in the legal space, not just law firms, is really going to have to start thinking about their own supplier diversity programs,” Sweiss explains. “Up until now, the majority of these players in legal have been immune to supplier diversity efforts. I believe this is going to change dramatically in the next 12 months.”

2. The growth of ESG benchmarks, scorecards & frameworks

With an expanded collective understanding of ESG material issues for the legal industry, custom frameworks for the industry too will evolve. The beginning of this trend started in the last 24 months, as numerous outside parties began offering up metrics in the ESG space.

For example, impactvise provides a comprehensive measurement of law firms internal ESG strategy; and the Law Students for Climate Accountability focuses on law firms’ client work around climate in litigation, lobbying, and transactions. While Diversity Lab’s Mansfield Rule provides a measurement for diversity, equity & inclusion as part of the social part of ESG.

3. Increased legal risk for law firms

Clients are starting to make ESG demands about corporate values and positions that present a potential risk for multinational law firms, observes St-Charles. There are important implications for this growing trend regarding the rule of law and the right to representation for multinational law firms. To illustrate how the risk shows up, imagine a client working with a partner at the U.K.-based office of a law firm who asks the firm to agree to terms that contractually prohibit it from working with fracking companies, even in other countries. If that law firm is working with such clients in other jurisdictions, then agreeing to this could contractually open up the firm to legal risk.

4. Biodiversity as an emerging dimension of the “E”

The critical need to retain abundant biodiversity is an issue requiring closer attention of the legal sector, notes Adam Woodhall, chief executive for Lawyers for Net Zero, a non-profit initiative launched in mid-2021 that supports general counsel and their teams to drive action on climate and ESG within their organizations. Indeed, governments from around the world — as part of the United Nations — gathered in December 2022 to agree on a new set of goals to guide global action through 2030 in order to halt and reverse nature loss; and the Taskforce on Nature-Related Financial Disclosures, a financial services industry advisory group whose members represent more than $20 trillion in assets, is expected to release its final risk disclosure framework in Fall 2023.

5. Increased pressure to speak out on controversial events

Law firm leaders are increasingly caught in the middle between activism coming from employees, clients, and politicians on one side of a hot-topic issue and another group of clients who may be on the opposing side. For example, we’ve recently seen corporate clients that are leaning into ESG actions, such as enacting net zero commitments, while expecting their supply chain partners to do the same; yet, on the other side, a small group of members of the U.S. Congress warned law firms in a recent series of letters about the “collusive effort” to restrict fossil fuels.

To successfully navigate these events, law firms should “think through the process of if, when, and how to respond and address it from the law firm’s values,” says Gayatri Joshi, former Executive Director of the Law Firm Sustainability Network and a Partner at Vorgate Legal ESG Impact. Indeed, many law firms already have been doing this during the Ukraine/Russia conflict, either by making public statements or internal statements to their employees or clients describing the impact of the this event on the firm and its stakeholders.

Although the ESG issues that stakeholders care about differ across the legal industry, the fact remains that ESG will only increase in prominence for legal organizations in 2023 because of the many external factors — regulations, clients’ ESG strategies, politics, and activism among stakeholders — that influence the industry.

That means, law firms should proceed with introspection and caution.

“Law firms need to get their own house in order if they do not want to run the risk of losing and not attracting new clients,” says Adrian Peyer, Co-Founder & CEO of impactvise. “Until now, the ESG performance of a law firm has been ‘a nice to have’, but 2023 and beyond will move it to ‘a need to have’.”

Woodhall, of Lawyers for Net Zero, agrees, highlighting the unique role of general counsel. “The foundation of our society is a livable planet, so savvy GCs and their teams are supporting their business to be part of the climate and biodiversity solutions, as well as providing the social and governance advice which helps nurture flourishing businesses and society.”

The number one reason for this lack of ownership mentality is that “most lawyers aren’t raised to think of the practice of law as a business,” says Elaine Fitch, of Kalijarvi, Chuzi, Newman & Fitch. “They become lawyers because they want to be lawyers, not business owners.”

This in turn leads into the personality traits of the kind of people who select law as a career. Many lawyers become lawyers precisely because they do not see themselves as future business owners, but rather as practitioners of a craft. “Their personal commitment to their craft is what often allows them to be great at what they do,” notes Joshua Driskell of Lagerlof. “When stepping into an ownership role, they might often feel as though they have a less intimate connection to their practice.”

