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September 2008 Issue | Volume 34 Number 6| Page 8
FRONTLINES

Trends Report

Selections from the Legal Market Basket

When I was a child, my mother often sent dad and me to the market to buy whatever we wanted for the dinner entrée—be it chicken or steak, pasta or fish—but it was supposed to be just one item. Dad, however, always bought several. And when I asked him why, he would say, “I can’t pick out just one, they all look so good.” That’s how I felt when trying to select a trend to discuss for this issue. I couldn’t pick just one from the tempting choices. So here, instead, are several items from my legal market basket.

A Shift in Summer Associate Programs

Slowly but steadily, an increasing number of small and midsize law firms are discontinuing their summer associate programs. One reason is that the programs are costly, although the discontinuations are not simply the result of the current economy. There are more strategic reasons at work, including the fact that partners are finding they don’t have time to run these programs. In addition, there isn’t enough productive work to give these young clerks, and as a result, the firm doesn’t learn that much about them for purposes of making full-time hiring decisions. Factor into that the high associate turnover rate—on average, more than 70 percent of the entry-level hires leave firms within five years—and you can understand the concerns.

So, instead of hiring lawyers right out of law school, these firms are recruiting second- and third-year associates, usually from larger firms. One partner explained it this way: “We let other firms train them. Yes, we have to pay higher salaries but it’s less costly in the long run. Furthermore, we make better selections because we have several years of track record to evaluate.”

And the associates having several years’ experience leads to other reasons to take this approach in small and midsize firms—including, importantly, that the new hires are often ready and able to assume client contact and even responsibility for certain matters. Therefore, they are almost immediately productive, helping to boost the bottom line.

 

Growing Work-Life Balance Demands

So how are these firms attracting -associates away from larger firms? One vital “selling point” is that the work-life balance in smaller firms -appeals to a growing number of lawyers, both young and more senior. And the culture in most smaller firms is usually far more congenial. In fact, working in a smaller firm can be fun!

The desire of many younger lawyers for a more balanced life and a less stressful work environment is not a new trend by any means—but it continues to grow stronger and is a major issue in the profession today. It is often what causes a younger lawyer to move to a smaller firm, sometimes at a sacrifice in compensation.

Some of the major or “elite” firms still refuse to recognize this trend or, more accurately, they reject it outright. Even in many large firms that do recognize the issue, the work-life balance programs are halfhearted or more honored in the breach than in the observance. This is unfortunate because many alternatives could be implemented to achieve balance, including part-time and flex-time schedules, nonequity partnerships, sabbaticals and family leave programs, to name a few. Of course, the principal step in achieving work-life balance is demanding fewer billable hours of lawyers, something that becomes a challenge in firms tasked with meeting clients’ increasing demands for 24-7 service.

 

The New Outside General Counsel

When a corporate acquisition occurs, the acquiring company often has its own fully staffed legal department. As a result, the general counsel of the acquired company is out of a job. Today, many of these displaced lawyers are finding a new niche by serving as part-time general counsel for companies that don’t have in-house counsel of their own.

According to Gregg Schor, founder of New York-based General Counsel Solutions, “There are literally thousands of small or midsize companies that have some kind of legal work, just not enough to justify a full-time lawyer.”

These outside general counsels are not the same as contract lawyers, who are periodically called in to handle a specific project and are paid on an hourly basis. Instead, the outside GCs form a continuing relationship with their clients and are compensated accordingly. In some cases, they have an office at the client company and handle most or even all of the company’s legal matters. Occasionally, too, an interesting career option arises when a client company grows to the point where it needs a full-time GC and offers the position to the outside GC, leading full circle back to holding an in-house job again!

Well, those are my selections for today—but by no means are these the only items in my legal market basket. Stop by in the next issue to see what else I have picked out.

About the Author

Bob Denney , President of Robert Denney Associates, Inc., provides strategic management and marketing counsel to law firms throughout the United States and parts of Canada.

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