Today’s Wall Street Journal has news about 3 major companies’ profits being higher than anticipated. Coincidentally, they all raised the prices of their products.
Despite "high" hourly pricing in the legal community, one wonders whether there isn’t room to raise prices further. If this is something you may want to consider for your strategic plan, see my article that suggests how and when to adjust fees.
During times of economic crisis, law firms need to be even more careful with the economics of their practice, according to writer Shannon Nelson of Law360.
I was talking to Patrick Lamb today, asking his opinion about the impact of today’s financial crisis on law firm fees. His response brought me up short, though it shouldn’t have. He said that restricted credit lines have impacted everyone. After all, even banks won’t loan to other banks overnight funds as was normal before the crisis for fear of the 2nd bank’s failure. If banks won’t loan to one another, how can we expect banks to loan funds to law firms? Thus, collection policies of law firms must be carefully monitored and honored. Collection of billings, high realization rates, is essential to the survival of law firms in today’s environment.
Will lawyers actually see their “second season,” their “red zone” of life? Will the 400,000 lawyers projected to retire within the next 10 years have to work or will they be able to retire? Will lawyers be just like others in our country today who are seeing their “nest eggs” dwindle by at least 50% in just the last few weeks?
A recent study by a major bank suggests that the revenue of large law firms have been flat or decreased 10%; the next tier of law firms experienced 5 to 15% declines.
But, 2009 should see better results according to this study. Firms have absorbed the increased compensaton for associates. Firms have moderated the growth in their head count, both of new associates and lateral movement that doesn’t return immediate results.
There will be more segmentation of work by corporate law departments. This will provide work for smaller law firms from General Counsel who will be more cost conscious. This will especially be true if the current "value" emphasis by members of ACC (Association of Corporate Counsel) comes to pass. There will still be work that will not be price-sensitive.
One pundit commented today that our 401 K‘s have now become 101 K‘s!
With close to 400,000 lawyers (Baby Boomers) slated to retire in the next 10 years, the legal profession will be rocked! How, however, no one is yet commenting.
With the current financial collapse, and investment values plummeting by 50% in many cases, we may not see so many retirees, after all. Even lawyers may have to work longer years than they anticipated. We may have one more generation than contemplated in the work place. Will we see even more challenges in an effort to understand why each generation reacts differently to the same stimuli? How will we reconcile the differing values between, and now among, generations? As Rodney King once said, "Can we all get along?"
With the recent financial crises still in the news, it is helpful to find a little levity. While coaching a client of mine today, we were talking about Bank of America buying all the other banks at bargain rates.
His comment: Bank of America is an oxymoron, it should just be called The Bank!
The State Bar of California recent answered several questions about the FDIC and clients’ trust accounts. While their comments relate to California lawyers, their comments are instructive for all lawyers with clients’ trust accounts. Caveat: Check your jurisdiction’s rules and regulations, including those of both the bar and the banking associations.
The September 15th edition of Massachusetts Lawyers Weekly has two articles, one on top of the other, each with the photograph of a rather attractive woman. No sexism intended here, but this is the oldest tactic in the business to sell newspapers!
The first article discusses a proposed change in a Massachusetts rule of professional conduct that would require a successor contingency fee lawyer to be responsible for the predecessor counsel’s fee, unless there is an agreement to the contrary in effect. Obviously, this rule has prompted controversy. Lawyers in Massachusetts should be quite wary of this proposed rule and make their voices heard.
The second article features a well-endowed lawyer who will be the cover photograph for the 2009 Beautiful Lawyers Calendar, featuring 12 lawyers “who reportedly embody ‘the style and spirit’ of the Massachusetts bar.” If other states do not follow suit, there may be a heavy influx of male lawyers to Massachusetts. And if other states do follow suit, we may see the beginning of the demise of either Sports Illustrated bathing suit issue or Playboy!
Note to my readers: After my previous post about our economic and political systems collapsing around us, I had to attempt some levity, even if not PC … In advance, I ask for forgiveness, hoping you will see the humor in this as I do. Perhaps, though, you need to read the newspaper to get the full impact of my reaction. <g>
The days of multi-million dollar profits per partner and rapidly rising triple-digit associate salaries were never real for most law firms, especially when considered in light of the demographic of law – more than 70% are in small law firms. But, now firms big and small, conservative and highly leveraged, all feel the business pressure from the economic downturn.