2012 in 2009, for BigLaw: No Ordinary Downturn

Journalist Gregg Braden says that cosmic shift scheduled for 2012 will happen because of "a reversal of the Earth's magnetic poles."  For BigLaw, it is appearing that what's being referred to as "2012" is already under way. No, in the legal business, this is no ordinary downturn.  This is a systemic and irreversible upheaval.

Take breaking news about Cravath, Swaine & Moore.  As Susan Beck reports in THE AMERICAN LAWYER, this once pillar of the White-Shoe Legal Establishment experienced a 13% drop in revenue and a 24% decline in PPP.  Its cash cow - that deep-pocketed Wall Street - is no more, at least not for a long time.  Beck observes that "the future" of Cravath" and about 14 other elite firms "is as uncertain as the Wall Street world they draw their strength from."

The layoffs go on and on.  The latest are the 10 more associates cut at Wildman, Harrold, Allen & Dixon.  Nixon Peabody reduced first-year salaries to $145,000 from $160,000.  Meanwhile associates at Nixon Peabody are bumping into Pay-for-Performance slashes of up to 20 percent in salary.

What's going down, pun intended, in BigLaw is analogous to what occurred in the early 1980s in Corporate America.  That whopper of a recession, along with the emergence of a global economy driven by technology, triggered a model restructuring which is still a work-in-progress.  The term "redundancy" was shorthand for radically eliminating full-time high paid employees who had benefits. 

A pioneer in this former GE Chief Executive Executive Jack Welch was nicknamed Neutron Jack.  After he visited a GE facility, the buildings were left but the people were disappeared.  The new workforce became just-in-time, were paid standardized contract wages, and had no benefits.  Management visionary Charles Handy described this emerging model in his book "Age of Unreason."  Incidentally, those good corporate jobs lost today are never coming back. That work has been re-distributed among just-in-time workers like myself.

The current economic crisis is plenty of reason as well as an excuse for law firms to make urgency reductions-in-staff.  But you can bet they're calling in the consultants on how to restructure, particularly since, as Beck notes, even the deepest pockets are sending letters demanding, not requesting, discounts in their bills. Often the General Counsel has to get approval for expenditures from Central Purchasing.  The spending leash is a lot shorter.

In addition, we all know about technology. Cloud computing, for instance, makes much of law more portable.  That makes it more possible and lower cost for lawyers to start their own boutiques. And those boutiques, like The Rimon Group, can be virtual.  Virtual means billing at significantly less than what BigLaw has to charge because of overhead.

Then, of course, there are all those model deletions and additions involving outsourcing, automation, and doing more assignments in-house.

Prediction:  Law will be not for those who want to become wealthy but, like writing, for those who love the craft.  Some anticipate starting salaries in larger law firms at about $75,000.

Comments

[Jim]

"who are the 'some'...?"

well, me (1L).

[Jack]

So are we assuming that "Biglaw" encompasses only the 14 firms that rely on Wall St. for the majority of their business that the author refers to?

[j]

Who are the "some" anticipating salaries of about $75,000?

[House of Cards]

This has been predicted: http://www.youtube.com/watch?v=BufcBAlyU04