Lawyers and the Recession
The Washington Post reviews the impact of the recession on “big law,” the large firms that account for most of the high profile business and litigation work in the U.S. As with recessions past, law firms are laying off partners and associates and cutting rates as well as giving fee caps for discrete matters such as appeals. Lots of lawyers are suddenly exploring new careers.
This is a particularly sharp downturn, but it is the third I have watched since leaving government in 1989. My own firm was begun in the deep recession of 1991 when my partners and I decided we could offer substantially lower hourly rates to large corporate and real estate clients which were if course eager to save on their legal costs. There’s thus an echo for me in these graphs from today’s story:
“Everyone realizes the big law firm model is broken,” said Willard, a partner in Silicon Valley-based Virtual Law Partners, who works out of his office — adjacent to his kitchen and family room — at his Reston home.
Although thousands of lawyers and staff members across the country have been let go during the past six months, Willard and Virtual Law’s founder say that since June they have been adding three partners per month. “When you tell people, ‘I’m going to drop my rates 25 percent,’ it’s a pretty easy decision” for them to hire you, Willard said.
I don’t think the big firm model is “broken,” just undergoing one of its regular contractions and spin-offs that reintroduce efficiency and competitiveness into service and rate structures. It is a cycle that is good for the law and very good for clients.