"Guarded optimism" and doomsaying are not mutually exclusive

by Vault Law Editors | September 27, 2010

  • My Vault

A recent straw poll of law firm managing partners revealed “guarded optimism” about the direction the market for legal services is heading. The poll took place at a meeting of the New York State Bar Association’s Task Force on the Future of the Legal Profession. Also present at the meeting was ABA President Stephen N. Zack, who predicted that “the practice of law will change more in the next ten years than in the past 200 years.”

Among the poll’s findings:

  • All of the managing partners confirmed that their firms had experimented alternative fee arrangements, while 30% of the respondents “regularly” employs AFAs
  • More than half said that clients complain about (or refuse to) footing the bill for the work of junior associates
  • A majority said they anticipated demand for legal services to remain flat in 2011; while roughly one third believed demand would increase.

Elsewhere in the world of legal industry prognostication, Lisa Smith, the head of the Hildebrandt’s law firm strategy group, also assumes a flat demand going forward. Smith contends that the absence of growth, combined with increased client demands, will force transform the traditional law firm staffing model in three basic ways:

  • Through Six Sigma or other efficiency initiatives we might see a 10% improvement in efficiency through use of technology or other means. That would result in a reduction of 6,500 lawyers, with some corresponding increase in technology staff.
  • Legal process outsourcers are gaining traction, especially with clients. For sake of argument let’s say there are currently the equivalent of 1,000 outsourced lawyers (there are probably more than that just at Pangea3, Integreon and CPA Global right now). If this number increases five-fold, which is slower than the growth rate over the last few years, that will result in a shift of 5,000 lawyer jobs.
  • Firms are increasingly hiring staff attorneys at substantially lower salaries than partner track lawyers. This trend is likely to accelerate. If there are currently 3,000 staff attorneys in AmLaw 200 firms (this is only 15 per firm so likely low) and that number triples, it will result in a shift of 6,000 lawyer jobs to lower cost resources, although certainly still part of the overall associate pool.

Smith's concluding speculation is ominous: “a possible reduction or shifting of 17,500 of the 65,000 non partner jobs, which is nearly 27% of the total. It is not surprising that some firms are reducing summer programs and first year classes. Is that going to be enough?”

-posted by brian

Filed Under: Law

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