As noted in Morning Docket, Citi’s quarterly review of the financial landscape facing law firms just came out. The surface level verdict is — as it has been for some time — slow and steady, with a bunch of red flags.
The firms are happy to see positive revenue growth, even if it’s only 2.7 percent. I mean, other industries aren’t so lucky. But when the industry is a few years into the “New Normal” and analysts are still pointing to the same failings, it’s hard to feel too optimistic.
The year-end Biglaw management machine is starting to grind into motion. The compensation committee is starting to look at the numbers for individual partners — to decide who will be rewarded and who will be de-equitized. And the firm’s A/R collections crew is starting to pressure the partnership to get bills out the door and talk to clients about what will be paid by year’s end. The associate bonus committee? If one still exists, is must be having a hard time reserving conference room space to meet.
The end of the year is a serious time for law firms. For many individual lawyers in Biglaw, it is the time of year when their die may be cast, in terms of compensation, lateral movement options, or even their continued employment. As anyone who follows Biglaw knows, we are living in interesting times, with many firms navigating choppy seas in terms of client demand, financial performance, and expense management. And at many firms, there has never been a wider gulf between the rank-and-file partner and firm management when it comes to the ability to make or influence decisions about the firm. Partners at many firms are often clueless about what the firm is doing and why, to the extent that partners are asked to vote on lateral candidates or even mergers based solely on the “reassurances” and “enthusiastic outlook” of management.
The net effect of this divide between management and the partnership? An increasing sense among partners that they are simply assets of legal “brands” rather than owners or even stewards of a professional enterprise. For many, it is a bit of a hopeless feeling, especially when they consider the Biglaw options down the street, which usually present the same level of management opacity to the putative “owners” as their current firm. But just because management likes to tell the partnership to “leave the managing to us, you just focus on building your practice” does not mean partners aren’t entitled to information — even if it’s just the personal views of the managing partner on certain issues.
Here are five questions for your managing partner. The topics are varied, but the answers given should give partners a good sense of both their relative standing within their firms and the values that drive the business decisions of their leadership….
Two weeks ago, Greenberg Traurig announced a lawyer residency program — one-year positions where lawyers spend a third of their time on training, are paid “considerably less than associates,” and billed out at lower rates. When the program concludes, residents may be offered a position as an associate, become a non-partnership track “practice group attorney,” or get shown the door. The program has elicited a range of reactions over its implications for Biglaw, ranging from potentially promising (David Lat and Toby Brown), to shortsighted and risky (Jordan Furlong), to a mixed bag for associates (Adam Ziegler).
But from the perspective of lawyers who want to start their own firms and have the option of handling traditionally “big firm” matters, residency programs like that offered by Greenberg Traurig are a boon. Imagine being paid to do little more than spend a year learning the ins and outs of big firm practice and practice areas by observing depositions and trials and accessing unlimited PLI content. Plus, residents have a chance to meet and network with other lawyers at GT and throughout the legal community; presumably, fewer billable hours means more time to hobnob. At the end of the residency, lawyers could move on to start their own firms — but with the benefit of a year of student loan debt repaid and a big firm credential on the résumé — which can be a selling point for certain types of clients (usually the kinds of clients who won’t experience sticker shock at your $250/hour rates because they’re accustomed to paying double that at a large firm)….
Following the lead of Kilpatrick Stockton, Orrick, and other Biglaw firms, Greenberg Traurig has created some new non-partnership-track attorney positions. They pay less than traditional partnership-track — or, in GT parlance, shareholder-track — positions, but the billable-hour requirements are lower and the training is better.
What do these positions look like? Let’s find out….
There is plenty of negativity surrounding Biglaw nowadays. Time for a little positivity, with some help from the audience. I want to hear about young partners in Biglaw who are making a difference in their firms, for their clients, or in the lives of their colleagues. Good examples for us to learn from and emulate. If you know of someone deserving of recognition, let me know. The nominations will be kept anonymous, and I will only follow up with the permission of the person doing the nominating, and the nominated young partner as well.
Ground rules? Age matters. The younger the better, if only because the younger the partner the longer the potential Biglaw career. And nominees must be succeeding within the Biglaw framework. This is not a generic “great young lawyer” award. I know there are plenty of great young lawyers out there. I want to know about the ones doing cool things within the Biglaw framework. The same framework that usually skews older than your typical post-golf round brunch at a Scottsdale resort.
What kinds of cool things? Succeeding at business development, and especially helping others do the same. Using technology in a way that improves client service, and the lives of colleagues as well. Introducing new management techniques to a practice group, or teaching associates the skills that they need to move forward. All the things that we used to expect older partners to do, before clients decided to add a zero to the profits-per-partner of many firms, and everyone from Biglaw’s gold-laden generation developed the attention span of a four-year old with a confiscated iPad when it came to anything other than money. Take a broad view. There are at least one or two such innovative, dynamic, and pleasant junior partners at every Biglaw firm. Let’s hear about them….
Each year, Corporate Counsel compiles a list of the law firms that Fortune 100 companies use as outside counsel. This year, to change things up a bit, it seems like the list has been expanded to cover the entire Fortune 500. From Apple to Yahoo, and every billion-dollar company in between, these corporate clients expect nothing short of the best in terms of legal representation when dealing with high-stakes litigation and deals. If you’re looking to line your firm’s pockets, you better head to the RFP line when these companies seek lawyers.
Up until last year, only the most prominent Biglaw firms (like Cleary, Davis Polk, Cravath, and Simpson Thacher) topped the list of those that had the pleasure of doing business with the country’s biggest companies. Things changed rapidly, however, when Big Business tried to cash in on deals for legal services. The firms that were willing to cave to the pressure of providing alternative fee arrangements won in a big way, and the rest were left in the dust.