Another obstacle to developing an ownership mentality is lack of training. Most law schools do not include any education or training in the business of law, and that is unfortunate. “The consequences of the lack of this training often shows up down the road,” says Brian Temins of Minden Gross. “Making the transition to owner isn’t as easy as just changing a title — training and preparation need to go into it.”

Indeed, adds Bijal Vakil of Allen & Overy, having business acumen “is just as important for obtaining work and retaining it.”

“Most lawyers aren’t raised to think of the practice of law as a business. They become lawyers because they want to be lawyers, not business owners.”

Often firms are not intentional about exposing their lawyers to the business side of the firm. And this problem starts early because many law firms encourage young attorneys to focus on developing their legal skills, rather than on developing a book of business. As their practice builds, these lawyers tend to focus on getting their legal work done, and perhaps never develop and understanding of why they do what they do. Instruction on why the work matters to the client, and how lawyers’ time is billed and collected, as well as how new work comes to the firm, may broaden attorneys’ focus beyond the day-to-day legal work.

Another possibility to consider is that an attorney may, in fact, already have an ownership mentality, but the more senior attorneys are not allowing him or her to express that. If senior partners insist on doing things the way they have always been done, or are not welcoming toward new ideas, other partners will have little incentive or opportunity to demonstrate an ownership mentality.

What’s a firm to do?

Many law firm leaders that were interviewed emphasize “drawing back the curtain,” and involving more attorneys in the business of the firm. This approach requires transparency and education at all stages. Tom Segars of Ellis & Winters recommends starting early by “involving young lawyers at every step of the initial client intake and billing processes, including conflicts checking, initial consultations, discussing terms of engagement, preparing an engagement letter, and editing invoices.”

David Lackowitz of Moses Singer, agrees, saying that transparency means sharing information. “Just like in other industries, [the attorneys] should be provided with data about lawyer productivity, revenue, expenses, hiring and firing, strategy, goals, etc.,” says Lackowitz, adding that such information given to attorneys at the beginning of their careers is the first step in creating an ownership mentality.

Too often, however, firms keep financial information within a small, tight circle. In some larger firms, even seasoned partners may not have access to important financial information. Instead, firms should share as much information as possible to encourage ownership mentality among their lawyers. “When people understand the mechanics of the business and feel like they have skin in the game, they are more likely to work harder for [the firm] rather than just themselves,” observes Sean Dolan of Evans & Dixon. Information is power and can lead to open discussions and improvements to the overall firm.

Law firms should start this process early by involving associates in the client relationship. This simple commitment goes a long way towards instilling an ownership mentality. When associates see how clients use and value their work — including knowing that the client has paid the bill for the work — associates then feel a sense of ownership to the client relationship.

Involving associates in the entire project creates a sense of ownership, while simply assigning tasks insures they develop purely a task orientation, explains Mickey Maher of Hecht Solberg. “If a younger lawyer hasn’t experienced the opportunity to take ownership of matters or some piece of client relationships, the lawyer will be less likely to take ownership in the enterprise of the firm over the course of his or her career,” Maher adds.

Indeed, firms should take this one step further — let younger lawyers play significant roles in hearings, depositions, trials, and more, especially as they become more senior. Introduce them to clients and encourage clients to contact senior associates directly with questions.

Heather Linn Rosing of Klinedinst observes that “the things that law firms can do to instill an ownership mentality in those up for partnership are the same things that firms can do to promote retention.” These include fair compensation, wellness programming, a commitment to the community, and a mechanism for employees to express their opinions and participate in the betterment of the organization.

Many of the leaders interviewed also emphasized the importance of active mentorship by senior lawyers, as well as active sponsorship for attorneys, and especially for women and diverse attorneys.

Promoting teamwork

While it is often challenging to motivate lawyers to participate in activities beyond their normal billing hours, firm activities that promote bonding, teamwork, and cross-selling are valuable in reinforcing ownership mentality. Involving lawyers on firm committees, such as recruiting, can help to instill an ownership mentality within them, says Heidi Yernberg of Jayaram Law. This activity brings “[the] entire team into operational issues from the beginning, involving associates in a wide range of areas, from project management and workflow to reviewing bills and budgets, to fostering business development relationships, encouraging thought leadership and more,” Yernberg says, adding that group activities, no matter what they are, instill a connection and sense of responsibility to others in the firm.

