LEGAL MARKETS

8/7/2019 LEGAL MARKETS

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THE US legal market

The US legal industry includes around 165,000 law offices that generate annual revenue of $180 billion.

Large firms include --

Skadden

Arps

Baker and McKenzie

Jones Day

Latham & Watkins

The industry is highly fragmented: the 50 largest firms hold less than 15 percent of the market. About

150 law firms have annual revenue over $100 million.

Demand for services depends on the volume of economic transactions, which changes with the

economy. The profitability of individual firms

Change in the US legal market

Posted on 16-9-2010

After nearly two years of a bruising recession, Americas legal profession has had to dosomething for the first time in decades: change.

New hiring practices, new billing arrangements, and new business models are posingchallenges to the nations law firms.

Still, Americans need lawyerslots of themwhether its a corporation requiring a team oflitigators to defend against a product liability suit or a parent seeking counsel for a custodybattle.

With that in mind, U.S.News & World Reportand Best Lawyers have joined to launch theinaugural edition of Best Law Firms, a comprehensive listing of nearly 9,000 law firmsgrouped by legal practice area and geographic location. They range from the mammothlegal powerhouses in Manhattan to a solo practitioner in Memphis. The tiered rankings aredrawn from thousands of practice-area evaluations by clients and lawyers alike and are

available at usnews.com/bestlawfirms.

The rankings appear at a time of turmoil for the nations largest law firms as they respondto pricing and value pressures from their biggest clients, such as Amy Schulman, generalcounsel at pharmaceutical giant Pfizer Inc.

Flat fees. Schulman is fighting a decades-long status quo: the billable hour. In March 2009,she introduced the Pfizer Legal Alliance, a group of 18 law firms that get the companyswork annually in buckets. The firms are paid flat yearly fees and strive for incentives such


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as bonuses and additional work, given if they add value and collaborate. Too often,Schulman had found, the billable hourthe industrys standard measure of compensationsparked a perverse and inefficient relationship between lawyers and their corporate clients.

This is a chance to reset that relationship, she says. Most people that understand themodel really embrace it as a call back to a different era when lawyers and clients had a

much more collaborative, trusting, long-term relationship.

Schulman is just one of many key players in a changing legal landscape, which attorneys,consultants, and scholars agree is an intricate convergence of recessionary forces,empowered clients, and systemic shifts.

For a while, the question was, How fast are things going down? says William Perlstein,co-managing partner at WilmerHale. Things are clearly stabilized, but theyve changed.

The billable hour, long the bane of industry critics, was a focus through the recession, asclients like Schulman were desperate to halt yearly increases in legal fees in favor of morecertain figures. In fact, pricing and fee structures were rated the most pressing issue facing

the industry by 71 percent of corporate counsel and 60 percent of private practice attorneyssurveyed in late 2009, according to the LexisNexis State of the Legal Industry report.

The focus on alternative fee arrangements can be misleading, experts say.

Lawyers are not saying, Can we find a way of billing that means we are going to be lessprofitable? says Richard Susskind, author ofThe End of Lawyers?(2008). Clients, headds, are realizing that its all just fancy footwork.

Though lawyers say there is often a disconnect between what clients expect to save withalternative fees and the reality, many agree that billing matters little in high-stakes cases.

Clients really want to haveand are willing to pay fortrue expertise, says CharlesDouglas, a partner at Sidley Austin. That means you have to have people who really havethe experience ... and that means theyre more senior.

This has been bad news for young lawyers, who saw a markedly worse job climate throughthe recession. Across the country, summer associate programs shrank or disappeared. Anestimated 3,200 to 3,700 offers to the class of 2009about half of all jobs promised bylarge law firmswere deferred at least six months, according to NALP, the Association forLegal Career Professionals. Hundreds of associates were laid off.

At Sidley Austin, for example, 89 associates and 140 staffers were let go in March 2009.Incoming associates were offered voluntary deferrals of a year or two before coming to

work.

There was just not enough work for the group of associates that we had, says partnerThomas Cole. Those are the formative years. If you dont have enough to do ... yourenot going to progress professionally.

Firms like Sidley Austin and Morgan, Lewis & Bockius may change their hiring model,partners say, to bring on fewer summer associates, who are effectively offered positions twoyears before they will come to work. By hiring law school graduates and lawyers from other


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firms closer to their start time, these firms will have more flexibility to calibrate demand,the partners say.

