Career Exploration

Q 1 Numbers: Large Law Firms Doing Slightly Better

The well-known legal business consulting firm Hildebrandt Baker Robbins just published a report of its Peer Monitor Index, which includes information about key law firm business metrics for January – March of 2011.

We’ve regularly blogged about the Peer Monitor system before, but to refresh you , it is a service that allows law firms to access their peers’ financial data (in the aggregate) in exchange for supplying their own data to the system for others to access (on a normalized and aggregated basis). There are 35 Am Law 100 firms, 35 Am Law 200 firms and 30 NLJ 250 firms in the system. You can find more information about the Peer Monitor system here

You can read a summary of the report here.  You can read the whole thing here.   

Among other things, the report shows that — very much in line with how the overall economy performed in Q 1 — the market (at least for large law firm legal services) gained a bit for the second quarter in a row.  However, challenges remain.  Growth is “constrained,” realization rates [i.e., the percentage difference between time spent on a matter and the amount of time for which the client actually paid] remain “low,” and expenses [which firms did a great job of cutting in order to remain profitable during the recession] have “begun to grow again.”  As to hiring, the report summary states that firms are “currently being very conservative in adding capacity.” 

The report concludes:

“As we move into mid‐year, law firm activity is gradually increasing and, for some firms, demand is strong, providing optimistic signs for the remainder of 2011. But in this economy, one still needs to be watchful for unexpected developments. The legal industry is now poised at an inflection point where firms must transition from a defensive to a strategic posture, and shift focus from extreme cost controls to achieving sustained revenue growth. However, attaining that goal will not be easy, and will, in most cases, require firms to change their traditional business models.” 

Finding Small Firm Opportunities

The Above The Law blog recently started a new series for small firm lawyers called Small Firms, Big Lawyers.

The latest installment is entitled The Secret To Finding A Small Firm Job.  You should read the whole thing, but one highlight was the testimony of the author — the principal of a small firm — that his suggested method, which comes down to informational interviewing, works: 

“Over the past 13 years, I have hired five lawyers whom I first met in informational interviews (months or even years before I hired them). In addition, I know of six other informational interviewees who ended up with jobs that they got after I sent them to other lawyers.”  

We have a a bunch of resources on the subject of Informational Interviewing on the CDO website. 

Some Smaller Legal Job Markets That Pay Surprisingly Higher Salaries

The ABA has undertaken what appears to be a careful and detailed study of the geography of lawyer salaries.  They’ve developed an online search tool that enables you to see where the jobs are and what they pay by county.  They’ve also “identified  10 smaller markets whose average salary figures may surprise you—lesser law markets that are paying big-city bucks.” 

You can read their entire findings, which comprise the cover story of the latest ABA Journal, here.  

N. CA-based Firm Leaders Hopeful For A Better Year

Today’s Recorder contains an article about 2010 revenues and profits at eight Northern California based law firms.  It also reports on interviews with some of the firms’ leaders about what they are expecting for the future. 

Read the whole thing here.  Notably, head count at six out of the eight firms dropped in 2010. 

One highlight:

“Extreme caution about hiring remains the rule – even at firms like Morrison & Foerster, where revenue per lawyer was up a healthy 6 percent. Chairman Keith Wetmore said MoFo’s biggest challenge was aligning head count with work levels. ‘We’re being very careful not to let groups hire ahead of demand,’ he said. ‘We’ve also managed costs and staff head count aggressively, not replacing people when they leave, restricting travel costs and revisiting our marketing and tech budgets.'”

Some Biglaw Financial Forecasting

The National Law Journal recently conducted a roundtable with 3 managing partners at large DC-based firms.  They talked about staffing, rates, client demands, lateral recruiting, the political landscape and the future of the legal business model.   A summary of the discussion appears here.   

You should read the whole thing, but a few highlights:

  • IP litigation was unexpectedly slow in 2010, but is expected to increase in 2011
  • things have stabilized, but not likely to get significantly better in 2011
  • the expected increase in the government regulatory area did not materialize and the results of the mid-term elections suggest that it may never materialize
  • no one is expecting layoffs and salaries and bonuses have been — and are expected to continue to be — unfrozen
  • clients are expected to continue exerting pricing pressures; the billable hour will not disappear, but the use of alternative fee arrangements will continue to increase
  • we can expect to see a continuing of the trend of increased merger activity and lateral movement by partners and practice groups to competitors 

Latest on Working Part-Time in Biglaw

NALP, the Association of Legal Career Professionals, just released its annual analysis of the use of part-time schedules by lawyers at law firms. 

The headlines are that part-time lawyers remain the exception and that their ranks are comprised mostly of women.  However, the number of male partners practicing part-time “edge[d] up.”

How Midsize Firms Might Need to Adjust to the Changing Legal Market

A thought-provoking blog post from law firm management consultant Hildebrandt.

Last year, we linked to a couple of articles (here and here) reporting that (at least some) midsize firms (100-300 attorneys) appeared to be weathering the economic downturn better than their Biglaw counterparts.

However, according to the Hildebrandt blogger (and we agree!), just as large law firms have had to adapt their business model to new economic realities, midsize firms have to make some big changes as well.  Hildebrandt’s blog post suggests what those changes may look like.    

Passage of Dodd-Frank Bill Will Increase SEC Enforcement Activities

Today’s Recorder contains an article written by a partner in Covington & Burling’s SF office who predicts that the SEC will ramp up its enforcement activities as a result of new powers conferred by the  Dodd-Frank Wall Street Reform and Consumer Protection Act. 

Unfortunately, the article is password-protected, so you will need to get the print version either in the CDO or in the main library.

But, the career-related take-away for us is that we can expect the SEC to be busier than ever (as well as the law firms that do SEC enforcement work and/or those that have securities litigation practices and/or those that represent financial services clients).

As the article concludes:

“Dodd-Frank has ramped up the SEC’s enforcement mandates to a level greater than at any time since the agency was created. Its jurisdictional reach is broader, the number of causes of action it can bring has increased, and its available remedies have expanded. Public companies, regulated entities and hedge funds, as well as their officers, directors and employees, should prepare for a significant increase in SEC enforcement activity.”