Developing a strategic plan, with the input of all attorneys and staff, is a way to encourage involvement and ownership. The plan should be consulted and reviewed on a regular basis, so that all stakeholders can see how it is being utilized to determine the direction of the firm.

“When people understand the mechanics of the business and feel like they have skin in the game, they are more likely to work harder for [the firm] rather than just themselves.”

Indeed, Mary Vandenack of Vandenack Weaver encourages her lawyers to develop their own practice plan and “that plan should be incorporated into the firm plan.”

At Ellis & Winters, a North Carolina-based litigation and commercial real estate firm, they take it further by having their director of Client Services & Business Development work with each attorney to develop an individual plan for business development, focusing on the lawyer’s interests and strengths, while holding each lawyer accountable for implementation.

And finally, accountability is a large part of this process — and often, it is the hardest part of the equation as managing partners often have difficulty holding their partners accountable. “I would give them actual business responsibilities,” says Marco Antonio Gonçalves of Veirano Advogados in Brazil. “A make them accountable for [those] responsibilities, as well as for what is expected from them as a firm partner in the long run.”

To reinforce what it means to be a partner, Fairfax, Va.-based patent law firm Harrity & Harrity conducts partnership skills training that requires new partners to meet with the managing partner on a bi-weekly basis to review scenarios, such as hiring or firing an employee, or how to deal with a potential malpractice issue. When a partner has an ownership mentality, they hold themselves accountable because they want their firm to improve and succeed in every way possible.

Clearly, creating an ownership mentality among firm partners is not easy. Often, all a law firm can do is provide training, resources, opportunities, and support. It’s up to the individual lawyers and partners to fully embrace being a law firm owner and all that it encompasses.

While all of these reactions are normal, remember that critical feedback is not personal; it’s integral to business. It’s critical to our legal practices and the business of running a law firm that we are always learning, growing, and developing, especially if a particular behavior has a negative business impact. The key is to understand the situation objectively, try to resolve the issue, and then move forward. With shifts in the way we communicate, feedback can be a great gift to many senior-level attorneys.

Certainly, receiving difficult information can be a challenge. When you handle a negative situation graciously and calmly, however, your demeanor and professionalism will be noticed and appreciated. More importantly, you the gain the ability to pivot in the best direction possible for you and your organization.

Communications strategies

With that in mind, here four tips that may prove useful the next time you find yourself at the receiving end of constructive (and possibly uncomfortable) feedback.

1. Stay engaged in the conversation

It’s common to tune out feedback — and even mentally map out the counterargument before hearing someone out. That’s why many of us shut down or become closed off when presented with negative information. When this happens, we give off nonverbal cues through facial expressions and body language that show we’re not engaged in the conversation. Yet, this is a guaranteed way to rapidly escalate the conversation from constructive to destructive.

Because a conflict cannot be resolved until the situation is understood and addressed, it is important to stay open and actively listening. That way, you can be part of the solution and help everyone find a way to move forward. Keep your face neutral, your arms uncrossed, and your mind open.

2. Keep emotions out of it

Shock, anger, and embarrassment are all common reactions to bad news or criticism. In fact, many people may experience an entire range of emotions when presented with negative information at work. And while these reactions may be considered normal, unfortunately, they only serve to escalate an already negative situation.

By remaining calm and emotionally regulated, you can maintain a professional presence and offer solutions to help determine the next steps.

If you feel the conflict has arisen from misinformation, feel free to make that correction — but stick to the facts. Making excuses or placing blame will only cloud the issue and make it difficult to make headway. Further, it may seem like you aren’t taking responsibility but are instead throwing others “under the bus.”

3. Ask to reconvene

Not every conversation has to be resolved in a split second. Take a break and ask to reconvene once you’ve had a chance to review the details. Separating yourself from the situation will allow time to regulate your emotions, process the information, and start to come up with productive solutions or next steps. And if you have to share the bad news with others, taking time to review the situation can be even more important.

Your ability to remain emotionally regulated and handle feedback well will make it easier for your team or clients to model your behavior and provide a more straightforward path forward for everyone involved.

4. Look for the positive

As unpleasant as it may be, try to remember that constructive criticism, negative feedback, and difficult conversations are all key opportunities for growth. Each time you find yourself at the receiving end of bad news, try to see what you can gain from the situation.

For example, if the issue comes from a client, take time to listen and ask questions. The client may appreciate your openness to their feedback and your desire to improve. If you’ve hit a challenge within your firm’s partnership, having an open conversation will help you build trust and develop the relationship, as well as maintain a healthy work culture for others.

