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There are signs that change — perhaps dramatic change — is just over the horizon for law firms. From paths to partnership to methods of compensation, tomorrow’s law firm will be a very different place. Pressure to change will trickle down from the biggest firms and their key clients and will soon affect lawyers and professional service firms throughout the market. To stay relevant and profitable, we all need to stay ahead of the trends. At our legal staffing firm, we spend part of every day of our professional lives talking to general counsel, managing partners, firm administrators, and recruiting managers about legal staffing problems. We use what we learn to help firms find and keep talented lawyers and to help lawyers manage their careers. In talking to key people at firms in New York, Washington, Atlanta, and the Bay Area, we’ve seen interesting patterns emerging. Based on what we’ve seen, we think we can make some predictions about the changes that may be coming to law firms and lawyers. Look for 2007 to be one of the last years when most 2L summer clerkships will lead almost inevitably to the first step on the partnership track. Although some firms will continue to hire summer associates in large numbers, junior associate spots are likely to get more competitive. It appears likely that in the long run, many top firms will do a thorough cost analysis and abandon summer programs and law school recruiting altogether. Their preferred alternative will be to hire only laterals with at least a few years of meaningful practice experience. The partnership track will also change. Like the pot of gold at the end of the rainbow, partnership will move away as associates walk toward it. We won’t be surprised if a big New York firm announces a 12-year partnership track and firms across the country follow along. But that’s only one change, and a comparatively minor one. The real bomb will drop if clients take a stand together to force changes. Imagine, if you will, an open letter in The Wall Street Journal signed by a large group of Fortune 100 general counsel, announcing that they are no longer going to pay to train the next generation of lawyers. Outrage at associate salaries may be only the beginning. If the clients revolt, firms will change dramatically. Client backlash against outside counsel practices will produce great opportunities for lower-priced, top-quality boutiques that specialize in niche practices. Very sophisticated work will regularly land with firms of 40 to 100 lawyers, all of whom are graduates from big law firms. We also look for more big companies to institute a request-for-proposal process for their “commodity” legal work. Even more will choose to increase their legal department head count dramatically. Savvy GCs will also insist on the right to hire contract attorneys directly, rather than pay outside counsel a markup. As big clients start to flex their muscles, expect overall costs for outside counsel to plummet. As clients start putting the squeeze on law firms’ profits per partner, big firms will begin openly to do what they have been doing quietly for years. They will start recruiting and hiring staff attorneys in large numbers. These positions promise little chance for advancement and limited professional development. The trade-off for the lawyers: The pay will be pretty good, the hourly requirements will be more reasonable, and the firm will feel like a stable employer. In the increasingly shifting sands of the legal market, that may be enough of a draw. The biggest benefit for the firms will be that this cheaper labor pool will provide flexibility. They will be able to accommodate clients that will increasingly demand that some work be performed at less-than-premium rates. Fee breaks and flat-fee agreements, even among elite firms, will become much more common. Generally, the firms that adapt to the new reality of price-sensitive clients will do better faster. Our guess is that those who don’t adapt will either see work go elsewhere or, if they are exceptionally well-positioned, emerge in a very small top tier of firms almost exclusively handling bet-the-company work. In a very few years, Generation Y lawyers will be productive midlevel and senior associates. They already represent a serious retention problem, and the issue is growing more acute. We expect negotiations with these professionals to start taking on novel aspects, as their demands for work/life balance will outweigh the distant possibility of partnership. In addition, within the next five years plenty of firms will be considering some novel approaches to professional development. In a few firms, associates with obvious rainmaking potential will be pulled from the ranks and, to the shock of their colleagues, will receive training in sales techniques. Others who show extraordinary analytical skills will be promised long-term security in place of full partnership participation. They are a slippery bunch to hold on to, but these and other creative steps will improve retention. A fully integrated, diverse workplace will remain an elusive goal at most firms, though sincere efforts will persist. We anticipate that the problem will eventually dissipate to a degree. The key will be when firms break out of their up-or-out, one-track-for-everybody blinders. When firm managers truly embrace the idea that young lawyers should be evaluated and trained toward their strengths, more professionals will succeed in providing long-term economic value to their firms. Multiple career paths within firms will permit candidates of a much broader stripe to succeed. ONE LAWYER’S FUTURE So let’s imagine a 2007 law grad, top school, cum laude, with good news from the bar examiner in hand. She’s prepared to start her legal career, but she knows almost nothing about the business of practicing law. Here’s what we think may happen to her. After a few years at her first big firm, she makes a lateral move, hoping for greener pastures. What she finds is a business in transition. This new firm is in the midst of merger talks with another big firm, both hoping to reap competitive advantages by combining complementary practice strengths, shedding unproductive partners, and reducing per capita overhead. The merger occurs, and the firm now has more than 1,000 attorneys, placing it as one of the largest 50 firms nationwide. But as it grows bigger, her firm embraces the notion that it needs to grow smarter. Our young lawyer is by this time married and seriously considering starting a family. She is doing well and is recognized for her business instincts and her skill in handling client counseling assignments. At her seventh-year review, the firm proposes paying for her to get an executive MBA. They offer her the chance to transition into a role as business manager for her practice group. The new career path could be made to fit a lawyer with a young child. What she likes best, however, is that the new path means that she can move to a family-friendly city. After a straw poll of the firm’s attorneys and senior staff, the firm decides to move its entire back office and management staff to the firm’s satellite office in Knoxville, Tenn. Many of the staff attorney slots are also relocated there. The transition is made with minimal business interruption. With the mind-blowing advances in telecommunications and information-sharing technology, folks rarely notice that our �07 grad isn’t in the office down the hall. Her compensation is now based in part on the profitability of the practice group she manages. Partnership isn’t the goal anymore, but profit sharing is still a strong motivator to stay. It’s now 2027, and she’s a mother of two, firmly entrenched and a pillar of the Knoxville community, providing strategic planning for a key piece of her 2,400-person firm. She’s already put a place holder in her Outlook calendar for her retirement party in May 2048. So was this fiction? The future isn’t set, but there are currently forces at work moving toward every change we hypothesize. Clients are flexing their muscles more; firms are rethinking their summer programs and first-year recruiting; the partnership track is skinnier and longer than ever. Big firms of 2007 are nothing like the big firms of 1987. Twenty years from now, it is fair to say the changes will be even more dramatic. Some of the economic pressures that will drive seismic changes in the legal market are already emerging. It’s a safe bet that a relatively few big firms will get bigger still, but plenty of cutting-edge work will land elsewhere. Staffing strategies within law firms will change substantially. There will almost certainly be widespread experimentation in designing programs and compensation structures to stop the bleeding that comes with poor retention of productive lawyers. The profit margins for big law firms may start to shrink, but the market forces that justify big law firms will remain. So what factors will define the most successful law firms of the future? Successful firms will have powerful, creative, professional business managers; they will embrace a client-centered culture; they will take seriously the demands of their younger work force; and they will use technology and staffing creativity to maximize the productivity of their people. In short, expect law firms to look, act, and feel like big business. There’s no escape from the truth: Lawyers, welcome to the marketplace.
Stephen Stone, a former attorney, is vice president of Cambridge Partners, a legal search and staffing company. He is based in Atlanta. Jeff Schoenberg, also a former attorney, is director of partner placement for Cambridge Partners in Atlanta. Brooke Silard, a former manager for a large law firm in Washington, D.C., is vice president and manages the D.C. office of Cambridge Partners.

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