Thanks to Adrianos Facchetti over at the California Defamation Law Blog for sending me this interesting article from the California Bar Journal. Staff Writer Diane Curtis asked the question which many law bloggers are discussing. How will the current economic crisis affect the business of law?
Here are some interesting tidbits from the article:
- According to the Bureau of Labor and Statistics, the number of legal jobs declined for the sixth consecutive month in November, moving from 1,180,700 in May 2007 to 1,163,500 in November 2008. The drop between October and November was the sharpest monthly drop since the decline began in June.
- But the economy isn’t the only reason for the change that’s going to hit law firms, Keane added. Clients are balking at paying a gigantic bill for the partner-rate work of a first year associate, and unhappy associates who are asked to continually increase their billable hours are making their unhappiness known.
- The pyramid structure of associate-to-partner leverage – hiring more and more associates for every partner – can be a real problem in an economic downturn because associates’ salaries get bid up to the point where the firm can’t pay them, he said. Helm also said Munger Tolles is careful in how partners draw down money. They’re made to wait until the end of the year to get a very large part of their compensation.
- “When identify is based on some false totem – per-partner profit – value to clients and the quality of legal services don’t matter, and that’s unfortunate.” He said that if firms are constantly distributing income, then what happens is they’re totally dependent on lines of credit when business gets slow.
- At the same time, associates ignore billable hours at their peril, especially in the current economy, according to legal recruiters. “I think If I were giving any advice to associates – and I get calls from a lot of associates – it would be to keep your hours high,” said Seth Davis, managing partner of the San Francisco office of Laurence Simons International, a legal recruiting firm. “It’s the ones who are not reaching their numbers who are going to be laid off first.” Fanning of Major, Lindsey & Africa concurred. “There are two ways to attack decreased profitability: Increase worker productivity and cut expenses…If I were an associate billing 1,500 hours, I’d be very nervous.”