endangered industry - US Law Firms !
(snip)"Law firms - A less gilded future
The legal business has undergone not only recession but also structural change. Ever-growing profits are no longer guaranteed. Nor, for some firms, is survival
TWO years ago Howrey was one of the world’s 100 biggest law firms by revenue, with nearly 700 lawyers in eight countries. Profits exceeded $1m per partner. The American firm, which specialised in intellectual-property suits, had had several spectacular years in a row. But in 2009 profits were much less than expected and angry partners began to leave. Defections continued during the recession. After failed merger talks, Howrey shut its doors this March.
Though Howrey was the only big firm to collapse, the forces that destroyed it hit the whole profession hard. Work on mergers and acquisitions (M&A) dried up and nothing similarly profitable took its place (bankruptcy, securities litigation and regulation were rare bright spots). Clients became keener to query their bills—and to demand alternatives to the convention of charging by the hour, such as flat, capped or contingent fees. Small and innovative firms began obliging them, and big firms increasingly felt forced to follow suit.
All this took a toll on the labour market. After a dozen years of growth, employment in America’s law industry, the world’s biggest, has declined for the past three years (see chart 1). The 250 biggest firms, according to an annual survey by the National Law Journal, shed more than 9,500 lawyers in 2009 and 2010, nearly 8% of the total. Many also deferred hiring, leaving new graduates in a glutted market. Legal-process outsourcing firms, which do not advise clients but do routine work such as reviewing documents, put further downward pressure on the demand for their talents. The pain was felt in Britain, easily the biggest legal market after America, and other countries too.
Lawyers would like to believe that the worst is over and that no more of them will suffer Howrey’s fate. Work on M&A and initial public offerings has recovered from dismal levels. And according to American Lawyer, profit per partner at America’s 100 biggest firms rose by 8.4% last year, having fallen by 4.3% in 2008 and gone up by a measly 0.3% in 2009.
But not all the trends that have hit the legal industry are cyclical. Some are here to stay even as the economy recovers. One is clients’ determination to keep their bills down. Feeling that they had overpaid vastly for the work of green trainees, they began refusing to have routine work billed to first- and second-year associates (ie, lawyers who are not yet partners). They see no reason to stand for it again. And alternative fee arrangements continue to grow in importance, albeit slowly: they accounted for 16% of big firms’ revenue in 2010.
A second trend is globalisation, which the law is experiencing later than other industries. For lawyers, it holds both promise and peril. Booming emerging markets, especially in Asia, are leading New York and London firms to extend their reach. But the growth of outsourcing to places like India is not lost on money-conscious clients, some of whom are demanding that their lawyers pass certain routine work to cheaper contractors.
A third trend is the growth of technology in an industry long synonymous with trained human judgment. Software that can perform tasks like “e-discovery”, sorting through e-mails and other digital records for evidence, is saving firms money. It has also made it harder to sustain a business model in which partners sit atop a pyramid with a fat base of associates who carry out expensively billed work, some of which is routine and repetitive.
Trends that were not part of the recession will not disappear with the recovery. Some will even strengthen. William Henderson of Indiana University points out just how good and how long a run lawyers had. Spending on legal services grew from 0.4% of America’s GDP in 1978 to 1.8% in 2003. The legal business grew four times faster than the economy. Now, Mr Henderson says, a “hundred-year flood” is hitting the profession. Job growth had begun well before 2008, he points out, so that the labour market was already out of balance when recession struck. Not all firms will survive, and those that do will not all prosper equally.
Howrey’s boss, Robert Ruyak, blamed two new trends for his firm’s demise. Howrey had begun acceding to clients’ demands for flat, deferred or contingent fees, causing income to become clumpy and unpredictable. And the rise of specialised e-discovery vendors hollowed out another source of revenue."(snip)
from
Re: endangered industry - US Law Firms !
Because my company is not large enough to have an inside counsel, one of my duties is reviewing legal fees. Which in this business can get big in a hurry. Our outside counsel had to be trained to bring their fees in line with company objectives and budgets. Frankly, it took a firing to make a point. (A firing coupled with a complaint to the NC bar and the Patent bar.) Now, outside counsel knows that when I give them a budget, I mean they have a budget.
Z
Re: endangered industry - US Law Firms !
hmm... is the law field really that bad now? im currently in college pursuing my paralegal degree!!
Re: endangered industry - US Law Firms !
^^^ well, the legal field has been somewhat slow in adopting 'structural changes' ... but customers like Zofia's firm insisting that legal fees be kept under control has indeed forced them to accept SOME changes at least.
One such change is the outsourcing of 'boiler plate' contracts and legal reviews, i.e. legal work that requires a lot of 'motion' but little special skill, to much lower priced legal services in India etc. Another such change is the replacement of 'human' US legal researchers with special purpose software that is capable of searching legal and other databases. And yet another such change is a refusal by 'customers' to continue paying high hourly rates for services provided by inexperienced attorneys / legal researchers / paralegals etc. - with those 'customers' instead offering the legal firm an X dollar budget to accomplish legal result Y ( which in turn creates strong incentive for the legal firms to cut costs internally by whatever means available if they wish to earn a profit ).
