Ten Top Reasons Midsize Law Firms are Disappearing

Fear.MP900414034[1]Oh, for heaven's sake! First we read for years how the major firms are going to go under, disband or simply disappear and now we're reading out go the midsize firms. What's going to be left? Teeny, tiny little firms or solos? What does this mean for the paralegal?

Probably a lot. Already, a new trend is sweeping the country: the combining of the paralegal with the legal secretarial position. That means a new set of skills for paralegals. Does it mean more money? Not necessarily. Is it a downgrade or will the legal secretarial duties no longer be considered legal secretarial and merge with the paralegal? What about those admin duties you're not supposed to charge?

Will paralegals be expected to work longer and harder to meet billable requirements because now they are saddled with legal secretarial duties - i.e., non-billables - and to make up for it and be forever profitable, will hours and expectations go up? Readers, let me know what you think. I'd like to know. Chere

Guest Blogger: Brenda S. Edwards

Creating and sustaining a profitable midsize law firm is challenging, especially in 2015. With many firms shrinking, becoming unstable or simply shrinking, becoming unstable or simply dissolving, both clients and employees are pursuing stability.  While there are many pressures, the following ten reasons are driving forces behind midsize law firm’s financial struggles or failures. 

  1. Top heavy partnership agreements.  While this is not a new phenomenon, the timing of the maturation of these partnerships has exasperated the challenges of operating a law firm’s profitably.   The leverage pyramid has inverted.  Many firms have too many partners, not all of which contribute equally to revenue generation and firm management.  There isn’t enough profitable work to support the firm.  They either have too many employees or too many attorneys that are marginally profitable.  The reverse is also true, where support staff or attorney reductions have been too deep. 

  2. Partners not retiring.  While there is some alignment with the first cause, it may also be unrelated.  Because of the recession and slow recovery, attorneys may not be in a financial position to retire.  Instead they choose to continue working.  In the best cases, they are contributors, productive and profitable.  In the worst cases, they create limited value and profit, yet expect to maintain the same level of compensation. 

  3. Fundamental market shift.  This cannot be ignored.  Certain consumer market segments are gone or substantially reduced.  Simple estate plans are frequently provided by internet legal providers such as Legal Zoom rather than an attorney.  Business clients are leaner, have gone out of business, merged with a larger company or simply don’t have the cash to expend on preventative legal fees. 

  4. Clients requiring more and paying less.  Larger corporate clients continue to shift costs to their legal team.  Downward pricing pressure, fixed or flat fee work and third party billing review companies who are valued by the legal fees they save their clients.  Additionally, corporate clients are requiring that firms increase administrative staff to comply with more complex billing, reporting, and compliance requirements. 

  5. Market oversupply.  There are fewer students in law school and fewer graduates, yet the market remains bloated, especially in the second tier legal markets. There has been little improvement in the past 6 years and Bloomberg reported in June that only 64.4% of law school grads are working in positions that require a law degree.   Many recent graduates, unable to find a paid position either take an unpaid intern position or become a solo practitioner.  Ill prepared to run a business and practice a varied range of law, they undercut the market and become potentially difficult opposing counsel which can result in high legal fees which some clients are unable to pay.

  6. Chasing the same lateral partner.  While hiring a lateral attorney with a portable book of business can resolve some problems, it is increasingly difficult. Firms, anxious to make themselves sustainable, are frequently chasing the same lateral attorneys who have a portable book of business.   This is simply a market supply issue.  There are not enough attorneys with portable books to meet the needs of firms that are looking for them.  Once a lateral is identified, the compensation structure that they require may create new problems for the firm including over-compensating the partner or the inability to deliver the anticipated new business. 

  7. Lack of strategic thinking.  Continuing to think that the market will recover to pre-recession levels and not making decisions, in some instances, unpopular choices to create a sustainable firm. 

  8. Costs continuing to escalate.  Health care costs and increased regulation are just two examples.  For the majority of law firms personnel costs and then occupancy are their two most costly line items.

