Legal marketplace trends: Howrey and the boom in small law jobs

Last week the legal marketplace was rocked by the news that 500-attorney firm Howrey will soon cease to exist.  At the same time, SimplyHired’s Trend Report showed that legal job postings in December 2010 were up nearly 97% year-over-year.  In a year when an extremely large and well-respected firm saw its PPP slashed in half, where are all of these postings coming from? 

Per the New York Times, the answer is small employers: “[e]mployment by companies in the private sector rose by 297,000 last month…[but] [c]ompanies with 500 or more employees were responsible for only 36,000 of that number,” which represents only about 12%.

Although I haven’t found statistics on the size of the firms responsible for that 97% figure, it’s not a far cry to assume that many of them are much smaller than Howrey.  After all:

  • The number of licensed U.S. attorneys is about 1.1 million;
  • The percent of U.S. firms and legal service providers with fewer than 10 employees is 91%; and
  • The percent of U.S. law firm market comprised of firms with at least 100 employees is only 0.4%.

Although Howrey may be top-of-mind at the moment due to its size and prominence, it’s important to remember that it represents only a small chunk of the legal marketplace.

Cloud computing for lawyers and legal ethics guidance

What is cloud computing for lawyers?

Cloud computing for lawyers is essentially a mode of outsourcing that can be broadly defined as IT infrastructure, platforms, and programs that are provided to attorneys via a subscription or pay-as-you-go basis.  The value proposition offered by cloud computing is lower overhead – firms won’t have to take up space with servers or train in-house personnel to support all of their desired capabilities.  Instead, lawyers will obtain access to functionality they cannot afford to provide themselves.  As cloud computing becomes more popular, lawyers will  presumably have more opportunities to try out different and more powerful computing capabilities.

How cloud computing is different for lawyers than other professionals

As with other types of outsourcing, cloud computing for lawyers implicates ethical issues that are not of great concern in other lines of work and other contexts.  For example, many individuals (including myself) now use cloud computing in the form of Gmail Docs for personal documents and spreadsheets, but we are free to do so without much investigation or reflection because this usage does not put sensitive client information at risk. 

Some legal cloud computing advocates point out that firm email isn’t necessarily as secure as it might be, and cloud computing for email actually offers more security than the status quo.  But in general attorneys are right to be thoughtful and cautious in adopting new technology, and some have exhibited this caution in the form of requesting ethics opinions from their state bar association. 

Formal ethics guidance on cloud computing

In 2010, the New York State Bar Association issued Ethics Opinion 842, under which attorneys are permitted to store confidential client information with an online storage vendor as long as they take reasonable care to ensure the system is secure and the attorney takes periodic steps to re-affirm the security of the information.  Under Alabama Bar Association Ethics Opinion 2010-02 addressing online data storage, attorneys must make file retention policies clear to clients at the outset of representation, and this communication should take the client’s sophistication into account.  The Opinion also mandates that attorneys must take the necessary steps to ensure any virtual offsite files are as carefully secured as in-house paper files.  The bottom line of these two opinions is that when considering the adoption of new technology attorneys should bear in mind their existing ethical obligations and meet the same standard of reasonable care they have always adhered to.

Law firm communications roundup

A couple of thought-provoking pieces on improving law firm communications:

  • Jordan Furlong of Stem Legal questions the usual structure of case law updates.  His thesis is that attorneys tend to focus on what interests them – the background of the case, the arguments, the holding –  when instead they should focus on what interests clients: how a ruling changes the legal landscape and impacts them on a practical level.
  • In the ABA’s Law Practice Today, William Brennan proposes ways to improve the effectiveness of (and attorney comfort level with) communications about receivables.
  • Steven Levy analyzes the US News Law Firm Rankings and finds that several of clients’ key concerns relate to communications, including civility and responsiveness.
  • Tom Kane at the Legal Marketing Blog cites a major survey of corporate counsel who gave high marks to firms that provide important legal and business news off the clock, proactively analyze long-term issues likely to face their clients, and use news alerts to compile quarterly presentations about clients’ competitors and challenges.
  • Douglas B. Richardson of Altman Weil found during a law firm exercise that “pointless” interaction and face time was essential to creating a new generation of firm leaders.

Should associates pay firms for the privilege of learning to practice law?

Dan Hull recently proposed on What About Clients? that law firms should not pay new associates for the first 2-3 years.  Not only that, newbie lawyers should pay firms for the privilege of learning from them.  He first floated this idea in 2008, arguing that associates receive the greatest training in the first few years but there is no guarantee they will stay with the firm and allow the firm to reap the benefit of this investment.

The idea of associates paying their firms is subject to many knee-jerk criticisms – e.g., these lawyers have student loans to pay off, this will result in a reversion to the days when lawyers trained for years as apprentices and only white men from wealthy families could afford to become lawyers, and what about labor laws?

Hull’s proposal is nuanced though, and disposes of some of these criticisms.  Top new associates – the ones hiring partners deem worth the investment – would receive some payment.  The rest would receive no money or would pay the firm “tuition” and their hours would not be billed out.  And since his initial 2008 post, a couple of firms have indeed adopted a model wherein new associates are paid reduced salaries for the first year or two while they undergo intensive training programs.

But many firms are not motivated to follow the Hull school and pursue the most dedicated “lifers.”  In an eye-opening recent article from the ABA Journal, Debra Weiss exposed recent research concluding that some hiring partners choose associates for other reasons: 

One hiring lawyer, for example, indicated he would select a fictional candidate, “Julia,” from Yale Law School even though he believed she would not enjoy the work and would probably quit in two years. Yale law grads, he said, are likely to succeed in life and Julia could potentially one day be a judge, a congresswoman, a client or a politician. And if she has a connection to the firm, it can help.

