A new nationwide American survey reveals deep divisions between corporate counsel and private practice attorneys over the current state of the legal industry, the impact of the economic downturn and what the future holds for the law firm business model. The just-released State of the Legal Industry Survey was commissioned by LexisNexis and is the first of its depth and breadth to be conducted on the legal industry since the beginning of the economic crisis.
Almost three in four (71%) corporate counsel surveyed say they feel law firms are not doing enough to respond to the current financial pressures on their business model. Almost half the in-house counsel polled (46%) say they have requested rate cuts, yet less than one in five (18%) private practice attorneys say their law firms have reduced billing rates.
More than half of corporate counsel surveyed (58%) say they believe law firms are too profitable; however, more than three in four (77%) private practice attorneys believe clients are too focused on reducing costs at the expense of quality and long-term results.
"The fact that corporate counsel don't always see eye-to-eye with their private practice colleagues on issues like the business of law and the current state of the legal industry is not unexpected," said Andy Prozes, CEO of LexisNexis Group. "What is surprising about the results of our study is the extent of the differences between these two groups. There's a Grand Canyon-sized divide between the opinions of corporate counsel and those of law firm attorneys on some of the most important issues facing the legal industry today. If we're going to close this gap, all of us in the legal community need to take a holistic approach to address these challenges."
In addition to deeply divided opinions among practicing attorneys, the survey also reveals that law school students are feeling the impact of the current turmoil within the legal industry. More than half of law school students surveyed (54%) say that the current state of the legal industry has made them consider career alternatives, while almost two-thirds (65%) believe law school does not teach the practical business skills needed to practice law.
Corporate Counsel: Law Firms Not Responsive Enough to Economic Downturn
With the majority of corporate counsel believing law firms are not taking enough action in response to the economic downturn, most also say that, in 2009, they shifted work in-house and reduced spending on their outside counsel. For example, according to survey respondents:
• Only 38% of corporate counsel believe law firms are being responsive on changing fees and costs given the current economic recession
• 69% of corporate counsel have shifted work in-house since the start of the economic downturn and 56% have reduced spending on outside counsel
Private Practice Attorneys: Clients Too Cost-Focused, Quality and Results Suffering
Meanwhile, a sizeable majority of private practice attorneys (77%) believe their clients are too focused on reducing costs. According to the survey, private practice attorneys say their firms have taken a number of steps in 2009 to respond to the changed economic climate, including instituting alternative fee arrangements, reducing staff and imposing hiring freezes. Of the private practice attorneys surveyed:
• 43% have conducted layoffs
• 41% say their firms have offered alternative fee arrangements
• 33% have implemented hiring freezes
• 29% have deferred start dates for new associates
• 26% have reduced employee salaries since the start of the economic downturn
Opinions Split on Future of the Legal Industry
Despite the considerable impact of the economic recession, just over half of corporate counsel (53%) and private practice attorneys (52%) believe the recession will permanently change the way business is conducted in the legal industry. Looking to 2010, opinions are divided on the future direction of the law firm business model and the billable hour. Further cuts are predicted by corporate counsel and, to a lesser extent, by private practice attorneys.
• In line with a change in the business model, 57% of corporate counsel believe the billable hour will give way to alternative billing arrangements
• More than half of corporate counsel responded that they plan to shift work in-house (57%) and reduce the amount of their total spend on outside counsel (55%) in 2010
• When asked what actions their law firm is most likely to take in 2010, the top two responses among private practice attorneys, at 18% each, were: reduce workforce/conduct layoffs and defer start dates for new hires
Law School Students Feel Unprepared, Ill-Equipped for New Economic Reality
The survey shows that a majority of current law school students feel ill-equipped for the business of law, and many are considering alternative careers as a result of the uncertain future of the legal industry. Of the 100 law school students surveyed:
• 35% of law school students responded that they do not feel adequately prepared to succeed in the changing legal marketplace
• One fifth (21%) of students say that based on the changing legal marketplace, they regret attending law school
"The survey makes for some sobering reading, but there may be an upside," said Mike Walsh, CEO, LexisNexis US Legal Markets. "The data suggests that lawyers on both sides of the table are making changes to navigate this tumultuous time but to move ahead together as an industry it will require a great deal of communication and collaboration. Law firms that are willing to capitalize on these trends during these times and think and act differently to better meet the needs of their corporate clients could give themselves a competitive edge over their peers."
Click link for a copy of the report...