  9. Not hiring business people and if they do, not letting them manage the business.  Strong management will make the hard decisions.  While some firms have strong executive committees with strong business background, many do not.  The traditional “country club” law firm structure does not align with lean market driven management. 

  10.  Client Hoarding.  While potentially protecting a partner or practice group, it does not help the organization and makes that practice group vulnerable if there is a change in decision making for their client.

Firms can address difficult internal operational challenges.  External market factors will require thoughtful strategies and adjustments.  Law firms that are proactive, well managed and aware of the changing market will create both a profitable and sustainable future.

About the Author: Brenda Edwards is the Executive Director of Phoenix law firm Jaburg & Wilk.  She has expertise in business management and marketing of midsize law firms.

Paralegal Jobs Are Vanishing According to New AP Analysis

Bad, Bad News for Paralegals

Women abstractParalegal jobs are vanishing according to a recent analysis.  In fact, out of the top disappearing jobs, paralegal is in the top 7 positions.   

For years, the Bureau of Labor Statistics predicted that the paralegal position was one of the fastest growing fields.  In fact, as recently as 2011, the BLS predicted that from 2010 - 2020, paralegals would  have an 18% growth rate (average). No longer. 

The position is being obliterated by technology according to a recent analysis by the Associated Press.   "Year after year," the analysis states, "software that runs computers and an array of other machines and devices becomes more sophisticated and powerful and capable of doing more efficiently tasks that humans have always done. For decades, science fiction warned of a future when we would be architects of our own obsolescence, replaced by our machines."  Here's a great example:  travel agents -  similiar to paralegals in that it is a "helping" position.  Now, gone due to technology.

Unfortunately, paralegals are included in the millions of middle-class paid jobs vanishing, the most vulnerable being those jobs that are "routine and repetitious."  That particular phrase was actually in the ABA definition of a paralegal some years back.  How little we knew.

"There's no sector of the economy that's going to get a pass," says Martin Ford, who runs a software company and wrote "The Lights in the Tunnel," a book predicting widespread job losses. "It's everywhere."

Most of the jobs will never return, and millions more are likely to vanish as well, say experts who study the labor market. What's more, these jobs aren't just being lost to outsourcing and they aren't just factory work. Increasingly, jobs are disappearing in the service sector, home to two-thirds of all workers.

They're being obliterated by technology.

What is effecting the paralegal field in addition to technology?  Law firms today are seeking highly sophisticated and experienced paralegals. Those without technology knowledge and ability are at the highest risk.  Those who are not updated on the latest laws, procedures and who are not innovative or motivated are also at a very high risk.

Additionally, the five-year recession has seen associates dropping their level of assignment to cover paralegal duties in order to put forth enough billable hours. Rocky law firms, rather than see paralegals as cost-efficient and saving attorneys time, view the higher associate rates as more beneficial to the firm despite the fact that paralegals cost less and are frequently more profitable. It can make the top line more impressive resulting in the potential for higher bank loans, revolving credit lines and more. 

What can paralegals do to reverse the trend?  Maybe not much given the trend affects just about every service and manufacturing position.  However, you can leverage your paralegal background and propel yourself into new or  hybrid positions.   Here are just a few: 

