The 'Fundamental Shift' In The Litigation Market That May Cost Lawyers Their Jobs

What could be causing this upset in the litigation market?

Anyone who’s been following news related to the litigation market knows that it’s not a great time to be a litigator. Throughout 2015, law firms have been slashing or otherwise reducing the size of their litigation departments due to the declining demand for their services. In fact, three firms that we know of thus far — including Goodwin Procter, Kasowitz Benson, and Hughes Hubbard — have conducted layoffs specific to their litigation teams.

If you’re a litigator who’s worried for your job, you have every right to be, because according to Gretta Rusanow, Head of Advisory Services for Citi Private Bank’s Law Firm Group, there’s been a “fundamental shift in the litigation market.” Of 86 major corporate firms profiled in Citi’s database, total billable hours for litigation between 2012 and 2014 dropped by a -1.31 percent compound annual growth rate.

What could be causing this upset in the litigation market? Look out, document reviewers, because you’re taking the blame. Bloomberg BNA’s Big Law Business has more:

[A]nalysts and attorneys pointed to a growing trend among corporate law departments to parcel lower end litigation work, such as document review in discovery and less significant lawsuits to “low-cost service providers,” which can include organizations located offshore or in the U.S., or an internal subsidiary within a law firm. Such a change is more likely to affect law firms that derive significant revenue from routine litigation work, which is growing increasingly scarce, the analysts said. Mea[n]while elite law firms that work on the highest stake cases have been relatively immune to the changes.

In addition to facing pricing pressure from in-house clients and less work available in litigation in general, law firms must now do combat against the evils of low-cost doc reviewers and technological advances in discovery matters, like predictive coding.

Per Zeughauser Group consultant Kent Zimmermann, “Right now, we have a double whammy. Part of it is permanent and part of it is cyclical.” Like it or not, bargain-basement document review is here to stay, but your firm may be able to stave off additional litigator layoffs by procuring high-end cases. Moreover, while litigation spend is expected to increase in 2016, the vast majority of that money is likely to stem from “premium” matters. If your firm can’t harpoon one of these whales, you may be in trouble.

Rusanow believes that law firm layoffs related to struggling litigation departments will continue unless something is done about it at a management level:

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“I think it’s going to be dependent on how successfully firms are able to build a brand,” she said. “It’s not all doom or gloom. For firms that have really built out their litigation expertise in growth areas, like regulatory and compliance, like life sciences, like tech — whatever those growth areas are, they would be justified in building out their [litigation] headcount.”

If your firm or organization is reducing the ranks of its litigators or litigation staff, whether through open layoffs, stealth layoffs, or voluntary buyouts, please don’t hesitate to let us know. Our vast network of tipsters is part of what makes Above the Law thrive. If you have information to share, email us or text us (646-820-8477). Thank you!

Citi Analyst: There is a ‘Fundamental Shift’ in the Litigation Market [Big Law Business / Bloomberg BNA]

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