2023 Bright Insight: The 2023 National Legal Sector Benchmark Survey Results

The last three years have been ones of significant upheaval in the legal sector, as they have been for most industries. However, in some ways, the more things change, the more they stay the same. The stated business competition challenges for law firms have remained consistent for years. There are nuances, of course, but it comes back to two main issues: pressure on the business model (i.e., fee structures) and retention of top talent. In 2019, the most commonly cited issues related to business competition were recruitment and retention of talent, competitive fee structures, IT security, and the high costs of labor overhead. The top two drivers were identical in 2022 and IT security was in the top five. Labor costs, however, declined in importance, likely due to the fact that fee growth had been so strong in 2021 and labor challenges were less about immediate cost and more about finding enough good talent and managing it in an increasingly remote or hybrid environment. Accordingly, the impact of COVID-19 was the number three most commonly cited business

competition challenge and succession planning jumped up to number four. The latter was likely driven by the increase in retirements that occurred in the wake of the pandemic. The legal sector is also an older than typical industry, with a significantly larger share of workers nearing retirement. In the U.S., 24% of workers overall are 55+ years old, but within the legal sector, nearly one-third (31%) of employees are 55 or older.

Succession planning and attorney retirement remains near the top of the list in 2023, only falling behind the historical business challenge mainstays of talent recruitment and retention, competitive fee structures, and IT security . The competition for talent, as previously noted, has grown intense as nearly 90% of firms indicated they are looking to poach lawyers from other firms. Even if the economy and labor market slow down in 2023, legal sector employment will remain tight both because of the competition for talent and the fact there is a large number of partners nearing retirement.

What are the greatest issues related to business competition that your firm is currently experiencing?

Competitive fee structures Recruitment and retention

44%

42%

Attorney retirement Succession planning IT security

39%

32%

21%

Other Cash flow Non-labor overhead too high Conflicts Real estate issue Gaining internal consensus Capital costs Globalization Labor overhead too high

20%

15%

13%

12%

10%

8% 8% 8%

3%

Source: Cushman & Wakefield Research

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