  • Become a technology wiz in your specialty.  Software programs come and go and are updated frequently.  Being a wiz also means you are on the prowl every day for the latest trends and new programs.
  • Hot jobs are hot as long as the economy holds up, the specialty doesn’t cool down or schools do not answer the call to churn out trained candidates.  How familiar are you with the future of your specialty? If you were previously an ERISA paralegal, chances are you no longer hold that position.  Mergers & Acquisitions specialists were big losers in the recession.  If you were in M&A, did you prepare for an upcoming recession with a second specialty? Cross training is one way to make yourself more valuable in a firm. You may be the best paralegal the real estate department has but if that entire department is being shutdown, it won’t matter. But if you are also good at litigation, you may find yourself being moved into that department.  If not, you know why you may have been out of work for a long time.
  • What transferable skills do you have?  Take a good, hard look at your background.  Medical background? Construction? Insurance? Teaching? Police? Accounting? How can you combine your skills and leverage that background - even in a different field.    
  • Use social media to get your reputation well-known. We've said for years: network, network, network.  Use LinkedIn.  Make sure you have tons of connections. You just never know who knows what and where.
  • Expand your skill sets.  Are you a litigation paralegal without comprehensive eDiscovery knowledge?  You're on the target list, believe me.  I have listened to many, many paralegals declare that their firm does not "do" eDiscovery, so therefore there is no urgency to learning about it.  These buggy-whip, short-sighted paralegals are in for a big surprise if their firm starts losing business as a result and they are the first to go.  (BTW, the Organization of Legal Professionals, OLP, offers many online courses in eDiscovery and Litigation Support:  www.theolp.org).
  • Be prepared to move into a different position all together.  For example, the Litigation Support field has a shortage of professionals schooled both in law and in technology.  Who better than a paralegal to move into a Litigation Support position?  The pay is excellent, the opportunities for the future very good.  The field will eventually evolve into something that we probably have not even envisioned, particularly since the legal field was one of the last to get on the band wagon.

Don't be short-sighted. Change is here to stay and in this century, most of us are not prepared for how fast it is happening. My strongest suggestion is to ride the horse in the direction it is going.  You'll be glad you did. 


New LitSupport Survey Shows Managers Get Big Bucks

Survey2The Organization of Legal Professionals (OLP) has been surveying Litigation Support Professionals to uncover interesting insights and valuable facts to help LSPs make the most of their careers.  The survey, sponsored by ZyLab and Career Numbers, is unlike traditional salary and utilization surveys. The survey is left open to regularly update the information and release new and interesting insights.  Additionally, OLP/Zylab will continue to provide free access to the updated results to each person who completes the survey. 

The Organization of Legal Professionals (OLP) is a non-profit organization providing continuing legal education and certification exams to the legal community.  The organization offers courses in eDiscovery, litigation support, project management and other timely topics.  OLP also offers over 40 scholarships per year to long-term unemployed legal professionals. 

The goal of the survey is to empower legal professionals to make the most of their careers by providing personalized career information, giving them better insight into the implications of their decisions. Companies are using data to earn larger profits, sports teams are using data to build better teams, and now it’s time for law firm employees to start using data to make the most of their careers.

The survey replaces generic statistics such as “people with law degrees earn, on average, 20% more over their careers than those with Bachelors degrees” with smart comparisons, such as “people like you (based on your education, experience, career goals, work ethic, and more) earn, on average, 34% more over their careers by attending a top 25 law school program, feel 42% more satisfied with their career, work 6 hours more per week, and feel 14% more stressed.”

The survey has been completed by almost 300 firms across the U.S. 

Here are some of the many insights uncovered to date:

  • Nearly three-quarters of Litigation Support Professionals (LSPs) reported being paid an annual salary with the average salary equal to $75,700.
  • The average Litigation Support Manager earns $111,000 per year while their direct reports average $89,300 of total compensation per year.
  • 65% of LSPs received an annual bonus, and a super majority reported that the size of their bonus was based on merit and/or their employer’s success. 
  • The average annual raise was 3.1% this past year, with the highest and lowest earning LSPs receiving the lowest annual raises on a percentage basis.
  • 55% of LSPs agree or strongly agree that their employer’s technology makes it easy for them to do their work well, while 27% say that their employer’s technology is antiquated or somewhat antiquated.
  • Nearly 32% consider themselves satisfied with their positions while almost 30% are dissatisfied with the recognition that they receive.
  • More than half of LSPs believe that their employer’s reputation is within the top 20% of their industry.
  • 55% are satisfied to moderately satisfied with their work/life balance and over 70% are moderately satisfied to satisfied with their boss.
  • LSPs consider on-the-job training to be the most valuable training method, followed by Webinars, Seminars, and then Self-Study.
  • Two-thirds of LSPs are satisfied or mostly satisfied with their career, while only 51% are satisfied or mostly satisfied with their compensation.
  • 62% of LSPs have a private office while 52% have an office window.
  • While less than 10% of LSPs are actively looking for a new job, the majority are open to better employment opportunities.

