Archive for the ‘Law firm staffing model’ Category

Non-Equity Partnership Trends

March 12th, 2013 by Altman Weil

Since 1999, the Am Law 200 lists have tracked the number of non-equity partners in the 200 highest-grossing law firms in the United States. Between 1999 and 2012 there has been a significant change in those numbers.

In 1999, 65.5% of Am Law 200 firms had non-equity tiers; in 2012, that number had jumped to 84.5%.  Seventeen percent of all partners in two-tier firms were non-equity partners in 1999.  By 2012, 39% of all partners were in a non-equity tier.  Finally, the average number of non-equity partners in a two-tier firm went from 35.5 in 1999 to 108.8 in 2012.

The growth of non-equity partners as a lawyer category has reshaped law firms.  Many argue that the non-equity tier provides an easy way to offer the pride of partnership to associates, to introduce senior lateral hires, to increase billing rates of senior associates and elevate their status in the market — or to park underperforming equity partners.  However, it also builds a seemingly permanent class of high-priced leverage whose average billable hours are below those on either side of them (senior associates and equity partners).

It is critical for two-tiered firms to rethink their strategic intent with non-equity partnerships, including:

  • Analyzing short and long-term impacts on firm profitability
  • Rethinking non-equity compensation
  • Establishing tougher standards for entry and retention in the non-equity tier
  • Regularizing performance evaluations
  • Systematically managing transitions out of the tier

These steps will enable two-tier firms to begin the process of optimizing the productivity and profitability of non-equity partners.

Staffing moves save money, promote efficiency

February 1st, 2013 by Altman Weil

Several recent stories highlight law firms’ ongoing attempts to cut costs and deliver services more efficiently by rethinking their staffing models. 

The AmLaw Daily noted Kaye Scholer’s intention to move 100 back-office jobs, primarily from New York City, to Tallahassee Florida.

“The new operations center should help Kaye Scholer respond to the continuing push by clients to control costs, with Tallahassee’s lower cost of living allowing the firm to save on real estate expenses and staff salaries. [Chief Operating Officer Jeffrey] Hunter also views the move as promoting efficiency: “We think that we can provide timelier and more responsive services to partners and—in turn—their clients by centralizing those services instead of having them scattered across our New York, Washington, D.C., and Los Angeles offices,” he says.”

Read it at The AmLaw Daily

In a similar move in the UK, Magic Circle firm Allen & Overy announced they would relocate 43 US and European staff positions to their back office location in Belfast.

“With low economic growth across many developed markets, we must ensure we are operating in a way that will deliver the cost efficiencies our clients expect of us, so that we may protect the long-term competitiveness of our business,” Wim Dejonghe, the global managing partner for Allen & Overy, said in a statement.”

Read it at The AmLaw Daily 

The Legal Intelligencer reported that Blank Rome is offering buyouts “to its entire legal secretarial pool” as part of a rethinking of its secretarial needs:

“The reduction in legal secretaries is part of the firm’s overall effort to move into a more “efficient and flexible” service delivery model that better represents the fact that its younger attorneys are not utilizing secretaries the way more senior attorneys do.”

Read it at The Legal Intelligencer

Innovative alternative offers value to clients

July 20th, 2012 by Altman Weil

A UK law firm, Dundas & Wilson, has developed a new “Legal Services Unit” staffed by paralegals to offer clients lower prices on routine work while still retaining their business. 

“The initiative, which Dundas is dubbing a “firm within a firm”, will see a nine-strong team of paralegals split across Dundas’s Scottish offices take on searches, filings, registrations, basic due diligence and document review and collation work.” according to Legal Week.

The firm’s Managing Partner explains:

“Clients are keen for their law firms to come up with innovative ways to resource their work and deliver new models that can improve efficiency.  The LSU allows us to provide clients with more flexible resource for volume tasks, but at the same time, retain the assurance of having work done by a leading law firm.”

