Walker Clark Worldview

Has the current economic crisis changed the economics of legal practice for the next ten to twenty years?

Some of the clients of Walker Clark, LLC, tell me that they have not noticed a significant reduction in the volume of legal work, except in a few areas, such as real estate and mergers and acquisitions, which traditionally are particularly sensitive to business cycles.  In some practice areas, such as restructuring, litigation, and bankruptcy, the volume of instructions has actually increased.

What is different, however, is that clients now expect lower fees and more responsive service than before.  They are challenging fees and demanding better value.

These are not just short-term responses to cash flow issues in the clients’ businesses.  It is becoming clear that many clients regard these adjustments in fee structures and rates as a permanent change in the relationship with their legal service providers.  As one partner in a firm in New York told me recently:

We don’t like to admit this, but we know that our “discounts” are really permanent price cuts.

This poses several interesting — but by no means academic — questions:

• Has the traditional partner-managed law firm become obsolete?
• Can law firms continue to expect multi-million dollar profits per partner?
• Will law firms need to change fundamentally the way in which they deliver legal services?
• Can the global mega-firms survive a legal market of lowered financial expectations?
• Can small speciality law firms survive a legal market of  higher service-delivery expectations?
• Will we see a surge in the size and scope of practice of in-house corporate law departments?
• Can today’s law school graduates expect the same highly-paid lifetime professional prospects that their parents’ generation have enjoyed?

What questions would you add to this list?

Norman Clark

Tags: associates, economic crisis, large firms, small firms

This entry was posted on Sunday, June 28th, 2009 at 23:08 and is filed under associates, economic crisis, fees, profitability. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.