Summary:  Hot! Candidates are paid well, the work is interesting and while LSP’s do not feel they receive as much recognition as they would like, it appears to be an area of strong consideration for those with excellent technology background even without legal knowledge.

This is a small portion of the insights that are available to participants who have completed the comprehensive salary and utilization survey.  OLP/Zylab will continue to update the information, so check back quarterly for updated reports and new insights. For more information or to participate in the survey, please visit www.theolp.org.  For more information regarding ZyLab, go to: www.zylab.com.

Going On's.....This 'n Thats.....

Fighting computers
Tough week?  Take a few moments to enjoy our guest blogger, Celia Elwell, RP and senior paralegal, who sends us interesting links and articles.  Enjoy!

Judge Throws Out RICO Claims Against Johnson & Johnson, by Shannon P. Duffy, The Legal Intelligencer

Federal Judge Dismisses BP Oil Spill Fraud Lawsuit, by Maureen Cosgrove, JURIST

Jury Awards $900 Thousand In Age Discrimination Case, by Ellen Simon, Employee’s Rights Post Blog

Third Circuit Okays Collection of DNA from Criminal Suspects, by Nathan Koppel, Wall Street Journal Law Blog

Preparing Americans for Death Lets Hospices Neglect End of Life, by Peter Waldman, Bloomberg

LegalZoom Sued by Alabama Bar Group for Unauthorized Practice, by Stephanie Rabiner, Strategist, The Findlaw Law Firm Business Blog

The Grey Area of Unauthorized Legal Practice, Law Librarian Blog

Handle Loaded E-Discovery Tools With Care, by Sean Doherty, Law Technology News

Are Student Cell Phone Records Discoverable?, by Joshua A. Engel, Law Technology News

Conn. High Court Dismisses Criminal Case for Discovery Abuse, by Christian Nolan, LTN Law Technology News, Law.com

Writing to Persuade, Legal Writing Prof Blog

So Your Screwed up That Research Memo to the Partner, Now What?, Legal Skills Professor Blog

Typography for Lawyers - the book, by Raymond Ward, the (new) legal writer

The Importance of Printing it Out, by Raymond Ward, the (new) legal writer)

In a Field of Reason, Lawyers Woo Luck Too, by Benjamin Wieser, The New York Times

10 Reasons Why Most Lawyer Blogs Are Boring, by Cordell Parvin LLC, JD Supra Blog

Why Facebook's Facial Recognition is Creepy, by Sarah Jacobsson Purewal, PCWorld

Spies Like You?, by Josh Hyatt, CFO Magazine

5 Tips for Selecting PPC Keywords, by Jason Tabeling, Search Engine Watch

Gmail’s New Features: A First Look, by Eric Mack, PC World

Google Plus for Lawyers, Legal Skills Professor Blog

Online CLE Session: 60 iPhone and iPad Apps in 60 Minutes for Lawyers, iPhone J.D.

MoreLaw Lexapedia (includes Verdicts and Decision, Recent Case Law Updates, and other valuable links)

Plain Language (a federal government website - check out Tips and Tools)

Asset Search Blog published by Fred L. Abrams, Attorney

Municode (free access to most municipal codes)

Paralegal: The Only Legal Job Creating Its Own Positions & Making Lots of Mula

J0401003 The paralegal profession was created out of whole cloth.  Sometime about 30 years ago, someone (I don't know who) had an idea to title a person who was moving out of the legal secretary position but not quite into the associate position, a paralegal.  On top of that, whoever this person was, figured out that the paralegal could get paid more dollars and -wait! wait! don't tell me! - could also get billed out handsomely to the client but not so handsomely as to scare the client away.

Fast forward to the present, and the paralegal does it again.  Only this time, it's called......(drum roll, please) - an eDiscovery Paralegal.  Hot, hot, hot, folks.  The field cannot get enough people for these positions.  Literally.  It's very hard to find a person who doesn't need to be lawyer but does need a thorough understanding of the law and who doesn't need to be a computer programmer but does need to be techie savvy. Kind of a techie/quasi-lawyer hybrid.