Or put another way, the outsourcing, automation and pay rate arbitrage of 'lower skilled' US labor that has dominated US manufacturing etc. over the past decade has now evolved to start including US 'professions' as well. The same sort of changes are also starting to occur re US engineering firms ( CAD drawings being created in China ), US medical firms ( X-Rays being interpreted in India ) etc.
Re: endangered industry - US Law Firms !
Quote:
Originally Posted by
sweet_baby
hmm... is the law field really that bad now? im currently in college pursuing my paralegal degree!!
Yes, it's bad. For the last two years, I hired lawyer/contractors to do some specific work that our outside firm wanted to charge too much for. I was able to get the same quality of work for $100/hour that they would have charged me $250/hour and the attorneys I hired as contractors were very happy to have some work.
Being a lawyer is not a bad job if you have a spouse with benefits and all you want to do is dabble at the law while spending a lot of time at home with the kids. Doing it full time is a dead end for the time being. No one is doing a lot of hiring. Promotions are few and far between. I have put off hiring a full time inside counsel, but as sales grow, we'll probably hire someone and cut our legal fees from $250,000/year to the cost of the lawyer's salary and benefits. That is if we don't sell the company to someone who has an in house legal department.
Paralegal is a different story. A lawyer that I greatly respect, has three paralegals working for her and no other lawyers. Hers is a bankruptcy practice so she is very dependent on getting forms filled out properly collecting financial information and doing a lot of paperwork. Perfect for a paralegal. You don't need a JD to do that. She pays well, though her paralegals do not make the kind of money a JD would. The pay is around $50,000 a year and up with more experience. You get plenty of client contact. In fact the clients often only meet the lawyer when they go to court. The Paralegals handle all the routine client interviews. Those jobs are outsource proof because they have the client contact. (Legal research is mostly automated in her law firm, from what I can see.)
HTH
Z
Re: endangered industry - US Law Firms !
I considered law school years ago until I found out about all the unemployed lawyers.
Honestly, this is why I'll NEVER hire an Indian lawyer, doctor or anything else.
Re: endangered industry - US Law Firms !
Quote:
Originally Posted by
Kellydancer
I considered law school years ago until I found out about all the unemployed lawyers.
Honestly, this is why I'll NEVER hire an Black lawyer, doctor or anything else.
Why is it acceptable to say this about Indians... when if you replace that with another ethnicity it is correctly seen as horribly racist. Not all Indians are first generation either.
Re: endangered industry - US Law Firms !
Quote:
Originally Posted by
nelly33
Why is it acceptable to say this about Indians... when if you replace that with another ethnicity it is correctly seen as horribly racist. Not all Indians are first generation either.
Because black people aren't taking our jobs and they are AMERICANS! Indians who are from India (as in not born here) DO NOT BELONG HERE AT ALL. Common sense. If this makes me a racist because I'd rather give my money to Americans than non Americans then that's fine.
And before you say how can I tell, I will state that I would investigate and if they went to school in India or born there then no I will not hire them. Foreign workers from India are stealing our jobs. That is not racism but nationalism and I am perfectly fine with that view. I know many unemployed people that would be working if foreign workers didn't take their jobs.
Re: endangered industry - US Law Firms !
Ummm... not all Indians are first generation immigrants, and those that are citizens of the country are just as American as anybody else; black, white or purple. I would never hire an American to represent me just because they were American if they were not the most qualified for the job. That's the problem... being American doesn't entitle you to any special privileges in the private sector... skill, work ethic and competence do. A false sense of entitlement won't solve anything.
Re: endangered industry - US Law Firms !
You didn't read what I wrote, which doesn't surprise me. I stated I was talking about Indians who are NOT citizens. These are the ones who come here on visas. They do NOT belong here and no I would not hire them. Being American does give one more insight on being American in America. We should not be bringing in other people from other countries (who are NOT immigrants) when we have unemployed people like we do. People who come here on visas are not Americans, they aren't even immigrants.
I know though it doesn't matter what I say because you love to follow me and quote everything I say. I don't get why you are this obsessed with me, but hey if it's fun to try to disprove anything I say then it's pretty sad.
Re: endangered industry - US Law Firms !
At least I don't resort to personal attacks when I'm flustered :) And when I do quote you, normally it's because you come up with blanket statements that have no sources and no basis in fact. It has nothing to do with fun, it has to do with you spewing ignorance and bigotry with no facts behind it. You have an extremely outdated ethnocentric worldview in which you make it seem like you are entitled regardless of qualifications, based on the fact that you are an American citizen.
Make it out to be a personal obsession by me if it makes you feel validated.
Re: endangered industry - US Law Firms !
What? You follow me around in thread after thread. I could find many of the threads but I don't want to because you bore me now. I wasn't personally attacking anyone, except saying you do stalk me into various threads because you do. In fact I've asked you to leave me alone but you insist on following me which I don't get. Btw, your comments are also blanket statements that have no sources or any facts.
And yes American citizens should definitely be entitled to American jobs of which they are qualified over non American citizens. This makes sense to most people. People have no business coming here taking jobs from qualified American citizens. We have many unemployed Americans we need to be taking care of, we shouldn't allow foreign workers on visas to come here to take jobs from Americans. I personally know many people who lost their jobs this way.
And you are going back on ignore so don't bother responding to me.