A fourth of Big Law is about to disappear

Larry Ribstein —  29 September 2010

Am Law Daily reports on a Hildebrandt analysis (HT Law Blog) predicting “that nearly 27 percent of the 65,000 non-partner positions at Am Law 200 firms could be cut or recategorized as lower-paying positions over the next five to seven years.”  Causes include “flat demand for legal services,” price pressure from clients, outsourcing, Six Sigma strategies, and hiring off the partnership track.

Hildebrandt’s Lisa Smith says “it’s unrealistic for us to expect that the law business is going to be any different than any other business in terms of the changing need for talent.”

Actually I think this is too optimistic.  I have been insisting for awhile now that the economy was only the trigger of permanent decline in the demand for Big Law’s services.  Indeed, the factors cited in the Hildebrandt analysis support this:  outsourcing and other pressures on client demand will not go away when the economy improves.  Just because clients have more money to spend doesn’t mean they’ll spend it on legal services when they don’t have to.

On the other hand, this is only a gloomy piece of a bigger picture.  There’s an increasing need for legal talent in an increasingly regulated society.  That talent, however, is less likely to be working for Big Law.

Larry Ribstein

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Professor of Law, University of Illinois College of Law

18 responses to A fourth of Big Law is about to disappear

  1. 

    I work as a contract attorney for a large west coast firm. My position was 100% document review until a few months ago. Suddenly the contract attorneys here are being assigned more and more work that previously went to junior associates. What happened to the junior associates? This firm cut the number of first years dramatically and then deferred most of them. The number of contract attorneys has more than doubled in the last year.

    Welcome to the future of big law jobs! $35 an hour and no benefits.

  2. 

    After 8 years of Bush and the Republicans trashing lawyers and calling them everything short of terrorists, is it really surprising the law industry is suffering so much?

    • 

      I don’t recall Bush and the Republicans demonizing attorneys, but would it matter if they did? Businesses have less money to spend on every service, including legal. Bush trashing them won’t change that fact any more than than the legal profession sucking up to the Democrats have changed it. The world is changing for everyone, including the legal profession. I really don’t worry about them. They are among the brightest and best in our society. They will adjust and move on to other successful pursuits. I am concerned for blue collar workers who don’t have that level of adaptability. Lost jobs for them is a big problem for us all and will get even bigger.

      • 

        Willis, I think Vinny was saying it’s all Bush’s fault. It always is you know. That guy was so Godlike in his ability to control hurricanes, bring down tall buildings and then having it blamed on crazy Muslims. He even caused everyone to buy houses they couldn’t afford through mind control, and then the collapse just as he leaves office.

        The list is long and all is lost because Bush was conjured, infused with an unholy spirit and unleashed from hell.

        It’s a progressive fact that can only be undone through the worship of Obama. If only we could convince America to allow Obama to save us. The school children sing his praises, why can’t everyone. Maybe then he will save us!

    • 

      Wow, of all the “Blame Bush” lines I’ve heard, this is one of the weirdest.

  3. 

    Hear Hear Larry and James. I’m at a small boutique firm and we’re almost as buried in work as we were 3 years ago. Corporate counsel that I serve has multiple mid-size firms in different specialties doing what big law once did for them as one-stop legal shopping.
    BTW, non-partner track is also no problem here so long as you’re good; we’re customer oriented.

  4. 

    Uh, where does it say ‘global corporations’ can’t hire their OWN lawyers? Start an in house counsel division? Jeez. Big law is languishing due the Ponzi-like business model and ‘billable hours’ fraud.

  5. 

    I don’t work in BigLaw, but I have friends who do. Clients have, I think, finally realized that they’re paying $1,000 per hour for partners to take the credit for work done by associates being billed at $300 or $400 per hour (if that much, and taking home less). The highly-paid partners, who see the high pay as their reward for 10 or 15 years of working 80 hour weeks, just aren’t providing $1,000 per hour of value to the clients, bottom line. The partners are the middlemen, the brokers between those who need the work done and those who actually do the work. The middleman is a dangerous position to be in, in a shrinking economy.

  6. 

    The vitality and robustness of the US economy is inversely proportional to the aggregate income earned by lawyers.

    Even lawyers know this to be true…

  7. 

    I’ve got a background in professional services and a number of businesses where I was a customer of professional services (legal etc).

    What I see isn’t really the death of Big Law but a conversion to a structure that mirrors finance. You have the really large boutiques (Goldman/Cravath) you have the supermarkets with global coverage (Citi/Clifford Chance), then the big boutiques (Greenhill/Boies), regional bit players (no one you’ve ever heard of/ditto), etc. The mushy middle sees a workout just as accounting & consulting have seen. While there may be some productivity changes to the labor structure, the need for cultural understanding and personal contact will mitigate against outsourcing, just as it has in other domains (after huge and expensive problems of course).

    Law needs to change its billing practices (just as accounting does) to drive productivity enhancements. The same challenges of ethics and quantifiability will continue to bedevil this change.

  8. 

    I can vouch for what Larry says. I work for a mid-size firm, and we’re grabbing business left and right.

  9. 

    “65,000 non-partner positions” is not “a fourth of big law”. Misleading headlines like that undercut your credibility. To say nothing of quoting from a gossip rag’s report on the famously inaccurate predictions of the Hildebrandt organization.

  10. 

    Um, Matt, the point is not that the firms will get smaller – they may well get much larger. It’s just that they will look a lot less like the traditional only equity partners and partner track associates model. That won’t be true for every type of deal/litigation or all firms, but until recently almost all big firms had the strategy of “let’s become more like NY firms” (in billing rates, leverage, etc.) – and now big companies are looking to cut costs, and are willing to work with lots of different size firms (or different firm models) – so competition will drive alternatives.

  11. 

    Except that it’s happening. Joke’s on you.

  12. 

    I think this is profoundly mistaken. Let’s look at it rationally.

    Banks are getting much, much bigger. Global corporations such as Google and Microsoft and Apple and GE and Exxon are getting much much bigger.

    We are becoming much more oligarchic in every respect.

    And somehow these gargantuan juggernaut gigacorporations will be served by mid-size law firms?

    Risible in the extreme.

    • 

      Google, Microsoft, Apple, GE, and Exxon all have legal staff on the payroll because they’re big enough to constantly be involved in some kind of litigation- patents, acquisitions, trademark, contracts, etc.

    • 

      Some firms will actually continue to get larger, thru mergers with other firms as well as thru “organic” internal growth. Companies engaged in “bet the company” transactions will continue to seek out the very best lawyers and firms they can find, and for many of them, such talent will likely be found in firms firmly in the talent-rich, well-staffed and highly leveraged Big Law model. While I appreciate the point being made by the Hildebrandt consultants, I don’t think the empirical evidence is there to back up their contention.

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    […] cuts, and those who manage to hang on may find their positions downgraded, writes Larry Ribstein of Truth on the Market: Am Law Daily reports on a Hildebrandt analysis (HT Law Blog) predicting “that nearly 27 percent […]