Read it at Legal Week

Making partner 2012

January 19th, 2012 by Altman Weil

The American Lawyer crunched some numbers on the new partner classes announced in AmLaw 200 firms in January.  They found:

  • 973 associates and counsel made partner at 97 firms that announced their classes as of 1/13/12
  • Women accounted for one third of new partners
  • Most new partners were still at the firms they joined out of law school
  • It took ten and half years on average to be made partner
  • In most cases new partners joined the equity tier
  • In the majority of firms the number of new partners was up from 2011

Read it at The AmLaw Daily

Will computers replace lawyers?

October 24th, 2011 by Altman Weil

Advances in technology and artificial intelligence are aggravating factors in the struggling job market according to a new e-book, Race Against the Machine.   And law firms are not immune.

“Erik Brynjolfsson, an economist and director of the M.I.T. Center for Digital Business, and Andrew P. McAfee, associate director and principal research scientist at the center, are two of the nation’s leading experts on technology and productivity. The tone of alarm in their book is a departure for the pair, whose previous research has focused mainly on the benefits of advancing technology.

Indeed, they were originally going to write a book titled, “The Digital Frontier,” about the “cornucopia of innovation that is going on,” Mr. McAfee said. Yet as the employment picture failed to brighten in the last two years, the two changed course to examine technology’s role in the jobless recovery.

The authors are not the only ones recently to point to the job fallout from technology. In the current issue of the McKinsey Quarterly, W. Brian Arthur, an external professor at the Santa Fe Institute, warns that technology is quickly taking over service jobs, following the waves of automation of farm and factory work. “This last repository of jobs is shrinking — fewer of us in the future may have white-collar business process jobs — and we have a problem,” Mr. Arthur writes.”

The authors conclude: “In medicine, law, finance, retailing, manufacturing and even scientific discovery…the key to winning the race is not to compete against machines but to compete with machines.”

Read it at the New York Times

Last spring Altman Weil asked in a survey if US Managing Partners could envision computers replacing any timekeepers in their law firms in the next 5 to 10 years. 

Read it at Altman Weil

Law firm staffers offsite and outsourced

October 19th, 2011 by Altman Weil

Pillsbury Winthrop announced this week that they will move their back office staff to Nashville to reduce costs.

“The firm plans to send back office functions including information technology, finance, new client intake, and word processing to the country music capital by next year.  The move, announced Tuesday, puts Pillsbury on a path blazed by Orrick, Herrington & Sutcliffe, which has housed administrative staff and low-cost lawyers in Wheeling, West Virginia, for almost a decade, and Wilmer Cutler Pickering Hale and Dorr, which has been sending non-legal work and document review to an office in Dayton, Ohio, since last year.”

“It’s a competitive marketplace,” says Pillsbury chair Jim Rishwain. “Law firms need to find better ways to add value to clients in a very difficult economy.”

Also this week, O’Melveny & Myers announced they will cut 75 staffers and move their work to an an outsourcing company.

Read it at The AmLaw Daily

Law firm leaders are confident in face of changing marketplace

May 25th, 2011 by Altman Weil

The newly released Altman Weil Law Firms in Transition Survey 2011 finds confidence high among US law firm leaders in firms of all sizes.

Overall economic performance is rebounding, with two thirds of all firms surveyed reporting increases in gross revenue in 2010 and nearly three quarters reporting increases in revenue per lawyer and profits per equity partner.  Standard hourly billing rates are up significantly this year, with firms reporting or planning a median 4.0% increase in billing rates for 2011.  Continued reductions in overhead costs and the strategic shrinking of firms’ ownership ranks are contributing to profitability.

“If firms are finding their feet again post-recession, it is on new ground with a number of new factors in play,” said Altman Weil principal Tom Clay.  “And although most firm leaders seem to recognize the changes, it’s not yet clear whether they will be able to manage them effectively.”