If your client is leaving you for a new firm, ask them why. If they’re committed to moving on, they still may be able to offer insight that will help improve your engagement with your other clients going forward. Being receptive to critical feedback will help establish you as a highly respected lawyer within your field, as well as one who is always trying to be responsive to their clients.

If the bad news comes internally, work together with your colleagues to see if they can share their suggestions on how they could have handled the situation differently. Use these scenarios to strengthen your relationships internally, possibly gaining information that may help you in the future.

Importantly, don’t be afraid to ask for constructive insights from both higher-ups and junior members of your team. Each perspective can contribute knowledge that helps create and refine best practices for your firm.

Responding with grace

When you respond to challenging feedback with grace and open communication, others will come to see you as a confident and emotionally intelligent person — one that they will be more likely to seek out in the future. You will also help create a psychologically safe work culture in which people aren’t afraid to give constructive feedback.

Remember that no one gets to the top without facing conflict multiple times throughout their career. What sets the best professionals and leaders apart is the way they handle these uncomfortable situations.

So, the next time you find yourself in a difficult position at work, remember to stay engaged and open to discussion, separate yourself and process your emotions, and accept feedback with grace and poise. These tips will help you navigate tricky situations confidently and allows you to continue growing and developing your key relationships internally and externally.

Receiving constructive feedback professionally and with grace is one step towards building communication and strengthening relationships among your colleagues and clients. For more on how internal collaboration can enhance your firm’s standing in clients’ eyes, check out our recent Thomson Reuters Institute Insights podcast.

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Indeed, one key metric — profits-per-equity partner (PPEP) — is down for the first time since 2009, which occurred during the last global financial crisis.

This scenario and lessons in how law firms are attempting to navigate these choppy waters is mapped out in the 2023 Report on the State of the Legal Market, issued today by the Center on Ethics and the Legal Profession at Georgetown University Law Center and the Thomson Reuters Institute.

The annual report reviews the performance of U.S. law firms and breaks down the factors that most impact financial success and drive the need for a strategic view of firms’ market positions, operations, and future plans.

This year’s report shows that throughout 2022, growing political and economic uncertainty significantly reduced clients’ appetite for transactional work — which had become the white-hot driver of demand throughout 2021 and the early part of 2022. Indeed, possibly the most prominent development in the legal industry in 2022 was the substantial slowing in demand growth that firms experienced throughout the year. On a year-to-date basis through November 2022, overall legal demand contracted by 0.1%, which stood in stark contrast to the 3.7% growth rate recorded for all of 2021.

Not surprisingly, this collapse in demand growth, especially in the transactional practice, fell more heavily on larger law firms. At the same time, many law firms continued to add new lawyers at a healthy pace. As a result, productivity declined, even as direct and overhead expenses remained high, much to law firms’ dismay.

The combination of all these factors pulled down PPEP from its 2021 levels, although it still remains in a relatively good position historically.

However, the report shows that growing uncertainty over macro-issues, such as economic sluggishness in the United States and throughout the world, the challenge of returning to the office, and the rising costs of talent all set the stage for a very difficult 2023 for the legal industry.

One interesting note to the report was the relative strength of the Midsize law firm segment, which stood alone among other market segments in seeing positive demand growth in 2022. The report attributes this to clients’ willingness to move work in search of high-quality but more cost-effective outside counsel.

Looking to the leadership of Luis Urzúa

The report also noted that in times of uncertainty, organizations have a tendency to hunker down to protect against both real and imagined dangers. To steer a firm successfully through such periods requires leaders to embrace somewhat different priorities and be willing to experiment with new ways of operating.

To illustrate further, the report relates the incident of the terrible mine collapse in Chile in August 2010 that trapped 33 miners for 69 days deep underground. Facing certain catastrophe, the miners rallied around their shift foreman, Luis Urzúa, who was a recognized leader and trusted by the men.

The report notes that Urzúa’s leadership skills were a key reason that the miners survived. Taking note that organizations rarely if ever face uncertainties as severe or as consequential as those that confronted the Chilean miners, the report states that nevertheless, it is often in extreme situations that critical leadership traits are most visible.

Urzúa’s leadership manner emphasized telling the truth, requiring teamwork, and staying focused to great success. It allowed his team of miners to concentrate on the singular task at hand — surviving their ordeal together — despite the dire circumstances in which they found themselves.