Is there such a person?  There sure is if you are a paralegal well-versed in eDiscovery and technology.  Here is a sample of a job posting for just such a person:

"eDiscovery professional with a Paralegal background.  Lead eDiscovery efforts within the company’s Corporate Legal Department.  Support document retention and electronic discovery (eDiscovery) in multiple locations throughout the world. Manage the tracking and storage of voluminous corporate documents worldwide.

Develop and implement processes related to document retention. Interface with in-house and outside counsel to manage electronic discovery (eDiscovery) collections and productions as part of the litigation discovery process.  Collect electronically stored information for production in litigation matters.

Knowledge of: EDRM, the Sedona Principles, ESI, Sanctions, Triggering Events, latest technology, the discovery process, New Federal Rules, collection procedures, processing & review procedures. Must be able to work well with legal service providers.  Must be familiar with: Documentum, Symantec Enterprise Vault, EnCase, ARMA, Information Risk Management; IPRO, 
Relativity, iConect, Concordance, Summation, FYI and other programs."

Salaries are excellent ranging anywhere from $60,000 to over $100,000 depending upon several factors (plus overtime in many instances.)  You can work for a law firm, in-house legal department or a vendor.  The position has upward mobility opportunities.  You are not locked in as a paralegal with only a junior or senior level designation for the rest of your career.  You don't hit a hard salary ceiling because you'll never make partner.  You actually get off a sticky floor.

In fact, if you are a paralegal and have the skills and given that eDiscovery is a) here to stay b) exploding as each minute ticks; and, c) crying out for someone with your background, why wouldn't an enterprising paralegal jump for an opportunity like this?

Probably because the eDiscovery field is so new that there are no real standarized job descriptions, titles or, for that matter, formalized training.  Aha! I say.  That's changing.  And, yes, I'm bringing to your attention The Organization of Legal Professionals (www.theolp.org) because this non-profit is offering a new, online, interactive 8 week course that is going to give you the right formal training to put to use and skills to create a position within your firm or other entity.

That's what paralegals do. The history of Paralegals is consistent: get the training and then figure out that they can create positions because........law firms need them and law firms will buy what they need. The paralegal position is the only job within the legal field that is flexible enough to allow creativity to develop positions directly in line with current trends.  Think about it: legal background, technology, team player, non-attorney, essential to the overall operation and profit of a law firm.  You simply take your background and roll it into the ever-changing needs of a firm, giving yourself a new title and moving up an otherwise invisible career ladder.

Paralegals did this with case managers; litigation support positions (most lit support managers came up through paralegal); the paralegal administrator; trial specialist and other positions.  And now, the eDiscovery Paralegal.

Take the Advanced eDiscovery (Next Level) course with The OLP.  It starts on Tuesday.  It meets twice a week for 8 weeks, is taught by very seasoned pros and gives you a solid understanding of eDiscovery past the basics.  Paralegals have done it before and will do it again:  taking skills, knowledge and know-how and meeting the needs of the firm and the client in previously undefined but necessary jobs. It's power - sure as shootin', it's power. 




"Biglaw Plods Towards Mastodon's Fate"

Goodness, gracious, this is a remarkable discussion about the future of big law firms! Thanks to lawyer, author, & blogger Robert J. Ambrogi for highlighting it in Legal Blog Watch:

"When the general counsel of a major corporation says that the current model of the large law firm is heading towards extinction, ears perk up throughout the legal industry. That is precisely what happened after Sun Microsystems GC Mike Dillon wrote on his blog last week that Biglaw is going The Way of the Mastodon. His thesis is that large law firms exist primarily as aggregators of specialized legal expertise -- by combining multiple legal disciplines, firms can provide 'one stop shopping' for their clients. That used to make sense, in the days before the Internet when it was inefficient for a company to hunt down all the specialized legal talent it might need. But with the Internet, the model is changed, Dillon says."

If you work for a big law firm, I strongly recommend reading the entire post!