Following are some selected highlights:

  • 67% of law firms reported an increase in gross revenue in 2010; revenue per lawyer was up in 73% of all firms; and profits per equity partner rose in 73% of firms.
  • Overhead costs were down in 53% of firms in 2010.
  • The amount of non-hourly billing in 2010, measured as a percentage of revenue, increased in 58% of all firms and in 81% of firms with 250 or more lawyers. 
  • Only 12% of firms report that alternative fee arrangements are more profitable than hourly billing. 
  • 27% of law firms de-equitized partners in 2010 and 16% will do so in 2011.  32% of firms made fewer partnership offers in 2010 and 18% will do so in 2011.  Larger firms are more likely to take these actions than smaller firms.  
  • 92% of all law firms plan to acquire laterals partners in 2011. 
  • 87% of law firms are planning to add associates to their ranks in 2011.   Only 18% of firms plan to remove associates this year, down from 42% in 2010.  
  • Only 18% of those surveyed think that reduced associate salaries will be a permanent trend, down from 32% who thought that last year.
  • 60% of firm leaders expect that the increased use of contract lawyers will be a permanent trend, up from 52% last year.
  • 41% of all firms believe that outsourcing legal work will be a permanent part of the new legal market. 
  • 47% of all firms are concerned that they are not prepared to deal with the retirement and succession of Baby Boom lawyers – the top concern identified.
  • 94% of law firms believe that the focus on practice efficiency is a permanent change in the profession - the number one trend identified.
  • Other top trends include more price competition (90%), fewer support staff (88%), more commoditized legal work (81%), more non-hourly billing (75%), and fewer equity partners (68%).
  • Only 16% of firm leaders expect permanently lower profits per partner.   
  • Leaders score their confidence as an “8” on a zero to ten scale when asked about their firms’ ability to keep pace with change.

Conducted in April and May 2011, the survey polled Managing Partners and Chairs at 805 US law firms with 50 or more lawyers.  Completed surveys were received from 240 firms (30%), including 38% of the 250 largest US law firms.

The full survey is available online to download at: www.altmanweil.com/LFiT2011.

A “fundamental shift” in the BigLaw business model

May 24th, 2011 by Altman Weil

The New York Times has a story today on non-partner track positions in large law firms - a formula that they describe as “part of a fundamental shift in the 50-year-old business model for big firms.”

“The nation’s biggest law firms are creating a second tier of workers, stripping pay and prestige from one of the most coveted jobs in the business world.  Make no mistake: These are full-fledged lawyers, not paralegals, and they do the same work traditional legal associates do. But they earn less than half the pay of their counterparts — usually around $60,000 — and they know from the outset they will never make partner…”

“Besides making less, these associates work fewer hours and travel less than those on the grueling partner track, making these jobs more family-friendly. And this new system probably prevents jobs from going offshore. ”

Read it at the New York Times

“Law Factories”

March 25th, 2011 by Altman Weil

Great new post on 3 Geeks and a Law Blog - every firm should be asking themselves these questions.

 ”Law firms face an uncertain future: competitive markets, intense price pressure, and client demands to change. So they are beginning to ask fundamental questions about the nature of their business. These include what shape should a firm be and how will a firm approach this new market? Will firms be “Law Factories” that provide services to numerous market segments? Or will they be niche players that protect their brands in high-end markets and maybe even spin-off sub-brands for servicing mid-level and low-end markets?”

Read it at 3 Geeks and Law Blog

Legal hiring predicted to rise in 2nd quarter

March 10th, 2011 by Altman Weil

Hiring in the legal field should remain strong in the second quarter of 2011, according to the quarterly Robert Half Legal Hiring Index.  The survey is based on telephone interviews with 100 lawyers at law firms with 20 or more employees, and 100 corporate lawyers at companies with 1,000 or more employees - all with hiring authority within their organizations.

Lawyers were asked, “Does your law firm or company plan to increase or decrease the number of full-time legal personnel on your staff during the second quarter of 2011?” Their responses:

Increase….29%
Decrease….0%
No change….58%
Don’t know/no answer….13%

Read more at Robert Half Legal