The pandemic hit all businesses hard, and law firms are no exception. A recent Clio study, however, finds that solo firms faced the most significant financial downturns. Transitioning to working remotely is tough, and solos were more likely to face declines in both incoming cases and lost revenue. Those solo practices with a firmer grasp on relevant technology and content marketing, however, have weathered the storm more ably – and are better positioned to continue prospering.
According to Clio’s comprehensive report, Legal Trends for Solo Law Firms, those solos out there that made technology work for them throughout 2020 generated more revenue than those that did not – to the tune of about $50,000 for the year. Further, those solo firms with more facility for technology and that remain agile are far better positioned to successfully transition into whatever the future holds.
Larger firms naturally have greater resources, which increase their options when disaster strikes. As such, it’s not surprising that solo firms have had a tougher time adapting to the tsunami of change wrought by the pandemic.
Solos performed only slightly less well than the bigger firms in terms of new cases, including a drop of about 33 percent early on in the pandemic – with a steady return to baseline numbers by summer.
Solo firms’ revenue streams, however, took a harder hit. These declines stretched into the summer, and the overall drop experienced was about 5 to 7 percent greater than that of larger firms.
Those practice areas that were most profoundly affected by the pandemic are those that are most closely associated with solo firms, such as criminal defense, which experienced a 59 percent decrease early on. Additionally, personal injury, bankruptcy, and immigration – all practice areas that are common to solos – have sustained lasting negative effects.
While all solo firms felt the financial effects of the pandemic, those solos that adopted critical technologies were able to bounce back faster – ultimately earning about $50,000 more (on average). The technologies deemed most critical are client-based, including:
- Client portals
- Video conferencing
- Electronic document sharing
- Electronic payments
- Customer relationship management (CRM) products
All of these are forms of remote customer connections, which makes sense in light of the distancing effects of the pandemic. Further, tech-savvy solos were experiencing the financial benefits of these client-based technologies before the pandemic hit, but the financial advantage was heightened by its onset. Finally, these gains were relative not only to other solos but also to the tech-savvy firms’ own prior-year performances.
The quarantines, lockdowns, and social distancing of the pandemic set the stage for everyone to cozy up a little closer to technology, and solo firms are finding that this is certainly true of their clients. There is a lesson here for solo firms; investing in modernizing your technological offerings now can pay off big in the future and can also leave you better positioned for successfully adapting to the ever-changing business landscape.