(This would be good news for some students, as only 3 percent of firms reported hiring2009 graduates who had not been summer associates, according to NALP data.)

For the fewer grads who do land at a large firm, the going rate for new associates is stilloften $160,000 a year. Young lawyers can expect more training and evaluation, too, asfirms attempt to retain their smaller groups of talent and get a long-term payback on thehandsome starting salaries.

At Howrey, associates complete 300 hours of training as they move through five tiers ofcompetency evaluations, says Heather Bock, chief professional development officer.

By investing in associate skills, were able to send more highly skilled associates to theclient side, Bock says.

Reconnecting with clients needs was crucial through the recession, as corporate counsels

realized they could get lower rates by outsourcing or moving to smaller firms. Firms likeHolland & Hart, which has about 400 lawyers mostly in the West, are on the radar of clientslooking to cut costs because their overhead and salary expenses are lower than those atfirms on the coasts.

Attorneys at large firms, however, say their primary competition has been with oneanothera competition that extends beyond national borders.

If you really want to participate at the highest level of legal practice, you have to have aglobal presence and be able to provide services to clients around the globe, says Joe Sims,a partner at Jones Day. Its a serious challenge if youre not there yet and youre trying toget there.

External growth. The merger of Washington-based Hogan & Hartson with the British firmLovellsto form global giant Hogan Lovellsmade headlines in May, but internationalexpansions tend to be more by acquisition than combination, says Carole Silver, professorat the Indiana UniversityBloomington Maurer School of Law. Instead ofexporting Americanlawyers, which can be a pricey move with little reward, U.S. firms are recruiting foreignlawyers to serve in locations familiar to them.

Still, globalization is a murky field. Other countries have varying rules for U.S. lawyers, iftheyre permitted to practice at all. Like changes in billing, hiring, and management,globalization can be challenging for risk-averse attorneys used to stability, lock-steppaychecks, and repeat clients.

The biggest motivator [to change] is when law firms see their competitors doing things,Susskind says. Most of them are more concerned about not being left behind than breakingnew ground.

But while the current legal landscape has analysts, lawyers, and students questioning thefuture, optimism still abounds.


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By no means should people feel like, Gee, Im out of luck and its over for me,Kirkland

& Ellis partner Jeffrey Hammes says of unemployed lawyers. There will be life after theGreat Recession.

4 (More) Important Legal Industry TRUTHS

They Didnt Teach Us In Law School

July 19, 2010 by RJonFiled underArticles

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Note: This latest installment in the series makes a total of Ten Important Practical, Real-World Legal Industry Truths They

Didn't Teach Any Of Us Back In Law School. And lawyers being the lovers of precedent that we are it's unlikely you've heardmuch about these important facts of life in the legal industry in any CLE programs you've attended either.

Thank you to Kate Battle of VLO and Total Attorneys for pushing me to write the first article in this series. And then for comingback to me for more once it became obvious there was so much demand for this sort of information by lawyers out there. I'vebeen truly gratified if not a bit surprised by some of the truly touching posts and private emails I've received in response to thisseries.

So here it goes, the last 4 for a total of 10. And even though I didn't have alot of space or time to write about it, please takeadvantage of the totally free lessons on this site about how to set up & manage your IOLTA Client Property TrustAccount. Because that's another fact of life they don't teach us in law school either, isn't it?!?!

Four (More) Important Truths About The Legal Industry They Didnt Teach Us Back In Law School, For A

Total of Ten.

7. Being a successful associate at a law firm does not naturally endow a lawyer with requisite skills to start, market and manage asuccessful law firm. In fact very often its the opposite.

Unless youre on the management committee or have experience running a successful business before law school, chances areyouve invested most of your time becoming the best legal practitioner you can be.

In fact a measure of the potential for improvement in most small law firms is the ratio of hours invested becoming the bestpractitioner you can be divided by the number of hours invested learning about how to manage a small law firm. The good newsis for most small law firms thats a lot of potential

8. Your law firm is not your baby. It will never love you and it will never give you a hug.

9. The debate over whether the practice of law is a business or is it a profession presents a false choice. And if youre not

careful it can ruin your life. The practice of law is a profession. No, its a business. No, its a profession! Heres TheTruth: ITS BOTH.

