Georgetown Law Alumni Magazine - Res Ipsa Loquitur
Spring/Summer 2009 - Online Volume 1
Feature Articles
The State of the Legal Profession
By Ann W. Parks
When commercial litigation partner Brendan V. Sullivan (C’64, L’67) of Williams & Connolly began practicing law in the 1960s and 1970s, a typical case might involve a couple of lawyers walking into court with a hardbound volume of the Federal Supplement tucked under their arms. Contracts were mailed, read and digested by attorneys in days rather than hours — and in criminal prosecutions, if a defendant were accused of committing an offense at 9:42 a.m. on a Tuesday, there was no e-mail to document his state of mind at that precise time.
“We no longer have Clarence Darrow or Edward Bennett Williams going into court and dazzling a jury,” Sullivan says, noting that it’s not uncommon now for a case to require a team of 10 to 20 attorneys. The size and scale of things, he notes, has changed significantly since he graduated from law school — as has the available technology. “Edward Bennett Williams probably never tried a case with more than one bankers box of documents; now there are 20, 30, 40 boxes.”
The financial stakes have changed too. The law, as everyone knows by now, is not merely a profession but a business. A case that might have involved a few million dollars in the 1970s could involve hundreds of millions or even a billion dollars today. And at no time in recent memory has the link between law and business been more apparent, as many practice areas decline with the stock market and lawyers are feeling financial pressures that would have been unheard of a year or two ago. The month of February saw some especially tough times, as big law firms cut hundreds of jobs. Still, some insist that it’s an exciting time to be in the profession, as attorneys step in to assist with the regulatory and legislative challenges posed by the current financial situation. And seated in the front row observing it all are today’s students, who wonder what the changes will mean to them. What can these future lawyers expect, as they begin to practice in 2009, 2010 and beyond?
“Coming out of a really great school like Georgetown with a law degree, I’m going to be in as good a position as anyone to do well,” said Andrea Baron (L’10), who was taking the global financial situation in stride last fall. “It seems like there are so many things fluctuating right now that there isn’t one big picture; it’s more like, real estate is down and bankruptcy is up and no one knows what’s going to happen next year.”
Baron and Ryan Selis (L’10) — the student leaders of the Law Center’s Corporate Law Association — hosted a panel in October entitled “From Wall Street to Washington: What is Happening?!” with representatives from government, banking, and corporate and securities law. And at the opening of the new Center for Transnational Legal Studies in London, alumni Ted Burke (L’86), chief executive officer of Freshfields Bruckhaus Deringer, William P. Frank (C’63) of Skadden Arps, and Robert Ruyak (L’74), managing partner and CEO of Howrey, discussed “The Emerging Global Lawyer.” And those are just a few of the events designed to help Georgetown Law students and alums — as well as the national and international community — stay on top of a business that is starting to look very different than it once did.
“A lot of the old traditional forces at work are changing,” Ruyak says of the legal profession. “Today, instead of just being a lawyer handling a case, there’s an opportunity to develop very strategic business relationships with clients, to work with them overall in terms of risk management, not just on an individual case — when the case is over you kind of go away — it’s more of a continuous relationship, and I think we learn from that. … I think the law firm environment is going to change dramatically in the next three or four years.”
It’s a Business
In Classroom 2000 of Georgetown’s Hotung building one November afternoon, students are filling the aisles to hear Bruce MacEwen — founder of the online legal and economic newsletter Adam Smith, Esq. — in the first of a five-part speaker series sponsored by the Center for the Study of the Legal Profession. The topic for the day is “Law Firm Economics 101” — and MacEwen is describing to a crowd of students the realities of profits per partner and compound annual growth rates — realities that some of them might have gone to law school to avoid.
“One very practical motivation was to give our students a better sense of how the profession is changing, how it’s organized, what kinds of pressures, opportunities and risks they are likely to confront; and in what ways professional ideals are translated on the ground in concrete situations,” explains Professor Mitt Regan, who co-directs the Center with Professor Jeff Bauman. “The trend over the past 25 years has been toward much more intense competition among law firms — both for clients and for lawyers — and that has made law firms much more intensely focused on profits and financial performance.”
And the financial news was sobering as MacEwen — walking students through the realities of running a law firm — described a profession that is more competitive and pressure-driven than ever. Corporate clients, he noted, are fighting back from years of steadily increasing law firm rates, with some corporations refusing to pay for first- and second-year associates and demanding more from the lawyers they do work with.
On the plus side, MacEwen described a business that’s characterized by tremendous growth and, in recent years, a burgeoning demand for services. He noted that in 1985, there were approximately 40,000 lawyers in the National Law Journal’s list of the 250 largest U.S. firms (the NLJ 250); 20 years later, there were nearly 117,000 lawyers in these firms. Speaking to students a week later, Jim Jones, managing director of the professional services consultant Hildebrandt and chairman of its Hildebrandt Institute, noted that in 1987, the average size of an NLJ 250 law firm was 194 lawyers; 20 years later, the average was 513 lawyers.
Experts say that while the number of lawyers in firms has grown substantially in the past two decades, the number of students graduating from law schools has not — resulting in increased competition for talent, with employers reaching farther down in the ranks of more law schools and associate salaries that have increased three times faster than inflation in this century so far. “The good news is that, for a law firm, you are an incredibly important component of their supply,” MacEwen told the students. “You provide what they have to sell.”
Proactive
While no one sees a quick recovery to the economic downturn, experts believe that the current situation may cause a rethinking of the basic business structures of law firms. One of the biggest developments, for example, is that corporate clients are changing their attitudes toward law firms — reducing the number of outside firms and demanding more from the lawyers they do use.
“Corporate clients are cutting costs to weather what they perceive to be a long and potentially deep recession,” says Robert Dufek (L’76), former managing partner and management committee member at Morgan Lewis. In-house corporate counsel, he notes, are seeking value as well as partnering relationships from their outside counsel and want the latter to understand their business and competitive challenges. “They want their lawyers to be responsive, communicative and proactive; they want trusted advisers who are immediately available and totally committed to the assignment.”
Tom O’Neil (L’82), the senior vice president and general counsel of WellCare Health Plans who works frequently with outside law firms, agrees that the in-house bar is placing a premium on law firms that really take the time to understand a company’s business realities. “They’re expecting outside counsel not just to be the equivalent of a holistic adviser but to partner with them in solving problems,” he says.
And the leverage that corporate clients are exerting on their law firms can be surprising. As panelists pointed out at a symposium on corporate social responsibility in November — another initiative of the Center for the Study of the Legal Profession — corporations are increasingly demanding that law firms make socially responsible choices, such as “going green” or meeting diversity goals.
“We have diverse work forces and we’d like our lawyers to reflect that diversity as well,” says Marc Gary (L’77), executive vice president and general counsel of Fidelity Investments. Corporate counsel, he notes, have issued statements — one in 1999 signed by 500 lawyers, another in 2004 — vowing to consider law firm diversity as a factor when hiring outside counsel.
Corporations are also looking to outside counsel to develop new approaches to hourly billing — including alternative fee arrangements, lower per unit and per project costs, and requests for proposals (RFPs) for law firm services.
“Our clients, many of them are suffering because of the financial problems, so one of the biggest things we have to do is to accommodate them,” says Howrey’s Ruyak, noting that his firm is trying to utilize different approaches and methods to conserve the cost of litigation and to help its clients prepare for expanded needs on a tight budget. This could include using staff attorneys where possible, looking more strategically at priorities and using technology to reduce costs in areas such as discovery and document management. “There are a whole host of things that I think are key to helping our clients survive in these difficult financial times.”