"Orrick's Staffing Moves Pay Off -- Will Other Firms Follow?"

So, would you want to work in Wheeling, West Virginia? Read all about the separation of staff from lawyers in this article from The Recorder:

"When Orrick, Herrington & Sutcliffe announced it would move scores of support staff to a small industrial town in West Virginia, lawyers inside and out were skeptical of the quality of work and the return on investment.

"Five years later, the 980-lawyer firm says it's saved more than $20 million thanks to the Global Operations Center in Wheeling, W.Va. -- all without diminishing its services.

"But even with the purported success, most other large law firms still haven't jumped to copy it for themselves. Leaders say savings wouldn't be significant for their firms and the cost of splitting attorneys from staff would be too high [emphasis added].

"'We're not like a big corporation,' said Francis Milone, chair of Morgan, Lewis & Bockius, which employs 1,300 lawyers. 'We depend very heavily on personal relationships between lawyers and staff [emphasis added], and it would be a very substantial change and disruption if we told people you either don't have a job or you can move to wherever.'

"Consultants say that law firms will eventually have to bite the bullet, especially with the ever-increasing cost of doing business, amplified by the recent round of associate salary hikes.


"The firm hung its "O" on the old Wheeling Stamping building in the spring of 2002 and fielded more than 6,000 applications for 73 positions [emphasis added]. Now with 160 employees, the around-the-clock center handles everything from computer network management and help desk services to billing and collections as well as library services, human resources administration and marketing research. Most recently, the firm even added paralegals to the mix [emphasis added]."

Really, what do you think about working in an office described as, "No lawyers practice here, just those who support them"?

"Quick naps do the job at this law firm"

Calling all workaholics! Be smart & take some time off for a rejuvenating nap..at work!

"The Power Room at one Raleigh law office isn't a place where high-profile deals get done or important meetings occur.

"It's for snoozing.

"As workers log in longer hours, there is increasing interest in the revitalizing power of naps. One company in New York sells 20- minute sessions in nap pods. A recent study in Greece showed that regular naps can reduce the risk of heart attacks.

"Honestly, who hasn't had stressful workdays when an afternoon siesta would have hit the spot?

"Put the partners at Kilpatrick Stockton in the pro-nap camp."

"National Firms Stake Claim in Phoenix's Robust Economy"

Hmm, ever thought about moving to Arizona? Sounds like firms in Phoenix are heating up!

"It may be a dry heat in Phoenix, but it's also a hot legal market for some national law firms moving into the desert city to take advantage of the region's flourishing economy.

"Ranked the fifth-largest city in the nation with 1.5 million people at the center of a metropolitan area of 3.8 million, Phoenix has the fastest-growing population of any major U.S. city, with professional and technical jobs creating the biggest surge in its employment sectors.

"Law firms new to the area want a piece of the thriving hospitality, real estate, construction, aerospace and electronics industries. But the influx of national firms means that some firms with long-standing practices in Phoenix are feeling a pinch from the competition.

'The large national firms are competing for a relatively small number of people,' said Elliott Portnoy, chairman of Sonnenschein Nath & Rosenthal. The 658-attorney firm opened a Phoenix office in June 2006 with seven lawyers from Squire, Sanders & Dempsey."

"Boston law firm plans San Diego expansion"

Oh, boy, firms expanding & lawyers changing firms. See the details in this San Diego Union-Tribune news article:

"The Boston law firm Goodwin Procter has recruited prominent local biotechnology lawyer Stephen C. Ferruolo to launch an office in San Diego as part of the firm's push into California.

"Stephen C. Ferruolo is expected to take much of his client base with him.
Ferruolo, 56, has been a highly visible face for Heller Ehrman, one of the few one-stop-shopping law firms for San Diego's biotechnology companies. He is also vice president and general counsel for Biocom, the region's biotechnology industry organization.

"Also leaving Heller Ehrman's life sciences practice for Goodwin Procter are partner Ryan Murr, several associates and a paralegal."

Nice to see the mention of a paralegal moving too; better, of course, if that person had also been named...