Karen Sloan of the National Law Journal digested a recent survey [PDF] of legal market trends by Hildebrandt and Citi. A lot of it we all know already– things were bad in 2008, and will be nastier in 2009, with average profits-per-partner predicted to decline by 5 percent to 15 percent. Survey says: Expect more layoffs, smaller bonuses, and more salary freezes.
What caught our eye was the analysts’ suggestion for generating profits in 2009:
[Firms will need to] reconsider changes to several key aspects of their business model. That includes everything from adjusting associate compensation structures and being more flexible with professional staff to offering alternatives to the billable hour model.
Biglaw to… competency-based models?
[F]irms should move away from lockstep associate compensation models and instead consider competency-based models, the advisory suggests. Jones said that instead of increasing compensation by class year, an alternative model is to separate associates into three or four levels, determined by their specific skill sets. Associates then would move up the next level only after they acquired certain skills. Rising to the next level would trigger an increase in compensation.
The report also suggests upping the number of contract attorneys hired. A commenter on yesterday’s Morning Docket was not pleased by the suggestions:
The suggestions they make for firms to change their promotion policies and use more staff attorneys would turn practices into f***ing Walmarts.
Well, Walmart is one of the few businesses doing well in the downturn. We’re just saying.
Continued Decline in Law Firm Profits Seen for ’09 [National Law Journal]