Changes in the Legal Landscape

As a “baby boomer” attorney entering the legal staffing business almost 25 years ago, after a decade of both private and corporate practice, I have been a participant in some dramatic changes affecting both the practice of law and the staffing industry.

Changes in the Law Firm Business Model

Although the traditional professional service delivery concept of “buy wholesale and sell retail” (leveraging non-equity professionals) continues in the law firm setting, the fortunes of all stakeholders have changed as law firms changed profit center accountability from the firm as a whole, to the practice section, and now to the individual attorney. Instead of a lifelong commitment to one firm, attorneys, including partners with a portable clientele, now consider lateral movement as a means of advancing their careers. This is particularly common within the associate ranks of larger law firms where the average annual attrition rate is 20% or more, with the pressure to develop clients being the primary complaint. Some firms are now questioning whether the traditional clerkship path to associate employment and development is either profitable or efficient, suggesting that lateral employment of associates trained at another firm’s expense might be a better path to follow.

The private practice of law is also big business. “Big” law firms of 100 attorneys (when I left the practice) have given way to global firms of thousands of attorneys with one such firm recently passing the $2 billion revenue threshold. As a result, law firms are more professionally managed by a senior, non-attorney professional with a keen eye toward profitability and growth. Formerly proprietary information such as profits per partner, revenue per lawyer, realization rates and the like are now publicly touted as firms compete for talent. Such competition has also driven associate salaries and their billing rates to levels objectionable to rate-sensitive clients. Increasing pressure by large clients for alternative billing arrangements, bidding for work (RFPs) and budgets for transactional work and litigation threaten the hourly billing structure upon which most law firms are built.

The result of all these changes is a more fluid market for legal talent where standards of measuring a lawyer’s added value are far more objective than practice skills alone. Time will tell whether such changes will be best for both the profession and clients.

The Rise of Corporate Counsel

Once undeservedly chided by some outside counsel as unnecessary gatekeepers to their clients’ senior management, today’s in-house counsel are vital partners to outside counsel in the client relationship. They offer an interdisciplinary “business lawyering” perspective vital to corporate risk management.

The traditional corporate employers of legal talent (large energy, utility, insurance, and transportation companies, etc.), offered a recently graduated attorney the opportunity of a long career, including pensions and other benefits not offered in law firms, and a more predictable work schedule. Most corporations now prefer that the attorneys they hire have: prior private practice experience; a demonstrated record as a team player with a strong work ethic; well-developed interpersonal skills; and a proactive service-oriented attitude. Although compensation for corporate counsel often lags behind their peers in private practice, the net worth building opportunities, relief from the pressure of billing hours and developing clients and a more predictable work/life balance are acceptable trade-offs for many seeking to move in-house. A significant portion of legal work is being “insourced” as billable rates for outside counsel exceed the cost of providing such work in-house.

Corporate life may also offer some attorneys the opportunity to “move to the business side” in a non-legal role where prior legal experience is valuable, especially for those who have developed leadership and management skill along the way. Corporate counsel are also leading the effort to partner with outside counsel to produce the best result for the lowest reasonable cost. Novel cost management techniques are now in place or being developed which require outside counsel to develop alternative billing strategies in response. There will always be the “bet the company” matter requiring the best outside counsel money can buy but you can’t build a firm within such a rare atmosphere. Or can you?

Diversity Initiatives

Fortunately, diversity initiatives have moved from being “the right thing to do” to best practice (sometimes encouraged by outside forces) to just being good business. The international and multi-cultural clients and corporate stakeholders of today have decision-making roles addressing the demands of a global marketplace and impacting the decision to engage outside counsel.

I graduated law school with only a handful of women and now they often comprise the slim majorities of law school students. The number of ethnic minorities in my graduating class was even smaller and now there are more than a hundred minority bar associations in existence.

The legal staffing industry is uniquely positioned to be a strategic partner in driving our clients’ diversity initiatives. More than offering a “diverse pool of candidates,” we are an advocate for our clients in the market for diverse legal talent.

Development and Acceptance of the Contingent Legal Workforce

When I started practicing, a “contract lawyer” meant a lawyer specializing in the negotiation and drafting of commercial contracts. Incrementally, the “part time professional” concept caught on, not only as a way to respond to the hills and valleys of the workload, but also as a flexible employment alternative arrangement to retain a valuable attorney or legal assistant, while remaining employees by definition.

In time, the concept of a “freelance” attorney as an independent contractor gained the acceptance of the ABA and state bar associations. This alternative to direct hire placement is being offered by our industry on a massive scale. From the “knowledge worker” contractor performing a specialty practice – often for extended periods of time – to teams of document review professionals addressing the electronic discovery demands in today’s litigation, this contingent arrangement also offers some professionals the flexibility and variety missing in their history of permanent employment.

Our clients for this service are both law firms and, increasingly, corporations interested in preferred provider relationships on either a local or national scale. In response to such demand, Special Counsel now places more contract/temporary attorneys and support personnel than any other staffing or consulting company in the United States.