Have these prestigious firms changed their ways? Is Corporate America again willing to open its fat wallet for them? Let’s find out…
First things first: I’m heading back to the States for a couple of weeks in October, and Troutman Sanders and Miller Canfield have already asked me to take advantage of that visit by giving my “book talk” about The Curmudgeon’s Guide at those firms. That means I’ll be blowing the dust off my speaking notes and reminding myself what I say. I might as well get some bang for the dust; if you’d like me to give the book talk at your firm (or school) in early October, please let me know.
Second things second: Citi, Wells Fargo, and PeerMonitor recently released their analyses of law firm performance to date in 2013, and the pundits were all a-twitter. (Well, all a-blogger, anyway, but the pundits are so retro.)
Here’s one question the pundits posed: Why is law firm headcount up when law firms are suffering from decreased demand for their services?
That’s a pretty good question, and there’s no obvious explanation. Being a curious fellow, I used a clever technique to get to the bottom of this: I asked.
After the jump, I explain why firms are hiring more lawyers during a time of weak demand (as explained by senior partners at a couple of firms) and note an overlooked aspect of 2012 law firm performance that may affect results in 2013 . . . .
We are pleased to invite you to a panel and cocktail networking reception in Toronto on September 10th from 6:30 p.m. to 9:00 p.m. Join Bruce MacEwen for a discussion of the future of the large law firm business model. Bruce’s trenchant analysis of the challenges facing Biglaw, Growth is Dead: Now What? (affiliate link), is “an extraordinary body of work that reflects enormous insight and ought be required reading by managing partners of law firms,” in the words of Paul Weiss chair Brad Karp. The event promises to take an insightful look at the differences — and similarities — in how U.S. and Canadian law firms are meeting the challenges of the “New Normal.”
Joining Bruce will be R. Scott Jolliffe, chair and chief executive officer of Gowlings and Gary Luftspring, managing partner of Ricketts Harris. The Canadian Bar Association is in the midst of a first-of-its-kind comprehensive study of the future of the legal profession in Canada and beyond, their “Futures Initiative.” Gary, a leader of the Steering Committee for the Futures Initiative, will present a very brief overview of the Initiative and its analysis to date of the fast-changing legal environment.
The discussion will be followed by a cocktail networking reception. There is no charge for this event. Thanks to our friends at Recommind for sponsoring.
Please RSVP below. We look forward to seeing you in Toronto!
D.C. is dysfunctional, as pundits constantly complain about. Has the lack of productivity on Capitol Hill expanded to affect the private law firms of Washington?
Perhaps. According to Citi Private Bank’s recent survey of law firm performance, which showed that the first half of 2013 was bad for Biglaw nationally, D.C.-based law firms did even worse than their counterparts in other cities.
The sky is not falling for the world of large law firms. But could Biglaw be a frog in boiling water? We can’t rule that possibility out just yet.
The latest report on law firm performance, focused on the first six months of this year, shows some signs of weakness. The numbers aren’t awful, but if Biglaw continues to travel down this path, it won’t wind up in a good place….
Average law school debt for graduates of private universities hovered around $122,000 last year. With only 57% of new attorneys actually obtaining real lawyer jobs, recent graduates have a lot to consider when it comes to managing their student loan payments. Thanks to our friends at SoFi, today’s infographic takes a look at student loan debt, including the possible benefits of refinancing for JDs…
Kinney Recruiting’sEvan Jowers is currently in Hong Kong for client meetings and still has a few slots available through October 22. Evan will also be in Hong Kong November 14 to December 15. Further, Robert Kinney has been in Frankfurt and Munich this week and is available for meetings with our Germany based readers.
One of our key law firm clients has referred us to one of their important clients in the US, Europe and China – a leading global technology supplier for the auto industry – in order to handle their search for a new Asia General Counsel and Asia Chief Compliance Officer.
Kinney is exclusively handling this in-house search.
This position will have a lot of responsibility and include supervision of eight attorneys underneath them in the Asia in-house team. The new hire will report directly to the global general counsel and global chief compliance officer, who is based in the US. The new hire’s ability to make judgement calls is going to be as important as their technical skill set background.
The position is based in Shanghai and will deal with the company’s operations all over Asia and also in India, including frequent acquisitions in the region.
It is expected that the new hire will come from a top US firm’s Shanghai, Beijing or Hong Kong offices, currently in a top flight corporate practice at the senior associate, counsel or partner level. Of course, the candidate can be currently in a relevant in-house role.
The JOBS Act created new tools for companies to publicly advertise securities deals online. As a result, thousands of new deals have hit the market and hundreds of millions in capital has been raised, spurring a wealth of new business development opportunities for attorneys.
Fund deals, startup capital raises, PIPE deals and loan syndicates are just a handful of the transactions benefiting from the JOBS Act. InvestorID FirmTM is a platform designed to help attorneys equip their clients with the workflow, marketing and compliance tools to publicly solicit a securities offering online. By providing clients with the tools to painlessly navigate the regulatory landscape of general solicitation, InvestorID FirmTM helps attorneys add value above just legal services.
The Jumpstart Our Business Startups Act (JOBS Act) went into effect in 2013 and permits Regulation D offerings of securities to be advertised publicly. This means that funds and companies can now use social media, emails and web sites to market transactions to new “accredited” investors.
However, with these new powers come new pain points. InvestorID FirmTM provides a secure, fully hosted, cloud-based platform with a breadth of tools for your clients, including: