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The Coming Invasion of the Body Snatchers: Are Offshore Law Firms Going to Invade the United States?


English: The United States Esperanto: Loko de ...

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                                                                             Jerome Kowalski

                                                                             Kowalski & Associates

                                                                             December, 2011

 

They’re coming.

The coming months and the coming years will mark an increased invasion of foreign based law firms and other providers of legal services into the United States.  They will likely be coming from all corners of the world. And, they will be looking to snatch your business.

First, we have the acknowledged intention of UK based behemoth Herbert Smith (1,500 or so lawyers) to re-open a United States office, after an absence of two decades. The new office, expected to open within the year will be populated by both United States and foreign qualified lawyers. Jonathan Scott, a senior Herbert Smith lawyer announced that the new New York City office focused on dispute resolution, including international arbitration and investigations.  Following the Watergate era admonition to “follow the money,”   the premium fee yielding dispute resolution and internal investigation practices seem extremely likely areas for firms like Herbert Smith (and AmLaw 100 firms) to continue to exploit.  The issue, of course, is that as the supply of high end law firms having the capacity to deliver quality dispute resolution work and internal investigations on a global scale and the competition for this work  continues to grow, price competition will ineluctably come in to play.

The British invasion is not new, nor will it end soon. British Magic Circle firms have invaded and have taken an increasingly dominant role in the US market for almost two decades.  London, which seems hell bent on being the Imperial home for the lawyers to the world, has already sent formidable firms here, including Clifford Chance, Linklaters, Allen & Overy, Freshfield, and Lovell Hogan. The last British invasion on these shores began with the Beatles in 1963 and last I heard, Mick Jagger and Paul McCartney are still playing to sell out audiences. The point is that, based on my count, fewer than 20 of the UK’s 100 largest law firms have taken to the US stage at this writing.

As the market in the Euro Zone continues to stagnate, law firms in that market will likely look to the American market as new sources for revenue. One recent example is Ireland’s A&L Goodbody, which long had a single lawyer outpost in New York, announced just yesterday ambitious plans to open a Silicon valley branch and reinvigorate its New York operations.   The Germans may not be far behind.

From the other side of the globe, the real game changer may well be the announced merger of   China’s King & Wood and Australia’s Mallesons Stephen Jaques. As announced in The Asian Lawyer , “[t]he combined firm will number some 1,800 lawyers, and is positioning itself clearly as an alternative in the region to the large U.S. and U.K. firms that have traditionally dominated major cross-border deals.”  It matters little if the combined entity will soon open a US office (although my raw guess is that they eventually will), the combined firm will be competing directly with both AmLaw 100 and Golden Circle firms for core cross border work.

As I previously observed,  “the profession must be mindful of the Chinese business model, which seems to be the Chinese asking foreigners to come to China and perform a service or build a product, followed by the Chinese saying “let me see how you do that.” That in turn is followed by “teach us how to do that,” and ultimately “okay, we now know how to do that on our own, so you can leave and we will do so on our own.’”

The West has not only taught Chinese law firms how to practice law in the Western style, but, the West has also taught the Chinese to operate globally and on the global expanse. Indeed, the two largest law firms in China, Dacheng and Yingke, are preparing to open bases in London. The United States will not be far behind.   Broad & Bright, one of China’s leading law firms with 60 lawyers,  is set on moving to the West.  It is now in merger talks with 2,900 lawyer Clifford Chance.    Since you have by now read the Broad & Bright web site through the link above, you know that Broad & Bright has acted as counsel in China for some of the world’s largest corporations and on its surface, does not need Clifford Chance to funnel more work to its offices. Broad & Bright is one of those rare firms that can easily be a net exporter of legal services. Thus, should the Clifford Chance talks fail, it would not come as much of a surprise that Broad & Bright (or a similar sized and placed Chinese law firm will simply say “okay, we now know how to do this on our own and we don’t need a Western law firm to open our own international law firm.”

LPO’s, sometimes called “non-traditional law firms”  have watched their gross revenues increase almost ten-fold over the last five years, to an estimated $2,500,000,000 in 2012 with some estimating a doubling of that number by 2015.  As I have said in the past, it is a major mistake to simply think of LPO’s as limited resource providers of ancillary services to law firms and corporate legal departments. Rather, they are alternate providers of legal services, which can provide a full range of legal services to United States consumers of legal services at an enormous price advantage. The only areas in which these entities are precluded from competing directly with United States law firms are appearing in judicial proceedings, signing legal opinion letters or otherwise directly providing advice to a corporation on American law.  A number of LPO’s, particularly on the Indian sub-continent, have affiliations of one form or another with Indian law firms.

The thin barrier preventing LPO’s from grabbing even more slices of the legal spend pie will easily evaporate.   There are a variety of different means for those affiliates to establish or acquire a United States law firm.  Thus, an LPO could easily establish a very real law firm branch office in the United States, populated by US duly qualified lawyers which in term could make eviscerate the thin boundary which would give these offshore entities the ability to offer the full array of legal services – including appearing in judicial proceedings,  signing legal opinions and direct counseling,

LPO’s, owned by offshore entities and owned by either US investors or by US law firms are sprouting United States branch offices like weeds. Those US branch offices already have the infrastructure in place to function as full service law firms, often with technology already in place that is complete state of the art. And there are many a small or medium sized law firm that would presumably welcome the capital and assured revenue stream from a successful well capitalized offshore LPO to buttress its own sagging fortunes.

In 2011, United States law firms met the challenges of reduced legal spends and new competition through reducing headcounts,  merging to create more critical mass and consolidating back office and support funtions, or by shutting their doors. Professor Steve Harper avers that in 2011 there were a total of 43 law firm mergers. Those shutting their doors, often with disastrous consequence to the firm’s individual partners, include the splashy Howrey implosion, Florida based Yoss, LLP as well as Ruden McCloskey (which didn’t quite go down without a fight) , New York’s Snow Becker and Krause, Atlanta based Shapiro Fussell Wedge & Martin, Los Angeles based Silver & Freedman, Denver based Isaacson Rosenbaum,  foreclosure mills Steven Baum and David Stern and150 lawyer Austin based Clark Thomas & Winters.  And there are more than a few commentators who suggest that  Arnold & Porter’s acquisition of the remnants of Los Angeles based Howard Rice and Bryan Cave’s acquisition of Denver based rapidly shrinking Robert Holme & Owen largely staved off the closures of the acquired firms.  A similar suggestion arguably applies to McKenna long’s “acquisition” of Luce Forward, with the former plainly planning on doing a material house cleaning of the latter.

Well then, Ollie, that’s a fine mess we’re in.

Despite admonitions concerning the imprudence of predicting the future by such luminaries as John Kenneth Gailbraith (“the only purpose served in making predictions about the future is to lend credibility to astrology”) and Yogi Berra (“the future is hard to predict because it hasn’t happened yet”), I tremulously suggest that we are certainly likely to see the following over the coming months:

  • Continued merging of middle market law firms to create larger regional or super regional law firms.
  • Further reducing headcount and support staff.
  • Acquisitions by foreign law firms or alternative providers of domestic US based law firms.
  • Some US law firms meeting the invasion of foreign law firms and alternative legal service providers by counter-attacks, landing branches on foreign shores, despite the known risks attendant to that approach.
  • Enhanced collaboration, both vertically between the law firm and its important institutional clients, as well as horizontally with alternative providers of legal services as well as with law firms to which the client may have downsourced work to.
  • Increased price competition for premium work as well as increased commoditization of other lines of work.

We are in for some challenging times.  Most well managed law firms will continue to survive and thrive. Some law firms will inevitably appear on lists published next December of law firms that sadly didn’t make it.

© Jerome Kowalski, December, 2011.  All Rights Reserved.

 Jerry Kowalski, who provides consulting services to law firms, is also a dynamic (and often humorous) speaker on topics of interest to the profession and can be reached at jkowalski@kowalskiassociates.com .

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Much Ado About Nothing: The ABA’s Ideas About Admitting Nonlawyers to Law Firm Partnerships; “Alternative Law Practice Structures”


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                                                                             Jerome Kowalski

                                                                             Kowalski & Associates

                                                                             December, 2011

The American Bar Association’s Commission on Ethics 20/20 just released its long awaited “Discussion Paper on Alternative Law Practice Structures.”  The report immediately brought to mind  Judge Posner’s recent decision in which he bench slapped a lawyer in a written and illustrated opinion by comparing him to an ostrich for ignoring an obvious case which the court felt controlled in the matter sub judice. My take is that the Commission simply ignored facts already on the ground and, more significantly, completely sidestepped the more urgent question, namely whether the United States would follow the lead of the United Kingdom and permit non lawyer ownership and equity investments in law firms. Our cousins across the pond call this model “Alternative Business Structures” or sometimes the “Tesco” model (the latter based on the ubiquitous retailer of that name).

The essence of the Commission’s report, predicated on the notion that lawyers in the United States some current ethical strictures relaxed so that they can effectively compete on the global stage, mandate the following changes which would permit nonlawyers to hold equity in a law firm, subject to the following strictures:

 such law firms would be restricted to providing legal services;

 nonlawyer owners would have to be active in the firm, providing services that support the delivery of legal services by the lawyers (i.e., the firm cannot be a multidisciplinary practice);

 nonlawyer ownership and voting interests would be restricted by a percentage cap sufficient to ensure that lawyers retain control of the firm;

 nonlawyer owners would be required to agree in writing to conduct themselves in a manner consistent with the Rules of Professional Conduct for lawyers; and

 lawyer owners would be responsible for both ensuring that the nonlawyer owners in their firm were of good character and supervising the nonlawyers in regard to compliance with the Rules of Professional Conduct.

These recommendations are, frankly, superfluous and add nothing to the current marketplace. . More significantly, market forces and realities have already pushed the envelope way beyond the Commission’s shortsighted vision.

For example, the Commission noted that many proponents argued that in order to attract the highest quality management and support staff that today’s legal market demands, law firms should have the opportunity to provide these personnel with an equity kicker. But, the fact is that the market long successfully dealt with this issue by simply paying top quality nonlawyer support personnel partner level compensation and bonuses. Famed comedian Jackie Mason does a great riff on how some people just want to be called partners for bragging rights, but the fact is that as Jerry McGuire said, “just show me the money.” And as we well know, law firm partners are nothing more or less than employees at will.

Second, the purported extant strictures limiting the services a law firm can offer to the delivery of legal services have long been ignored and circumvented through the creation of law firm subsidiaries that offer a plethora of services, some not even law related.

Moreover, substantial nonlawyer control currently exists in that many law firms are rather tightly controlled by their lenders.  It is often said that Citibank owns more law firms in the world than anybody. And banks can exercise the ultimate control:  they can force a law firm to shut its doors.

The final piece of what is to me plain silliness are the peculiar requirements that nonlawyer partners need to be vetted to be assured that they have the character and fitness required for bar admission and their conduct must be monitored by lawyer partners to assure that they are in full compliance with the Rules of Professional Responsibility.  Who is going to do this vetting?  And should a nonlawyer partner violate one of the Rules, who is going to be subject to discipline?  As I said before, top notch professionals just want to be “shown the money” and treated with professionalism and respect.  Having a business card that contains the word “partner” is no assurance of financial reward, job security or being treated with respect or dignity.

The tonier topic, is of course private equity investment in law firms.  As for that issue, the Commission blithely said

The Commission has ruled out certain forms of nonlawyer ownership that currently exist in other countries. In particular, the Commission rejected: (a) publicly traded law firms, (b) passive, outside nonlawyer investment or ownership in law firms, and (c) multidisciplinary practices (i.e., law firms that offer both legal and non-legal services separately in a single entity).

But whether you are a believer or a doubter concerning the Alternative Business Structures, it is a topic that demands immediate attention and public debate.  But as with so much else that Commissions do, it simply kicked the can down the road and agreed to continue to study the issue.

As that can goes rolling down the road beyond any visible horizon, the United Kingdom, hell  bent  on being the home base to the world’s great law firms, will take robust advantage of its substantial head start, legal services will be increasingly be provided by nonlawyer owned and unregulated Internet providers of legal services and  offshore LPO’s will continue to take larger market share, again in an environment where they are not owned by lawyers, not regulated and often under insured.

My expectation is that the next step in the evolution of  law firms will largely continue to evolve and form significant joint ventures with non-traditional providers of legal services.

In one of the next belated iterations of the Commission’s discussion papers, the Commission and the bar will arise from its long slumber and look around at a brand new world and perhaps even wonder “how did all of this happen; who was asleep at the switch?”

© Jerome Kowalski, December, 2011.  All Rights Reserved.

 

Jerry Kowalski, who provides consulting services to law firms, is also a dynamic (and often humorous) speaker on topics of interest to the profession and can be reached at jkowalski@kowalskiassociates.com


The Law Firm of the Twenty-first Century


English: A Crystal Ball I created in 3D. Suppo...

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The Future of the Law Firm in the New Economy

 

                                                                                                                                               Jerome Kowalski

                                                                                                                                               Kowalski & Associates

                                                                                                                                                November, 2010

 

The past, present and future of the legal profession: How we got here, what we are doing now and what the future portends: continued revolutionary changes.  The seminal analysis.

    

        

          The Rock Center for Corporate Governance at Stanford University recently published what is, at least for me, and likely for any interested reader, what is perhaps the most seminal recent study of large law firms, from both an historical perspective, an analysis of the law firm in the face of current economic conditions as well as some hedged and qualified predictions for what the future holds for the legal profession.

This remarkable piece of scholarly work, authored by Bernard A. Burk, Academic Fellow at the Arthur and Toni Rembe Rock Center for Corporate Governance at Stanford University and David McGowan, Lyle L. Jones Professor of Competition and Innovation Law at University of San Diego School of Law, entitled “BIG BUT BRITTLE: ECONOMIC PERSPECTIVES ON THE FUTURE OF THE LAW FIRM IN THE NEW ECONOMY” is required reading for every law firm manager, and, indeed for every practicing lawyer, both for law firm practitioners and lawyers serving as in house general counsel.

But, until you find the time to do so, you will find this modest piece, relying heavily on the work of Professors Burk and McGowan and some of my prior work with scores of law firms around the country, an essential guide.

A thoroughly researched work of scholarship, relying on a tomes of work of economists, sociologists and an array of highly regarded academics, heavily footnoted (I was personally rather flattered and a bit humbled to find my own previously published work among the myriad notes), it is a compelling work, laying out in detail how we got to where are now, how we got here and where we are going. My own recent note regarding the deployment of associates in the emerging law firm model certainly pales in comparison to this detailed work.

I encourage you to print the entire piece, read it thoroughly over a quiet evening, a long weekend or an airplane ride so that you can give it the attention it demands.

Professors Burk and McGowan divide their paper in to three sections: The first, describes the golden era of the past 40 years during which the large law firm emerged as a dominant business model; the second provides an analysis of steps taken by law firms or imposed on law firm by current economic exigencies to allow them to survive The Great Recession; and, third, some predictions for the future.

As the authors note, “past is prologue,” an understanding of the historical perspective is essential.  While their historical narrative is compelling, here, I will only deal with the here and now and what lay ahead.

Where we were

           The second half of the 20th Century witnessed the explosion and proliferation of large, very large and mega law firms.  Headcounts, billing rates, associate salaries, demand for new law school graduates, demands for legal services  partners’’ salaries were all on head spinning upward arc. Law firms, perhaps like real estate prices rose 5% annually, and law firms assumed that rate of annual growth would continue inexorably.  Accordingly, planning was in material measure seemed easy:  Resting on the assumption of continued growth at this level, firms based hiring, real estate and technology acquisitions to keep pace with this continued rate of growth. By the 1980’s the rate of growth increased to 8% and law firms adjusted their planning accordingly. The world was jolted when it realized that 5% annual growth of real estate prices was not a product of divine command.  Hence, the housing bubble bust. Similarly, the legal profession suffered a shock to its system when it too realized that 5% annual compounded growth was not the product of a heavenly decree. The legal services bubble burst.

As the second half of the 20th century began, virtually all firms were based in a single city.  By 1980, 87% of the country’s largest firms had branch offices.  In 1968, the largest law firm in the United States had 168 lawyers. By 2008, 23 law firms had over 1,000 lawyers. In 1975, an elite miniscule number of firms had profits per partner edging up to $100,000. By 2007, 100 of the most profitable firms had PPP averaging $1,300,000.

At the start of this golden era, law firm partners considered their admission to partnership as a grant of lifetime tenure and a general commitment by each partner to bind with the firm as a lifetime commitment. Lateral partner movement was virtually non-existent.  By 1980, lateral partner movement was rampant. Law firm partners were the LeBron Jameses of their era:  free agents available to the highest bidder.

My own career path as I began my quarter century of law practice is demonstrative of this pattern. In 1978, as I was being recruited by various law firms, I elected to join a firm considered a titan of Wall Street. It had 70 lawyers and boasted of the fact that 4 of its 20 partners earned $100,000. Three years later I was actively recruited to join a firm pursuing an accelerated growth plan. Based in New York, Finley Kumble had a branch in Los Angeles and plans to open new branches.  It was the 84th lawyer in the firm.  By the end of 1987, when it imploded, it was the second largest law firm in the world with over 500 lawyers and eight branches.

Where we are now

Among the pertinent points made by the Big But Brittle authors, (all  completely consistent with my experience counseling scores of law firms, my prior written work, my media interviews and speeches) regarding the radical changes wrought over the past two years are the following:

  •  Huge reductions in force.  Since January, 2008, AmLaw 200 firms acknowledged laying off nearly 15,000 personnel, including 5,632 lawyers. We all know that these figures are grossly understated.  They do not include hundreds of “stealth” layoffs,  in which firms purported to dismiss lawyers for inadequate performance (largely making those affected almost permanently unemployable again as lawyers), thousands of layoffs in middle market and mid-size firms falling below the AmLaw 200 metric and hundreds more lost by simple attrition.
  •  Drastically reduced recruiting and restructuring associate compensation systems.  We’ve previously addressed this issue.
  •  Increased reliance on value billing.  My own work on the subject, among the most widely read on the issue of Alternative Fee Arrangements describes the concept, its need and application is certainly recommended reading.
  •  Proliferation of specialty boutiques.  These firms, largely populated by large law firm refugees, are simply stopgap measures, fraught with peril. In my view the staying power of these shops is in serious question.  Those that focus on specialty practice areas in vogue now risk extinction as their wave of demand ebbs as the economy goes in to its next cycle.  Those small boutiques which offer a wider array of services may be able to survive based on competitive pricing. However, these boutiques are frequently self limiting; they are typically undercapitalized, function often on an “eat what you kill formula” and lack the diversity of practice that cushions larger firms as particular practice areas ebb and flow. The “eat what you kill” formula, not at all confined to boutiques, is an invidious concept.   Those lawyers who prove to be more facile hunters will always be susceptible to overtures from firms which offer a larger bounty for their kill and certainly from firms that offer richer hunting grounds, with practice and geographic diversification.  The successful huntsman typically has little institutional loyalty; rather, he or she is motivated only to increase his or her kill and the portion of the bounty he or she can bring home.
  •  Lower margin and cyclical work are slipping down the food chain.  Large firms seeking to maintain high profitability are stripping out lower margin work. In my view, supported by the paper’s analysis, practices such as labor and employment, estate planning, transactional real estate work, trademark and patent prosecution will be disfavored at large firms, find homes in mid-size firms where they can be handled more efficiently and at lower cost
  • Demise of partner lockstep compensation. Academic economic analyses suggest that large law firm models work well, since practice diversification theoretically allows for evening out the cyclical nature of many practice areas. Thus, theorists suggest that partners would seek comfort in an environment in which downward trending of his or her practice would be counterbalanced by the ascendancy of other practice areas.  Accordingly, these theorists suggest that a partner would sacrifice significant compensation enhancements for stellar performance periods, comforted by the knowledge that their compensation would be protected during downturns in their practices because other practices within the law firm would be on the rise. Increased partner mobility, lack of institutional loyalty and the fact that performance based compensation increases or decreases tend to be “sticky” and long lasting all served to bury lockstep compensation.
  •  Client and practice diversification.   The last two decades amply demonstrated that client and practice concentrations can easily be fatal. Technology law firms which made considerable fortunes during the dot.com boom have been eulogized. Firms which fed on the securitization feeding frenzy are gone. Firms that made fortunes servicing now gone Wall Street mainstay financial institutions are still largely reeling.  In my view firms that rely on any one client for more than 10% of its revenues or one practice area for more than 30% of its revenues are courting disaster
  • The death of the up or out rule.  In a world once populated only by associates and equity partners, with those associates not being admitted to the partnership being simply terminated, we now live in a world of associate caste systems, counsel, special counsel, senior counsel, contract partners, equity partners and more. Professors Burk and McGowan have an interesting discussion of some law firms that create the illusion of opportunity for associates by engaging in what they characterize “promotion-to-partner” tournaments, often illusory and arbitrary with current supply and demand factors make largely irrelevant. These issues must be viewed with an eye towards the necessity of maintaining associate morale and job satisfaction.
  • Law Firm Branding  There has been and likely always will be an elite group of top tier law firms which always rate the highest in profit per partner profitability and whose client base is not rate sensitive. The divide between these firms and those below this elite status will likely increase in the future. Nonetheless, law firm branding at every level is vital. Similarly, individual personal reputations and individual reputations of particular expertise also continue to be main drivers for attracting clients. We previously reported on the effectiveness of blogging in establishing the bona fides for enhancing and publicizing expertise and reputation.  
  • Clients will likely turn to individual lawyers, rather than law firms.    Individual partner qualifications and recognized personal expertise in particular practice areas is a main driver. Many such partners have been successful in parlaying their retention by cross marketing, relying in material part on firm branding.
  •  Cross marketing.  Nothing new here; the simple fact is that the most effective marketing is to existing client bases. In only a slightly different vein, internal referral networks are effective stimulators of business growth factors. Plus ça change, plus c’est la même chose. 
  • Corporate legal departments have grown increasingly sophisticated both substantively and in numbers at individual corporations.  The result is that these corporate law departments reduced the amount of business referred to outside counsel. Corporate law departments essentially became competitors of law firms for the sale of legal services. In evaluating retention of outside counsel, corporations evaluate “make or buy” decisions the same way they evaluate the acquisition of other goods and services. The lesson is obvious: make the case that a “buy” decision is economically advantageous as a key marketing strategy. Make or buy decisions are influenced in part by the fact that the a recent national survey by Hildebrandt shows that the average hourly rate for law firm partners is $400, while in-house partner level lawyers cost a company an average of $232.
  •  The “make or buy” calculus is rendered incredibly complex currently; corporate departments have been required to reduce their internal budgets by at least 2% and their budgets for outside counsel by 5% and more (Altman Weil recently reported that its survey results indicated a reduction of corporate budgets for outside counsel to be as high as 40% ( http://www.altmanweil.com/dir_docs/resource/473ed6e1-1c5d-4a8d-ae00-085ad1b2bd14_document.pdf.    )Elsewhere, I have addressed some options to deal with this conundrum. 
  • New technology, downsourcing, insourcing and outsourcing are key factors in the new economy. Much legal work, particularly time consuming repetitive work is downsourced to temp staff lawyers, not only bay law firms but corporate general counsel as well. Legal process outsourcing (LPO) is more frequently shipped overseas. Smaller firms with high end technology have various competitive advantages for corporate work, both because of the ability to charge lower hourly rates and being more agile in alternative fee arrangements.  Concomitantly, lower rates and the cost of technology acquisition obviously also lowers profitability. Nonetheless, as I have pointed out many times, law firms based in cities with lower costs of than in major metropolitan areas will continue to have significant advantages.  
  • Show me the money.  Capital is essential for law firm growth and simple survival; it is needed for expansion, acquisition of new talent and technology. Capital was also essential for the typical law firm model in which all profits were distributed at year’s end and new cash was required for the firm to function often through the first two and sometimes three quarters of the year. Most law firms typically operated on a cash loss basis for at least the first half of each year. Tightened credit markets have had a profound effect on law firms, particularly as their need for cash unpredictably increased beyond prior norms, since they also had to pay for real estate and technology acquisitions no longer necessary as headcounts and business shriveled.  Banks, once delighted to loan bags full of money to law firms and lawyers, have now turned a very cold shoulder. Underwriting criteria have become more dramatically stringent. Compliance with loan covenants is now closely monitored. Vital cash is now extracted by increased partner capital requirements (sometimes even from non-equity partners, who, in essence are now paying to keep their jobs), longer term payouts of capital for departed partners, lowered draws. A new breed of high end litigation funding companies is emerging and servicing AmLaw 200 firms. Seeking equity capital from non-lawyers does not seem to be a viable option.   

The Future

Quoting Yogi Berra (“predictions are hard, particularly about the future”) and John Kenneth Gailbraith (“The only function of economic forecasting is to make astrology look respectable”), Professors Burk and McGowan, “with all trepidation and humility” do make some predictions about the future.  Some highlights and some of our own observations.

  •  Downsourcing, Insourcing, and Outsourcing will continue to grow. 
  • Market competition for commoditized work, coupled with technological advances   work will result in continued price pressure and profitability.   
  • The number of highly compensated associate partner track positions at large firms will continue to decline.  At the same time, those lawyers who obtain such positions will handle more sophisticated and intellectually stimulating work.  
  • The number of non-equity service partners will increase.  In my view, this but another iteration of the increasingly proliferating caste systems discussed elsewhere and above.  Equity partnership status will be far more difficult to obtain; developing, retaining and enhancing portable books of business will be increasingly the key to the magic kingdom, as never before. Again, Plus ça change, plus c’est la même chose. See, also, Ecclesiastes 1:9. 
  • Our system of legal education and training of lawyers will undergo revolutionary changes.  This subject is addressed at length in my book Navigating the Perfect Storm: Recruiting, Training and Retaining Lawyers in the Coming Decade (Ark Press, 2010) and in a different context in some of my previous essays on the subject.  

We continue to work with firms around the country and the world assisting them in navigating these challenging times. Please contact me at jkowalski@kowalskiassociates.com or at 212 832 9070, Extension 310 for more information.

 

© Jerome Kowalski, 2010.  All Rights Reserved.

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