No option for Law Firm

Almost every day on twitter or in the legal press there are stories of law firms cutting lawyers and/or staff. As I write this post according to The Lawyer the total UK legal redundancies stand at 2727. In fact it may be easier to reel off a list of those firms that haven’t yet made layoffs (note I say yet, I would bet that layoffs are being considered across all firms)

So is this recession worse than 1980’s? Are companies really in bad shape?

I read an article recently on two types of recession:

• “boring recession” – troughs in the business cycle e.g. 1989-1992
• “dramatic recession” – big transformations in the economy. e.g. 1980-1982

The article above points out that the early eighties recession stripped out much outdated manufacturing, mining etc. The recession forcing the market to do exactly what markets do and correct itself.

So what category is this recession? Boring or Dramatic? I’m going to take a guess at dramatic, but this time it’s not blue collar industries that the market is correcting, but white collar ones!

This is the reason we’re seeing so many law firms shedding jobs. Though it’ll probably take more than this wave of layoffs to “correct the market”. I don’t think we’ll see another wave of redundancies, as I think a lot of firms will have stripped out the numbers they can afford to lose without compromising the organisations. What I do think though is that we’ll start to see radical changes in law firms; new billing models, exploitation of technology (to take a quote “no longer need clerks and pupils to search libraries, copy forms and wrap bundles in pink ribbon”), commoditisation of legal work etc.

But I think the biggest impact we’ll see though is in the upturn. This time there are many more well educated, ambitious, highly talented people that have been made redundant. Some of these will “rebel” against the old way of doing law, they’ll not go back to working for one of the old firms and they’ll start new firms. There was a wave of small business entrepreneurs that came out of the last dramatic recession, this time those entrepreneurs could end up completely reshaping delivery of legal services. (it may not take the upturn to bring this about, I saw an article today which shows this could be already starting to happen!)

It’ll be interesting to see how the current Lawyer UK 100 and AmLaw 100 keep up! Who’ll do a Microsoft and shift like they did when they turned 180 degree and embraced the internet and who will be the Lotus sitting back complaining that that upstart Microsoft didn’t do things their way and took their business away?

Seven years ago we had a training day for the IT department, we were set a task to set a task to prepare a very short presentation on “The Law Firm of the Future”.

The reason I remember this was thanks to an article I saw re-tweeted on Twitter last week from the Financial Post in Canada. The article was about changes in law around the globe that effectively enables law firms to launch an IPO.

This reminded me of a slide we put together in that 2002 presentation:

Looking at the rest of the slides some of our other points weren’t bad either.

• Fixed price contracts for legal work, leading to lawyers working on projects rather than cases.
• Full project management expertise for the legal project manager who has a team of lawyers, secretaries, IT personnel etc for each project.

These two bullets may be specific, but I think we were trying to point out that the traditional bill by the hour partnership model would not last. Quite in line with current “in vogue” thinking during the today’s economic climate (for example, see Optima Legal’s warning on small firms and the Adam Smith, Esq. blog report from the London City firms)

Not bad thinking for a bunch of IT geeks!

Back to the IPO point in the Financial Post though. I wonder how long it will be before we see the first IPO of a larger firm? Given the current economic turbulence, probably not soon. But thinking about the proceeds an IPO would probably realise for partners of a top 200 firm, surely it can’t be that long before someone tries!

Post on The Lawyer today : Legal Job Watch: UK 200 TOTAL REDUNDANCIES: 2199

The interesting thing about The Lawyer’s reporting (and LegalWeek for that matter) is that the figures are just for the lawyers! There is no figure for support staff in consultancy or redundant in any of the firms?

Can you read anything into this? I mean todays news on the job losses at Nissan didn’t just total the managers or engineers, but all staff. Why are the numbers from KM, facilities, the secretarial teams or IT not of any interest to readers of The Lawyer?

After all it’s not as if it’s because there has been zero job losses in these areas is it.