The report also suggests that as law firms confront a period of significant economic and market uncertainty, the lessons that were exemplified by the leadership of Luis Urzúa can provide some useful guidance for many law firm leaders as they navigate the uncertainties of 2023 and beyond.

You can download the full “2023 Report on the State of the Legal Market” by filling out the form below:

The Great Recession and its fallout saw the introduction of two relatively new concepts into the legal marketplace: the alternative fee arrangement (AFA) and the rise of in-house legal operations and procurement. Prior to the recession, the typical pricing arrangement between a client and a law firm was a relatively simple matter of the firm setting a rate, billing the client, and the client then paying the bill.

As clients increasingly turned to their legal operations and procurement teams to help drive down their own legal costs, the billing arrangements between clients and law firms became more complicated. Enter the age of the AFA, a plethora of pricing options encompassing capped, collared, and fixed fees, rebates, volume discounts, and much more.

While some law firms have had at least some members of their professional staff focused on pricing since long before the Great Recession, for many more, the idea of a dedicated pricing team has grown in importance in recent years.

In a few short years, the use of AFAs grew to nearly 20% of the average law firm’s revenues, and with the rise in revenue, so grew the need for experienced professionals to help shepherd these arrangements into being and thus ensure their success. A key part of that role quickly became having these professionals involved in direct negotiations on rates with highly trained procurement professionals on the other side of the table. In addition, law firm pricing professionals soon were responsible for other matters, such as the strategic navigation of tools like reverse auctions, which clients sought to use aggressively to contain their legal spend.

While some law firms have had at least some members of their professional staff focused on pricing since long before the Great Recession, for many more, the idea of a dedicated pricing team has grown in importance in recent years.

For many firms, this has resulted in fierce competition for experienced legal pricing talent to lead these critical pricing functions. Compensation has followed demand across the industry, from lead roles down to junior analysts.

The True Value Partnering Institute, in collaboration with its partners, Rees Morrison at Savvy Surveys for Lawyers, and the Thomson Reuters Institute, have tracked the progress of these pricing professional for many years. To that end, the group has published its latest report, Compensation for law firm pricing professionals at the start of 2023. Launched originally in 2017, this survey has charted the growth of legal pricing professionals, not only in terms of compensation but also team composition, as well as examining where the team fits into current firm structure, and how the team spends its time.

According to the most recent findings, compensation across pricing roles has risen notably. For example, in the last iteration of this survey, chief-level pricing officers were nearing $500,000 in total compensation; the most recent results show nearly every chief-level pricing officer exceeding this threshold. Even at the director level, some highly compensated directors were earning as much annually as their counterparts with chief-level titles.

For a more complete examination of the current state of compensation and job roles for legal pricing professionals, you can access the new report, Compensation for law firm pricing professionals at the start of 2023 here.

The findings also caution against falling into the trap of assuming that salary is reflective of experience or expertise. Drawing an analogy to lawyers, one would be mistaken to assume that a higher-paid lawyer at a larger firm always provides higher quality representation than a peer at an Am Law Second Hundred or Midsize law firm — the same holds true for law firm pricing professionals. In both cases, the successful outcome of a pricing arrangement is much more closely tied to the skill of the individual, and many skilled pricing professionals can be found outside the echelon of the largest law firms.

In that same vein, the number of years a professional has been with their current law firm was not found to be indicative of compensation. Indeed, it was more common to find higher compensation among professionals with shorter tenures at their current firms. However, this is likely a reflection of the highly competitive market for these professionals. More than 50% of respondents indicated that they’ve been with their current firm for fewer than five years with near 25% reporting a tenure of less than a year-and-a-half.

The market for experienced law firm pricing talent is, indeed, competitive, and the result, predictably, appears to be high mobility and commensurately competitive salaries.

This process then kicked off a volley of communications — internal and external — and necessitated forwarding emails, PDF letters, and spreadsheets for analysis and follow-up. The legal operations team provided some central support, but this was often challenging because data limitations made it difficult to account for past rate increases and freezes across different firms. Overall, the efforts felt somewhat ad hoc and very time-consuming.

“It has always been important to us to get this right,” says Antony Klapper, Deputy General Counsel in Product Liability & Regulatory at VWGoA. “We want to be fair to our law firms, whom we view as trusted partners. At the same time, we must manage our company’s finances responsibly — and execute all of this efficiently with a leanly-staffed team.”

