Writing for the blog of law firm consultant Hildebrandt, Lisa Smith makes an argument that outsourcing, efficiencies and increased hiring of staff attorneys could mean a different mix of staff and associate lawyers—and an overall reduction in head count in the next five to seven years.
Hilderbrandt expects an overall reduction of headcount of 17,500. But not partners! Just associates and staff attorneys…
If you read the full Hildebrandt blog post, it’s pretty thin. Lisa Smith briefly lists some of the pressures on associate jobs that we all already know about (outsourcing, etc), and then kind of wildly states that this will magically allow Biglaw to cut associate headcount by 27% in the next five years or so:
So just with these three drivers we see a possible reduction or shifting of 17,500 of the 65,000 non partner jobs, which is nearly 27% of the total. It is not surprising that some firms are reducing summer programs and first year classes. Is that going to be enough?
Why 17,500? Why not 20,000, or 15,000 associates? And why in five years? Why not two years, or twenty? For what’s it’s worth, here’s the “methodology” behind these headcount reduction numbers:
Through Six Sigma or other efficiency initiatives we might see a 10% improvement in efficiency through use of technology or other means. That would result in a reduction of 6,500 lawyers, with some corresponding increase in technology staff.
* Legal process outsourcers are gaining traction, especially with clients. For sake of argument let’s say there are currently the equivalent of 1,000 outsourced lawyers… If this number increases five-fold, which is slower than the growth rate over the last few years, that will result in a shift of 5,000 lawyer jobs.
* Firms are increasingly hiring staff attorneys at substantially lower salaries than partner track lawyers. This trend is likely to accelerate. If there are currently 3,000 staff attorneys in AmLaw 200 firms (this is only 15 per firm so likely low) and that number triples, it will result in a shift of 6,000 lawyer jobs to lower cost resources, although certainly still part of the overall associate pool.
There’s a whole lot of consultant double-speak in there, so let me translate:
Dear Biglaw Partner:
I bet you can fire 27% of the people who work for you. I could tell you why, but I’m guessing you don’t really care. How ’bout we just call it “efficiency savings.”
Do you need to? Will it help you do your core business of… “legal practice” (that’s what it says you do on my cheat sheet)? I can’t really speak to that. But a 27% reduction in headcount, that sounds great, doesn’t it? Give me a call. The recession affects consultants too.
Look, Lord knows outsourcing could change the entire nature of the Biglaw model. But how much and how soon? Nobody really knows the answer to that question. Sure, 17,500 associate reductions is a number that looks pretty good in a headline (trust me, I just put it in my headline; and now my headline magically looks better). Be afraid, be very afraid! Hire Hildebrandt unless you want to get left behind.
But the pretty/scary number is pulled right out of Hildebrandt’s ass. We need more research on the immediate and near-term effect of outsourcing on associate jobs, not more unmitigated hyperbole on how many people we might be able to fire in the future.
17,500 BigLaw Jobs Are at Risk Due to Cost Pressures, Consultant Says [ABA Journal]
Chipping Away at the Traditional Model [Hildebrandt]