Once governments allow a widespread return to offices, law firms will then be able to compete for work based on whether their lawyers are collaborating in person.
BY:
Lawyer Reporter
PROJECT COUNSEL MEDIA
12 March 2021 (Brussels, Belgium) – Recently Goldman Sachs CEO David Solomon labelled working from home an “aberration” and plenty of London’s top lawyers agree with him. Even if they are yet to say it publicly, you can expect top-flight litigation and corporate firms to ask their employees to get back to the office full-time as soon as possible. Over the last 12 months, we’ve all heard the anecdotes about junior employees driving this move, while partners are less sure.
Those that want to make the case to partners for remote working can point to many of the US law firms’ 2020 results as evidence of its success. Akin Gump’s PEP increased 15.4 per cent from $2.6m to $3m, Debevoise & Plimpton’s was up 23 per cent to $4.55m, and White & Case’s was up 16 per cent to $3.02m. From these numbers, it looks like working from home doesn’t decrease productivity.
Many US firms have posted impressive 2020 firmwide results despite working from home the majority of the year
Sources: The Lawyer and Investors’ Chronicle
The work-from-home apologists can also point to the success of Keystone Law. The fully remote listed law firm is trading at a price-earnings ratio of 50. In March of last year when its PE ratio was 32, the Investors’ Chronicle gave it a “buy” recommendation, saying its “capital-light business model provides resilience”. The market clearly agreed with this sentiment, hence the big increase in value since. For comparison, DWF which operates a traditional working model, trades at a PE ratio of just 22.
However, despite these big increases in U.S. firms’ PEP (profits-per-equity-partner) and the great valuation for Keystone, the remote model has not really caught the imagination: 75 per cent of partners still wanted to return to the office at least three days a week, according to surveys conducted by The Lawyer and by PwC. Clearly, unlike the stock market, these partners don’t consider the “capital-light business model” to be the future. And they have good reason for it.
Remote working was profitable for the top U.S. firms last year because every firm was doing it. Clients had loads of legal work to hand out (eDiscovery and legaltech work has been overflowing) and they had no choice but to select a firm where all the lawyers were working from their kitchens. Once the government allows a widespread return to offices, law firms will then be able to compete for work based on whether their lawyers are collaborating in person.
We’ve already heard about the demand for lawyers “in their seats”. Staff attorneys at two different Big Law firms told us how their firms won pitches because they met the clients in person and promised to have lawyers back into the office to work on the matters. For the other lawyers who Zoomed in to make their pitch they were unsuccessful. Homeworking is no longer looking financially savvy.
Keystone’s price may end up being reasonable given that it specialises in practices that require less in-person collaboration, such as family, property and private client law. However, its model isn’t comparable to the firms operating at the top ends of the corporate and litigation markets. For lots of those partners, working from home will never cut the mustard.
