Those of us who were active in the profession when The National Law Journal began in 1978 couldn’t have imagined the legal marketplace in 2012.
• A 100-lawyer firm was considered huge.
• Many firms were governed by partnership meeting.
• Office managers were just emerging; many were converted senior partner secretaries.
• Many lawyers didn’t keep time records.
• Few law firms had computers; most billing was manual.
• 1-to-1 secretary-to-lawyer ratios were the norm.
• Marketing was anathema, generally prohibited.
• Few lawyers billed more than $100 an hour.
• Associate starting salaries averaged $16,000.
• Communication was by post or telephone; fax and overnight delivery were just emerging.
• Corporate law departments were small, handling commodity work; in-house lawyers’ credentials lagged those of law firm lawyers.
• The great debate was whether law was a business or a profession, as though incompatible with each other.
Since 1978, the legal world has undergone wrenching change, decade by decade. Consider:
IN THE 1970S:
• Legal management emerged as a discipline, reflected by the formation of the Association of Legal Administrators and the ABA Legal Economics Section.
• Time billing was adopted as the norm, encouraged by clients.
• Benchmarking data became available, by way of surveys.
• The Bates v. State Bar of Arizona decision of the U.S. Supreme Court (1977) opened the door for lawyer advertising and marketing.
IN THE 1980S:
• Law firms streamlined management by appointing boards/committees, managing partners and professional administrators.
• The legal press began to publish league tables and lists, led by the NLJ and The American Lawyer.
• Some pioneering international law firms began to achieve “global” status.
• In the late ’80s, the introduction of the personal computer to lawyers’ offices reduced reliance on expensive legal secretaries, allowing each secretary to serve multiple lawyers.
IN THE 1990S:
• Led by the Big Five professional service firms, multidisciplinary practices expanded to include law practices.
• Law firms adopted the most successful management technique employed in the corporate world, strategic planning.
• Corporate law departments grew and internalized more sophisticated legal work, upgrading credentials of in-house lawyers.
IN THE 2000S:
• Electronic communication largely replaced postal service, overnight delivery and fax communications. This made lawyers accessible 24/7, increasing client expectations.
• Information technology, WiFi and Internet technology enabled lawyers to operate almost anywhere — at home, on the road, in client offices.
• Starting salaries of associates escalated to $160,000 in major law firms, due to a sellers’ labor market. This changed abruptly to a buyers’ market in the Great Recession of 2008-2009 as some firms reduced their offers and those who didn’t froze them.
• The Association of Corporate Counsel (ACC) demonstrated commitment to diversity as a prerequisite to engagement of law firms.
• The law department “convergence” initiative reconsolidated legal work in smaller numbers of outside law firms, increasing companies’ bargaining power over fees and staffing.
• Geographic expansion accelerated as local firms became regional, regional firms became national, and national ones became international, even global.
In the 2010s (so far):
• The ACC Value Challenge made law firm performance transparent to ACC members, as have ratings/rankings of lawyers/firms by publications.
• Corporate counsel have sent commodity work to both on-shore and off-shore legal process outsourcers. Some law firms have created “captive” outsource capabilities, establishing those operations in cheaper venues with lower occupancy and personnel costs.
• Alternative fee arrangements are gradually replacing time billing, as general counsel seek them based on budgeting and predictability.
• Nonlawyer ownership at law firms is officially permitted in Australia and the United Kingdom (as of 2011). So far, U.S. jurisdictions have resisted this trend, but may not continue to do so as competition becomes more global and the need for law firm capital greater.
• Finally, law firms have become big businesses, and some, very profitable. Today, 20 U.S. law firms have more than 1,000 lawyers; 18 have revenues of more than $1 billion; and 85 have profits per equity partner of more than $1 million. No one would have dared to predict that in 1978.