Trisha Fletcher, Legal Operations Specialist at VWGoA, emphasizes these points as well. “Collectively, our team had a strong desire to find a better way to do this.”

Taking a new approach

The VWGoA team launched a new initiative to process rate increase requests more effectively for 2022 and beyond — one that would ultimately win them an ACC Value Champion Award.

The first step, the team decided, was to establish a more centralized, uniform approach. This would be managed by legal operations with strategic guidance from legal leadership. Of course, there would still be coordination with in-house counsel, but in a more efficient way — built around a centralized process, featuring stronger use of data analytics, benchmarking, and core decision governance from leadership.

The next step then, was to improve the in-take process. Outside law firms were asked to submit their rate increases within a designated window of time and through a common portal. This allowed the team to consider them all together, performing side-by-side comparisons of similar firms to ensure more consistent treatment under then-current market conditions. This commonality also enabled the use of greater analytics capabilities to assess past rate increase history, as well as internal and external benchmarking comparisons.

Within this framework, the team also began examining firms’ compound annual growth rate (CAGR). A law firm’s billing rate CAGR shows a multi-year view of the firm’s rate increase history, accounting for past increases and rate freezes. Standardizing the figures this way enabled better side-by-side comparisons across the portfolio, and showed which law firms were high or low outliers based on their multi-year rate history.

The VWGoA team also found it very helpful to use data to model the dollar impact of the requested increases per timekeeper for the coming year. This was instrumental in identifying the most impactful requests in order to focus on managing costs.

Seeing the benefits

Through this new approach, VWGoA legal leadership and legal operations were able to implement more effective governance and decision logic to streamline the rate decisions in light of portfolio metrics and company financial considerations. By streamlining and consolidating the process, they freed up considerable hours that their staff had previously spent responding to rate increase requests as they came in, managing them all through one common workflow. They saved further time be setting auto-approval thresholds for certain rate increase increments.

In the end, the projected savings for the coming year were significant, with rate increases for various timekeepers, for example, trimmed to about one-half of the increment originally sought. The VWGoA team devoted particular attention to adjusting high outliers and managing the impact on budget in a sustainable way.

Beyond time and money savings, the team built a process that leveraged better data to drive better decisions. The result is a strong business case showing how those in legal can use technology and data more effectively to increase productivity and execute against business metrics.

From law firms’ perspective, understanding the data that informs a client’s financial position is a helpful way to focus their rate increase conversations onto a productive end for both sides.

“We recognize that, in this economy, many clients are facing challenging headwinds,” says Susan Vargas, Partner at King and Spalding. “As trusted partners, we are glad to talk about goals and metrics to strengthen our relationship in mutually beneficial ways — and we welcome informative data to help us do that.”

Indeed, as global economies moved away from the worst of the pandemic, it seemed early on that 2022 could provide a sense of normalcy, if not a return to traditional business practices. However, the rocky shoals of the war and global economic turmoil soon put an end to that sunny thinking. Yet many professional service firms and their corporate counterparts in the US and around the world found ways to remain profitable, resilient, and forward-thinking enough to allow some positive direction as we all head into 2023.

The Thomson Reuters Institute, through its blog posts, podcasts, market reports, and in-depth analysis, has chronicled many of the changes that swept through the last year, offering insights into how many organizations are adapting and what solutions are being successfully utilized.

If there were trends to discern in this very busy year, it was that twin issues of talent and technology implementation were impacting corporate departments and professional service firms to a greater degree as the year went on. And some of the most-read pieces on the blog site reflected that. For example, one piece that was very widely received described the different power skills that allow employees to flourish in new hybrid work environments; also, the changing regulatory stance toward the practice of law, especially around whether non-lawyers can own law firms, was of keen interest to our readers.

Further, many law firms, government agencies, tax & accounting firms, and corporate departments were beginning to grasp that the technology needed to meet the growing demands of the digital economy was of paramount importance. Indeed, as we moved toward the end of 2022, it was clear that technology adoption and maximizing its use simultaneously was among the biggest challenges and most promising opportunities that organizations are facing going forward.

Key market reports & in-depth podcasts

Throughout the year, it was the goal of the Thomson Reuters Institute to bring together people from across the legal, corporate, tax & accounting, and government communities and ignite conversation and debate in order to shed some insight on the newest industry developments and the most critical opportunities and challenges market participants are experiencing.

