Howrey’s Bankruptcy and Big Law Firms’ Small Future
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For corporate clients, there’s a potential silver lining in Big Law’s disarray. From 2007 through 2009, firms with more than 500 lawyers saw their billable hours decline by more than 5 percent. They unloaded associates by the thousands. While the billable-hours drought has eased with the economic recovery, companies increasingly are demanding better deals on rates, says Adam Epstein, a San Francisco-based board consultant for small-cap corporations. “The law firm brands don’t matter as much anymore,” he explains. “I tell clients that they need to go out and find the attorney who knows how to do their kind of financing, regardless of where that attorney practices.” Chances are that attorney has recently switched firms, anyway.
For practically everyone else in Big Law, the future looks chaotic. Client fee pressures will be matched by the cost overhang of the pre-recession go-go era. Young lawyers will increasingly struggle to establish a foothold. To protect their personal pocketbooks, firms are lengthening the path to partnership amid an oversupply of fresh labor. The Bureau of Labor Statistics estimates that during the decade ending in 2020, the U.S. economy will create 73,600 lawyer positions. Law schools are pumping out 25,000 graduates a year, suggesting an excess of 176,400 J.D.s no one really needs.
All of that adds up to a gloomy picture for newly minted lawyers, predicts William Henderson, a professor at Indiana University. In “From Big Law to Lean Law,” a paper he delivered last November at George Mason University, Henderson warned that an increasing proportion of young attorneys will get stuck working as non-partner-track “staff lawyers” or as employees of document-processing outsourcing firms. Most large law firms, meanwhile, “seem to be managed for the short-term benefit of individual rainmaking partners.”
Read original articleTags: Adam Epstein, Big Law Firms, billable hours, law firms, William Henderson