10. You hold the keys to your own kind of heaven or hell as a practicing lawyer. Use them!

Heres an audio program and worksheet to help you set the RIGHT kind of goals for your law firm. This is absolutely critical ifyou are thinking of starting a law firm. If youve already started your law firm, without-yet completing this exercise it couldeasily be the reason why your firm might not be performing as well as you know it could, on all three axis of law firm


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Legal Industry Enjoys Freedom from Paper

Documents drive the legal profession. Court documents, legal briefs, discovery documents and

depositions come together to make an ocean of paper in most law offices.

Taking hard copy into the digital realm is a great start in taming that paper ocean. But a few years ago,

the knowledge and management staff at New York's Cleary Gottlieb Steen & Hamilton LLP realized that

digitizing alone wasn't enough.

"We were scanning 300-by-300 dpi images of the documents that came to our office," said Matthew

Roeder, Imaging Technology Analyst for the firm. "If it was paper, we were scanning it. We used an OCR

technology to create text searchable PDF images, and people loved it -but the file sizes were huge.

"We needed compression. I think it was about then that one of our staff met CVISION Technologies at

the LegalTech event. CVISION seemed to be ahead of the pack in compression technology. The

technology was great - and they directed us to a customized version of PdfCompressor sold and

supported by EMC Captiva that's 100% integrated with InputAccel. Since we've adopted InputAccel firm-

wide, that was just icing on the cake!"

In the legal world, a hundred-page document is pretty common. If someone wants to send a 100-page

scanned document via e-mail to a client or co-worker with a four megabyte file size limitation, it usually

bounces back. File size also makes it difficult for attorneys to download portable case documents.

That's why CVISION's PdfCompressor has become a valued tool for IT professionals in major law firms

across the United States. Whether coupled with its own OCR technology or the OCR in current use,

PdfCompressor delivers on its promise to make file sizes manageable -and that moves documents

efficiently and cost-effectively through office networks.

Steve Talmud, CVISION's Vice President of Sales, said, "We're always intrigued to see how our products

are applied by our clients. They define the value we add to their image and document management. In

the case of many of the litigators we serve, the value-add comes in document portability."

Matthew Roeder agreed. "The compression capabilities we get from CVISION means one of our lawyers

can easily take two to three thousand pages of documents off a database, download it to a laptop, and

work on a case on the plane. Attorneys at remote trial sites can access documents from our office very

quickly. Clients can easily retrieve and view documents relevant to their cases. That's exactly the kind of

document portability we needed."

Steve Talmud added, "File size is a technology problem. For anyone who deals with a large amount of

paper, compression is a huge advantage. Our PDF compression technology makes document storage,

retrieval and presentation both secure and fast. We enjoy serving the legal community and look forward

to new ways we can make life easier for their IT and litigation professionals."


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Average Salary of Jobs in Legal Industry

01/07/2010

Legal Industry Hopes to Recover in 2010:

Have Salaries Changed?

By Staff Writer

The year of 2009 was a tough one for the legal industry, with 12,916 people laid off from major law firms, according to WhatWill 2010 Bring for Big Law? published in The Business Insider. Profits are expected to go up in 2010 as mergers andacquisitions pick up again, banks start to lending more and law firms work on the litigation resulting from the economic crisis.

Looking for salary data in the legal industry? In today's economy you need the most current, in-depth salary data available. Let PayScale provide you with instant access to the

compensation information you need.

In the meantime, one obvious way for a law firm to reduce excess costs is the remove non-productive associates from the payroll.But, it also could help to be aware of any changes in market salary ranges for employees in support roles, like paralegals.Whether you considering if you should offer annual increases or want to hire new paralegals to handle heavy work at a lower

cost, below weve collected salary data from PayScale's database for a number of job positions in the legal industry according tolocation and experience level.

