Since we rarely tire of noting new data that backs up old Miller-McCune.com stories, let me point out a Hildebrandt International Peer Monitor Index study on anemic revenue among white-shoe law firms.
(OK, the study came out in early May, but it wasn't until this morning's New York Timesstory, "A Study in Why Major Law Firms Are Shrinking," that I became aware of it ...)
The survey, and the Times story, echoed John Greenya's Miller-McCune.com story from early May on legal layoffs afflicting firms that were once as solid as, say, GM or Lehman Bros. Things aren't quite as dire for big law firms as that — revenues are flat, not nonexistent — but the times are hard on them in ways most seem never to have seen.
The Hildebrandt numbers suggest a bottoming out in the business, although the metric being used only has been tracking data for four years, so there's not a wealth of historical comparisons available.
The New York Times' Alan Feuer takes a Gotham-centric tack in analyzing the reasons for the law firms' pain and points to the carnage in finance, i.e. the recession, as the culprit:
"At the root of the law-firm crisis, legal experts say, is the credit crisis, which has pulverized the need for traditional practice areas like structured finance, mergers and acquisitions and private-equity transactions — the very things that have always kept a high gleam of polish on the city's whitest shoes. The downward trend has been unrelenting: fewer Wall Street deals mean fewer Wall Street lawyers."
He then pointed to a "potential paradigm shift" in how Big Law may take the current bloodletting, including a restructuring on what a big law firm was.
As James G. Leipold, executive director of the National Association for Law Placement (a trade association founded in 1971 to provide a common forum for law schools and legal employers), was quoted in our story, "From a purely analytic standpoint, it's a fascinating time to be watching the industry. I think we're going to see real structural change in the way law firms are organized and managed and run."
Hildebrandt Vice President Lisa Smith is quoted making a similar point, if a little less dramatic. "...The current environment has also created an opportunity for firms to think about ways to better align their business model with their competitive market position. One example is alternative pricing strategies to better meet the needs of clients. Firms may also be looking at more flexible and innovative staffing and compensation schemes, such as merit-based compensation for associates, to help balance revenue and costs."
Then again, perhaps a little drama is called for during the current multigenerational tumult.
We'll exit on Katherine Patterson's (of legal recruiters Patterson Davis Consulting) more evolutionary take: "We need to differentiate between what is recession and what is a natural adjustment in this field, which, in my opinion, is moving the way medicine moved — from doctors being gods to managed care. So we're moving from lawyers being gods to a more aggressive financial model in which people will not make as much money. And frankly, I think that's quite appropriate."
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