Still tough going in the legal profession

NEWPORT BEACH, Calif. — The legal profession is still suffering from the aftereffects of the great recession, but outside trends are also putting pressure on law firms, an academic expert told a gathering of Nevada attorneys Thursday.

Jim Jones, an attorney and senior fellow at the Center for the Study of the Legal Profession at Georgetown University Law Center, kicked off the State Bar of Nevada’s annual meeting by outlining trends and problems confronting modern law firms still trying to emerge from recession. He estimated another two years of sluggish growth before things return to normal in the law business.

Those firms confront a world in which clients want more value, have more information about firms and practices available than ever before, and are more willing to to use alternatives to law firms for legal services, Jones said. And while things are starting to look up, they’re still not as good as they were before the financial crisis plunged the nation into recession in 2007.

Part of the problem? There are too many lawyers, and competition among them is growing, he said.

According to the Thompson-Reuters peer marketing survey data, business in taxation, corporations and real estate are up, but labor and employment, bankruptcy and litigation are down, a disturbing trend since litigation makes up nearly one-third of work at all U.S. law firms. The recession prompted firms of lay off nearly 9 percent of associates, but the pool of lawyers is still too big.

“We continue to have more lawyers to perform the services that need to be performed,” Jones said. As a result, the only way to increase market share is to take work from other firms.

And the attorneys who are left are making less: The gap between what lawyers bill their clients and what they actually collect from them was just 1.1 percent in 2007, but has widened to 3.3 percent in 2014, he said. That’s because of clients demanding discounts, and firms granting them in order to maintain business.

Jones said self-help legal services are becoming more sophisticated, moving beyond providing simple legal forms or boilerplate documents. In Europe, for example, subscribing clients can sign on to an automated website run by a law form that asks detailed questions and produces documents specifically tailored to that client’s business needs, without necessarily speaking to an attorney.

Law firms are no longer gatekeepers of legal knowledge unavailable elsewhere. “We’re not going to be able to make money by controlling access to information,” Jones said.

And clients are increasingly willing to hire lawyers who aren’t at top firms, reasoning that they can get cheaper services for routine or non-critical matters, and save top-dollar legal talent for critical matters. Also, they’ll parcel out legal work to different firms, depending on price and specialty. (Indeed, growth in firms rated by American Lawyer in the Second 100 tier is up, more than AmLaw 100 firms and other mid-size firms, Jones noted.) And general counsel or in-house lawyers are doing more corporate work than they did in the past, Jones said.

As a result, it’s a buyers market for legal services going forward, Jones said.

The State Bar’s annual meeting continues through Saturday, with seminars covering everything from foreclosures to privacy, patents to the state’s effort to combat sex trafficking. Check back with SlashPolitics for updates.

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