Paralegal by Employer Type

Median Salary by Employer Type - Job: Paralegal / Legal Assistant (United

States) Compare your salary: Get a free Salary Report

Paralegal by Experience


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Median Salary by Years Experience - Job: Paralegal / Legal Assistant

(United States)

Compare your salary: Get a free Salary Report

Legal Secretary by Experience

Median Salary by Years Experience - Job: Legal Secretary (United States)



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Legal Assistant by Experience

Median Salary by Years Experience - Job: Legal Assistant (United States)


Legal Records Clerk by City

Median Hourly Rate by City - Job: Legal Records Clerk (United States)


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Legal File Clerk by State

Median Hourly Rate by State or Province - Job: Legal File Clerk (United

States)


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Median Salary by Years Experience - Job: Legal Records Manager (United

States) Compare your salary: Get a free Salary Report

Corporate Legal Specialist by Experience

Median Salary by Years Experience - Job: Corporate Legal Specialist

(United States)


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Law firms, because they bill by the hour, need to be worried about information serviceproviders, like the big publishing companies in information clearinghouses. If you can sellinformation rather than a legal solution, you can sell that over and over again. Clients dontwant to pay by the hour for finding answers.

How can law firms benefit from using information technology?

You cant build a robot to provide legal advice and legal conclusions to corporations, but youcan use these knowledge management platforms to basically have multijurisdictionalresearch at your fingertips. If you need [an answer] quickly, you dont want to have anassociate at $275 an hour research the issue if that legal knowledge exists somewhere.

What advice would you give to a law student?

I think the people [who] are going to be the most valuable going forward are going tounderstand the intersection between clients, systems engineering, information technology,and law. I think that fields wide open. Youre going to miss it if you focus on doing high-endwork.

Are we seeing any uptick in the legal industry?

Legislation in Washington is always good for business. I dont think its going to be enoughlegislation to return to the salad days. Long-term business is growth internationally. Thelarge U.S.-based law firms shrank in head count 6 percent domestically from 2008 to 2009,but head count actually grew abroad. Firms that have gone international are going tocontinue to grow.

The Challenge of Law Firm Change Management

Business development is imperative at both the attorney and firm level as law firms seek strategic growth through client-driven innovative services. While challenging, this is a skill set that can be learned. A sharply defined focus coupled with a

legal marketing plan that includes specific goals for client communications, speaking, publishing, referral networkmanagement, Internet marketing, and other education-based activities can serve an attorney and law firm well, as

outlined in my book Courting Your Cl ients.

Demonstrating Value

"The ones that are going to be most successful [will] figure out how to innovate." William Henderson is so very right.

That said, it will require more than just rethinking the firm's billable hour and knowledge management platform to be

innovative. Competing effectively "for market share" will require attorneys and law firms to demonstrate value. Here are

our thoughts: http://bit.ly/d3aL9t

The law firm pedigree bubble is bursting.

New opportunities emerge.

by Dion Algeri on September 1, 2010


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If youve got 10 minutes and an interest in the legal business I highly recommend that you read Bursting the PedigreeBubble by William Henderson, a professor at Indiana University Law School. Its the smartest, most comprehensive piece Iveread about the seismic shifts that are occurring in the legal industry.

Henderson explains that the AmLaw 100 firms and their Harvard-trained attorneys are simply notworth the exorbitant prices they currently charge. The sluggish economy is now causing corporations to question the value thatthese firms offer and this presents opportunities for everybody else. It also means that the AmLaw 100 will be forced to rethinkthe way that they do business.

According to Henderson, the perceived value of Ivy-League pedigrees will diminish and success will go to those attorneys and

firms thatshowhard evidence oftheir ability to deliver better value.Henderson argues (very convincingly) that there is surprisingly little reason to believe that an Ivy League-trained attorney will beany better at practicing law than someone who came out of a second-tier school like Hofstra. In fact, it is even possible that aHofstra graduate would make for a better attorney. This is terrible news for the pricey firms whose reputations are largely builton the Ivy-League pedigrees of their attorneys. [If you doubt this,please read the piece. Henderson cites some compellingstudies.]

Demonstrating ValueSo, how do you win clients in this new business landscape? Its all about demonstrating value. Its no longer enough to simplytell people that youre a superstar. You need to demonstrate it. And this means writing compelling thought leadership contentin which you give away your best ideas.

Trouble with the law

Graduates of American law schools are

finding that their chosen career is less

lucrative than they had hoped

America's law schools and firms

Nov 11th 2010 | NEWYORK| from PRINT EDITION


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THIS year The Apprentice, a television show in which contestants compete for the privilege of working for Donald Trump,features 16 who are down on their luck, having lost previous jobs or otherwise having to start anew. No fewer than five of themare lawyers. The legal-job market in America remains dire. But the numbers applying to law school are still soaring, and studentsare taking out ever bigger loans as tuition fees grow faster than lawyers salaries. Increasingly, they are graduating into a world ofoverblown expectation and debt.

Between 1996 and 2008 private law schools median tuition fees almost doubled, to just under $34,000 a year. At public lawschools fees grew even faster, albeit from a lower base: for those going to schools in their home state they almost trebled, takingthe median to around $16,000. Starting salaries at the biggest firmsthose with more than 500 lawyersroughly doubled, to

$160,000. But such plum jobs are hard to get, especially for graduates of the less prestigious public schools. At smaller firmsstarting pay has for years failed to keep up with soaring tuition fees, and of late has fallen (see chart).

Graduates chances in the job market have worsened since the great purge of 2009, when firms laid off young lawyers andwithdrew job offers. The National Law Journalsays that the 250 biggest firms cut their numbers of attorneys by 4% in 2009 andwere projected to cut by another 1.1% in 2010, making for the worst two-year period in the 33 years of the journals surveys.

Related topics

y England


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y Germany

y Europe

y Western Europe

y United States

Those that did not lay off any lawyers have frozen hiring and squeezed more work out of their staff. So morale is dismal at many

firms. But it is worse among those recent graduates stuck in temporary or part-time posts or working in non-legal jobs. The grimmarket has given rise to a situations-vacant website, shitlawjobs.com, whose home-page banner reads: Youre a lawyer, theeconomy sucks and you need a job. Among its latest vacancies on November 10th was one for a Spanish-speaking lawyer, on

just $10 an hour.

Law schools, of course, disagree that they offer students a bad deal. The statistics they produce, on measures such as how manyex-students are employed nine months after graduation, do not look so bad. But some frustrated young lawyers find themmisleading. Some schools report as employed those in part-time or temporary jobs, ones that do not involve practising law and

posts subsidised by the school itself.

Two students at Vanderbilt Universitys law school thus began the Law School Transparency project. Kyle McEntee, one of itsfounders, said Vanderbilt helpfully gave him the kind of detailed job-placement information all potential law students shouldhave: where graduates were hired and how much they made. Mr McEntee asked all 200 of Americas accredited schools torelease the same data. Just one, the little-known Ave Maria School of Law in Florida, has agreed to do so. Ten others said theywould consider the request.

The schools tell Mr McEntee that collecting the data is too expensive; he retorts that they already have most of them. Anyprivacy concerns could be dealt with by releasing aggregate figures that make it hard to discover individual graduates salaries.The American Bar Association, which accredits the law schools, is also calling for greater openness on how graduates fare afterleaving college.

The lousy job market is, of course, not the law schools fault. The market is rigid. Firms tend to hire those who spent their secondsummer during law school at that firm, and thus begin interviewing students for these internships near the beginning of theirsecond year. So, to a great extent, hiring decisions are made a couple of years before students graduate. This lag makes it harder

to trim recruitment according to the economic weather.

But law schools could still do more to help their graduates prepare. Echoing a lament heard in pretty much every industry thathires graduates, Evan Chesler, the boss of Cravath, Swaine and Moore, a New York firm, decries the difference between whatlaw schools teach and what lawyers do. Law school, he says, focuses too much on teaching students to think like a lawyer,rewarding independent study or working on the student law-review journal. He says they teach few of the practical skills oflawyering, leaving the firms to do much of the training in a recruits first years on the job.

Richard Revesz, the dean of New York Universitys law school, replies that most firms needs are so specific that law schoolshould not be expected to provide them. But he is nonetheless trying to bring NYUs business and law schools together moreoften, so students learn to structure corporate deals as well as reading appellate decisions.


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John Conroy, until last month the boss of Baker & McKenzie, the most globalised law firm, thinks England and Germany dobetter at helping graduates make the transition to becoming practising lawyers. A recent graduate spends two years combiningwork and study as a trainee solicitor in England andReferendarin Germany. The English system matches graduates to firmswell, whereas the German system produces exceptional legal technicians, in Mr Conroys view. In America, clients grumble thatthey are being billed at high rates for recent graduates who contribute little. Clients shouldnt be paying for law firms to train

people, is their refrain. Right now, many graduates wish they could get anybody to pay them for anything.