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Thursday, December 10
LexisNexis survey reveals 'Grand Canyon-sized divide'
by
Charles Christian
on Thu 10 Dec 2009 14:53 GMT
 1 AttachmentsFriday, December 4
Hildebrandt and Baker Robbins to merge
by
Charles Christian
on Fri 04 Dec 2009 17:24 GMT
The legal sector consultancies Hildebrandt and Baker Robbins & Company (BRCO) announced today that they will merge into a single company, effective 1st January, 2010. Both are part of the Business of Law group of Thomson Reuters.
Hildebrandt is a management consulting firm serving law firms and corporate and governmental law departments throughout the world. BRCO is a technology and business process consulting firm for the same market. Together, the new firm – which will be known as Hildebrandt Baker Robbins – will be the largest and most diversified consultancy serving the legal market, with more than 120 consultants working around the world in a broad range of practice areas. “The combination of Hildebrandt and Baker Robbins & Company is a strategic response to better help clients deal with the significant changes occurring in the legal market, including globalization, pricing challenges and leadership development,” said Hildebrandt founder Brad Hildebrandt. “These changes are increasingly driving the need for holistic solutions that cut across many specialized disciplines and areas of expertise. I look forward to introducing our clients to expanded service offerings that will help them successfully meet those challenges.” “We are creating a unique consultancy that combines our strengths and will address our clients’ most important business-critical needs with unparalleled expertise and experience in the legal market,” said Brad Robbins, co-founder of Baker Robbins & Company. “For the first time, legal organizations will have access to fully integrated solutions that combine business strategy with technology and business processes. The unique services offered by the new company represent a substantial value-add to clients, especially in such essential areas as strategy, and enhanced use of technology both in the practice of law and as a management tool.” Chris Kibarian, president of the Business of Law group within Thomson Reuters, Legal, stated, “We’re very excited to provide to the legal market the combined experience and expertise of these two extraordinary consultancies. Merging their services into a single, coordinated business offers an unparalleled opportunity to help our clients successfully manage their firms through the sea changes that are occurring in today’s legal market.” The newly combined firm will be managed jointly by Brad Robbins, the current CEO of Baker Robbins & Company, and Jim Jones, the current managing director of Hildebrandt, while Brad Hildebrandt will continue in a senior leadership role with a special focus on key client relationships and global initiatives. The company will operate out of its nine principal offices in Chicago, Eagan, Minn, Houston,; London, Los Angeles, New York, San Francisco, Somerset, NJ and Washington DC. Effective January 1, 2010, the company will also have representative offices in Beijing, Hong Kong and Sydney. Thursday, December 3
December American Insider out now
by
Charles Christian
on Thu 03 Dec 2009 18:22 GMT
The December (#17) issue of the American Legal Technology Insider newsletter is out now. The
next issue is out on 14 January. You can find the latest issue
attached below – to receive it free of charge direct to your email
in-box just email altisubs@legaltechnology.com
Top stories include the results of a Baker Robbins & Co survey on IT Staffing & Spending trends. Based on 2008 actual and 2009 projected IT spending and staffing, it provides an insight into the changes experienced by firms in response to the economic downturn. Key among the findings is that while IT spending was down substantially in terms of total dollars spent, IT spending and staffing reductions projected for 2009 were modest when viewed on a per-user basis. “This is a critical data point for understanding what drives IT spending and staffing,” says Sally Gonzalez, a director in BRCO’s strategic technology practice. “There are limited opportunities to reduce many fixed IT spend items (WAN and telecom costs, facilities and network operating costs, software licensing contracts etc) without making major investments for transformational changes (such as centralizing and virtualizing a firm’s distributed technology infrastructure). Investments firms may hesitate to make in the current economic climate,” says Gonzalez. “Firms reported reductions in lawyer and staff headcounts between 2008 and 2009, positioning them to reduce IT spends and staffing in terms of total dollars spent and total IT headcount while still maintaining a constant spend and staffing ratio per user. “The key question in our minds is: when will firms begin to make substantial changes in processes and service level expectations that enable them to fundamentally change their IT spending and staffing ratios? Only then will firms be able to influence profitability through meaningful efficiencies in IT.” • The survey covered firms ranging in size from 80 to 2100 lawyers. Copies of the report are available to non-participants for $500. For more information or to purchase a copy of the report, please contact Sally Gonzalez at sgonzalez@brco.com 1 Attachments |
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