 Whatever your position on this employment philosophy, if a firm decides that lower salaries in the first couple of years result in losing candidates they’d rather hire, presumably that system will be rolled back.  And if law schools and the bar work more closely with one another to more clearly sync their curricula and their expectations, presumably this will also impact firms’ attempts to modify compensation.  In any case, it’s clear that a one-size-fits-all approach to compensation won’t suit the many diverse legal employers in this country.

Equipping Our Lawyers 3: Refine law school core competencies

[View Equipping Our Lawyers Series Introduction]

The third Equipping Our Lawyers recommendation addresses in part the age-old teacher’s dilemma: how to identify core competencies and teach skills to students with different existing skill sets and varied post-graduation intentions:

Law schools should continue to refine their lists of identified core practice competencies, recognizing that essential competencies will vary by stage of education and by practice area.

Reporter’s Comment: This recommendation refers to the core practice competencies referenced in Recommendation 2 above. Recommendations 11 and 12 below expand further on the need across the educational continuum to identify essential practice competencies as the basis for planning career-long learning objectives for lawyers.

When it comes to Torts or Civil Procedure, most law students probably have a roughly similar degree of knowledge of the material – that is to say, not very much.  But when it comes to skills, students’ background and natural strengths vary more widely.  For example, if I take an inventory of some of the skills I learned in law school in skills courses (Legal Research & Writing), clinical programs (Civil Practice Clinic & Legislative Clinic), student working groups (the Criminal Law Research Group), internships and externships (the U.S. Attorney’s Office and the Pennsylvania State Senate Judiciary Committee), and in the course of editing a legal journal, it’s clear to me that I entered law school with innate strengths and weaknesses in different areas:

  • Academic research – the ability to learn the Lexis & Westlaw databases and to determine whether an article topic will contribute something new to existing scholarship;
  • Factual research – the ability to to pull out the relevant facts for a legal writing assignment and to track down and organize the key facts in a clinical case;
  • Writing and editing- professional emails, memoranda, briefs, agreements, and legislative drafting;
  • Oral communication – argument in front of mock judges and jurors, interviewing clinic clients and hearing their stories, trudging through a series of bureaucratic phone calls in the course of clinic cases, clearly explaining legal issues in the context of the Socratic method;
  • Professionalism – working with other students, fitting into a temporary office during an internship or externship, interacting appropriately with supervisors, colleagues and staff, being organized and prepared for classes, meetings, and hearings.

In addition, students’ high-priority skills may vary depending on whether they intend to seek positions as law clerks, associates in large law firms, trial attorneys, or sole practitioners.

In refining law school core competencies, educators at each law school must determine which skills and skill levels to target at every student (the ability to write clear legal memoranda), which should be optional but made available to most or all students (the ability to  interview clinic clients and devise case strategy), and which to offer to a select number of students to fulfill a special need.  The latter can be accomplished, for example, by surveying 2Ls’ professional intentions and offering a course in legislative drafting to those who intend to work in politics after graduation or requiring the submission of a resume and letter of intent for the course.

Techniques for crafting a curriculum and developing a teaching methodology that will inspire all students are naturally exhibited by the most well-respected legal educators.  In perusing the inspiring descriptions of the nominees for the Best Law Teachers in America, it’s clear that law students highly value instructors’ ability to make skills learning enjoyable, convey value, and make connections between exercises and real life.  Law students recognize that it is challenging to make skills courses engaging and they respect and appreciate the instructors who take on this challenge with grace and enthusiasm.

The best legal skills instructors are singled out for:

  • Inspiring students to seek the value offered in different kinds of research;
  • Using practical problems to help students connect doctrine and practice and providing experiences that help students learn and remember concepts;
  • Running an Advanced Legal Writing workshop that includes oral and written critiques, thus familiarizing students with the feedback and re-writes they will be faced with in practice;
  • Organizing class like a law firm and giving students the responsibility to produce legal work product; and
  • Giving students oral and written feedback tailored to their needs and continuously revising and updating the curriculum based on the latest research and trial and error.

The most inspirational skills teachers create an environment in which students do more than they expected, and in doing so prepare them for practice with both the skills and the attitude to succeed. When refining core competencies, law schools have the opportunity to establish the elements that will allow their graduates to later take charge of their continued skills development and provide value to clients and the legal community.

Schedule your deep thoughts

Like many lawyers, I alternate between creative/brainstorming work (e.g., brief-writing, thinking of article topics, spotting issues) and logistical work (e.g., meetings, organizing information, keeping on top of schedules).  Sometimes the two don’t mesh well within your day (or your week), and switching back to writing about a really head-scratching theoretical legal issue seems more difficult after you’ve just spent a few hours focusing on the nitty-gritty. 

But we’re not the only ones who encounter this issue.  In a post titled Getting Creative Things Done: How To Fit Hard Thinking Into a Busy Schedule, writer Cal Newport identifies the essential conflict at play: “To-do list creatives advance in their careers based on the quality of their creative output. Our logistical responsibilities, however, fight against this goal.”  Newport offers some strategies for accomplishing both types of work without letting one thought process derail the other.  Definitely food for thought.

Legal management potpourri

A couple of great posts from the Edge Group’s consultants:

  • Numerous U.S. companies fail to use basic tools, such as e-billing, to gather useful data on litigation spend, writes Pam Woldow.
  • Jordan Furlong asks: after all the change we’ve seen in the legal marketplace in the past year, is it possible much bigger, unforeseen changes are still afoot?
  • When hiring laterals, be sure to avoid these five faults, explains Ed Wesemann, lest you wind up decreasing profitability.
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