The Structural Changes that Are Driving Lawyers’ Numbers Down

What are the permanent structural changes that have driven down law firm hiring and law school class sizes? structural changes

Professor Burk says the market has produced new, cheaper ways to do tasks once done by associates in large firms. And, now we can “disaggregate” those tasks from other law-firm-delivered legal services. This gives clients the ability to move that work to lower cost providers. All has been enabled by data processing and other technologies; by instant, remote communications; and by networked providers.

Legal processing.  So, clients with large legal processing needs – document discovery, litigation holds and due diligence (but also loan closings, collections, foreclosures, legal forms) – now have alternatives to hiring law firms who assign that work to associates. Those include:

  • Outsourcing – law firm sends the send the work to an outside contractor.
  • Insourcing – client itself does the work or hires the contractor.
  • Downsourcing – law firm assigns the work to contract lawyers or others who work in the firm but at lower rates than conventional associates.

Costs of training lawyers. Also, training law graduates to practice law in firms is time-consuming and expensive. Traditionally, many large firms financed that training, in effect, by charging clients for associates’ time. As new, technology-enabled economics take hold, law firms are recognizing the value of keeping trained lawyers who may not become practice leaders in their firms. So, more big firms are keeping more lawyers longer – in new categories: non-equity partner, senior attorney, contract attorney. That is, trained lawyers are retained to do work that might once have gone to new associates — thus cutting the need to hire more graduates.

Other structural changes. Professor Burk does not mention explicitly other structural changes that may also have reduced the demand for large firm lawyers. These might include: (i) the expanding role, sophistication and capabilities of in-house legal departments; (ii) expanded multi-jurisdictional and multi-disciplinary commerce and law practices; (iii) competition from new law firm models: boutiques, mono-line firms, virtual firms; and (iv) competition from newly-enabled networks of smaller firms. These are both alternatives to large firms, and also modes of practice that are less dependent on hiring large numbers of new lawyers every season.

Quicker, Better, Cheaper. In short, new technology and shifting market forces are creating opportunities for new ways to deliver legal services and new ways to organize legal services providers. New ways only emerge where they represent improvements: quicker, better, cheaper.

In almost every case, “quicker, better, cheaper” means finding new ways to get more legal work done with fewer lawyers. And that drives down hiring, and law-school applications and class sizes.

The horror! The horror!          horror_animaatjes-44

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