You can explore our top trending Thomson Reuters Institute insights that shaped 2022, or you can relive some of our highlights from this year here. And for further coverage of the legal, tax & accounting, corporate, and government sectors, visit the Thomson Reuters Institute.

We did this in part by providing coverage of these topics on the Thomson Reuters Institute blog site — such as podcasts, videos, and key market reports — and by hosting world-class events, which kicked off in Amelia Island at our 29th Annual Marketing Partner Forum, which brought together global law firm leaders and the best strategic thinkers from around the world to discuss the steep challenges facing firms in the legal market; and continued in New York City with our 21st Annual Law Firm COO & CFO Forum, along with many more in-person and virtual events throughout 2022.

As our reach expanded over the year — the Thomson Reuters Institute blog site reached more than 1 million annual page views this year for the first time in its history — our coverage expanded as well. We created two new resource centers on the site, to accompany those dedicated to covering the legal, tax & accounting, corporate, and government areas. Our new resource centers — Environmental, Social & Governance (ESG) and Technology & Innovation — allow us to offer readers dedicated content and insight into those areas.

Throughout the year, the blog site offered a steady stream of analysis and market insight reports that shed light on what participants in the legal, tax & accounting, and corporate fields were experiencing in their respective marketplaces in today’s economy. For example, in the 2022 Report on the State of the Legal Market, we saw that the legal market has remained resilient, even though numerous key challenges remain for many law firms, including a hot market for legal talent that has driven up costs. Even so, the report showed that many law firms have managed the difficult market with a good level of success last year.

On the other side of the table, our reports on corporate law departments and corporate tax departments shed further light on the immense pressure these departments were under from their corporations to transform the way they operate, with special emphasis on working more efficiently and cost-effectively. Indeed, coming out of the pandemic, it appears the dramatic changes undertaken by corporations during that time — especially around talent management and adopting new technology — may only be the beginning.

Also, our series of twice-monthly Insights podcasts offered in-depth discussions throughout the year on topics ranging from the viability of the new cryptocurrency economy to the most common misconceptions in the legal industry around artificial intelligence, and from how financial institutions were managing Russian sanctions to how organizations can benefit from client feedback programs.

Now, as we move into 2023, the Thomson Reuters Institute will continue offering insight into the latest events and trends, bringing leaders together, and mapping out the opportunities and challenges facing corporations and professional service firms going forward.

Conversely, lawyers and perhaps especially partners, tend to go it alone, opting instead to maintain tight control of client relationships and, often, the origination credits that come with them. Many would be quick to point out that most of these partners have built quite successful and lucrative practices, so has there really been any downside to their practice of cloistering client work?

In one sense, perhaps not. Lawyers, especially for the last couple of years, have enjoyed an incredibly profitable run at a time when financial success seemed far from assured for most businesses. A lack of meaningful collaboration doesn’t seem to have hurt go-it-alone partners.

However, research from the Thomson Reuters Institute shows that law firms and their lawyers that have not fostered environments conducive to true collaboration on behalf of their clients might, in fact, be leaving considerable money behind and may even be placing unneeded strain on their client relationships.

In the most recent Thomson Reuters Institute Insights podcast, available on the Thomson Reuters Institute Insights podcast channel, we are joined once again by Lizzy Duffy, a senior director with the Thomson Reuters Institute’s global client services team. Duffy shares with us some surprising findings around just how powerful a team of lawyers that the client feels operates in a truly collaborative fashion can be for the law firm.

For starters, our law firm of hypothetical go-it-alone partners captures, on average, about 14% of a client’s total legal spend, Duffy explains in the podcast. In sharp contrast, firms where clients are served by what they perceive to be collaborative teams of lawyers enjoy closer to a 56% share of the client’s spend.

Looked at in this light, the lost opportunity cost from failing to deliver collaborative legal services appears substantial.

This podcast also explores some basic questions such as, how exactly is collaboration defined for purposes of this research and in the client’s mind? The podcast also delves into more complex topics such as how firms can best foster a collaborative environment in an era of hybrid work, identify and overcoming impediments to more collaborative cultures, and more closely integrate clients into these newly formed collaborative workstreams.

As we discuss, it’s not an easy goal to achieve, and it can involve addressing thorny topics like attorney compensation. However, the payoff in terms of improved client service, increased client loyalty, and a potentially huge jump in share of wallet might just make the effort worthwhile, particularly in a market increasingly defined by mobile demand and clients looking for law firms that deliver truly excellent service.

Episode transcript. 

You can learn more about collaboration within law firms on the latest Thomson Reuters Institute podcast here.

Looking over the columns for the year, several key themes emerge, such as how firms can best move past the constrictions of the global pandemic and begin to address other challenges like evolving technology and the shifting world economy. Other columns offers firms pathways to improving firms’ practices, increasing efficiency, and becoming a true partner to their clients; while others offered key takeaways, gathered from top legal clients, on the overall legal market.

Thriving in a post-pandemic world

As 2022 began, it seem that the worst of the global pandemic was behind us and law firms and their corporate clients were moving toward what could be seen as a more normal, or at least traditional, way of doing business.

Several Insights in Action columns explored these developments, looking at how chief talent officers within law firms were dealing with the hot labor market, especially around issues such as securing associate retention and staying on track for return-to-office plans.

In fact, several best practices emerged as to how to better retain key talent, including: i) clearly defining how the lawyer’s role fits with the firm’s goals and what lawyers need to achieve to ensure their own progression; ii) offering lawyers more control and flexibility as to what, when, and how they work; and iii) supporting lawyers’ well-being, including offering training and health-related programs.

In fact, concerns over talent continued to resound within the legal industry (and elsewhere) throughout the year. As such, several columns addressed how firms can best utilize or leverage the resources they have to provide the kind of training, work/life balance, and employee well-being for which many lawyers and staff members were clamoring.

How to address key challenges

One column published in October detailed how law firms can best address the reasons that younger associates and others leave the firm they’re currently with to go elsewhere, either to another law firm or in-house to a corporate law department. While being provided with opportunities for career development and growth was cited by many lawyers as strongly related to the satisfaction they feel with their current firm, surprisingly, compensation was not cited as such a strong correlation.

Other concerns, such as being treated with fairness and respect; feeling confident in the firm’s overall strategy and in firm leadership; and having the support of higher-level colleagues, such as partners all were ranked as more important than compensation in lawyers’ decisions to either leave or stay at their current firms, the column noted.

And that is good news for law firms because addressing those concerns is much less costly than simply increasing compensation, even if it can be a bigger challenge. However, throughout the year Insights in Action didn’t shy away from the bigger challenges that law firms were facing and instead offered ways firms could best overcome these hurdles.

For example, a recent column described how offering clients quality legal services is no longer a differentiator that law firms can count on to separate themselves from their competition; rather, offering quality legal service has become an expectation on the part of clients.

That means, as Rachel Heathcote of Thomson Reuters Market Insights, pointed out, is that clients are looking for more from their outside law firms, and the data shows that such issues as responsiveness, expertise, and business-savvy all have increased as firm differentiators in the minds of clients.

“What it shows to me is that everybody is doing service really well, so nobody is standing out for their service — it’s not a differentiator, it’s just table stakes,” Heathcote explains. “So what we have to be careful about if you’re a law firm is that if you are delivering poor service, then there’s a danger of losing out to competitors that are delivering high service.”

Again, the data shows that clients may be seeking more active business value out of their law firm engagements rather than simply a good client service relationship, she adds.

What the legal market revealed in 2022

One of the key values of the Insights in Action columns were their take on the legal market overall and the insights law firms could gain from the market data and client surveys.

For example, one mid-year column addresses the seeming disconnect between clients and those lawyers they designate as a stand-out performer as to where they see the value in their relationship. The column expanded on a survey that had queried clients on what qualities in those stand-out lawyers makes them truly stand out; and, querying the stand-out lawyers themselves, on what they think clients value in them.

While clients rated lawyers’ expertise and technical acumen as top qualities, the lawyers themselves cited their service and close relationship with the clients as their top draws. Clearly, as the column noted, there is room here for law firms to shore up what their lawyers can offer by focusing on what clients are saying is most valuable to them.

Other columns explored other critical subjects, such as how clients are exhibiting growing optimism about their future legal spending, despite the current economic pessimism; and how law firms based in the United States have managed to gain market share in the United Kingdom’s legal marketplace.

Looking ahead to 2023 and beyond, the Thomson Reuters Institute’s Insights in Action column will continue to offer data-driven analysis and market-revealing insights that can greatly help law firms navigate the often-choppy waters of the global legal market.

If you’re interested in learning more about some of the research used in our monthly Insights in Action column, and how this data can be applied to your firm, please visit here.