Friday, May 22, 2015
In my first post of this series, I asked whether business leaders had unknowingly provided the legal industry with a long-term solution to declining interest in the legal profession and potential waning influence. I suggested that business leaders may be the driving force that ends up saving the legal profession, and its "respectability". In my second post, I discussed the current state of in-house attorneys. In this post, I would like to look at the current state of private firms as it relates to the in-house attorney discussion. My view is that the competitive marketplace reactions of a growing number of firms are partially contributing to the dimming of their own future prospects. Firms will need to evolve rather quickly; how they can, I’ll discuss in a future post. However, because of the firms’ relatively weaker position compared to corporations, many firms are in very precarious circumstances.
In this interim period between past firm dominance and the future corporate acceptance of Professors Bird and Orozco’s “corporate legal strategy” (in which attorneys are fully accepted and integrated as part of business teams in corporations, resulting in greater legal opportunities), firms are struggling. From my discussions with attorneys, I have learned that many private firms are beginning to intentionally screen out attorneys that even appear to be on a path to in-house corporate life in the future. They feel less inclined to provide expensive training for someone that has (in their perception) little intention of making a career of private practice, especially their private practice. This diminishes the number of opportunities for new lawyers. Firms have a harder time training the new lawyers they have, because much of the basic business work is now taken up by in-house counsel. Corporations, for their part, have exacerbated the lack of work for new associates by using their increased influence and wealth to insist that only the most senior firm attorneys handle their corporate work—perhaps shortsightedly robbing firms of talent continuity that has historically benefitted the corporations in the end. Expensive summer clerkships and recruiting drives have all but disappeared.
Additionally, firms have become focused on hiring attorneys with portable business for the “quick hit” of income and are less concerned about hiring new law graduates. This cannibalization of mature legal talent has always occurred, but it now seems to be a much greater part of firm business plans. It has resulted in some lawyers commoditizing themselves, rather than some of their clients doing so, perhaps further weakening the profession's "respectability". Of course, because the legal industry is currently well staffed, this “horse-trading” approach will work for the present. However, it will eventually be unsustainable—as lawyers retire, there will be fewer talented lawyers to replace them or have the capacity to buy out retiring partners’ percentages. Of those, even fewer still will invite the rigors of private practice if the rewards diminish.
I, for one, am not a complete believer in the “end of Big Law”, or any size "Law", for that matter. (The late Professor Larry Ribstein discussed the subject here--disappointingly, he only briefly touched on the in-house counsel effect, and instead, focused on the firms themselves.) However, I do believe in the necessary evolution of “All Law”—where the legal industry (firm, in-house, and academia) evolves to a point of natural and mutual support which benefits society as a whole (creating greater “respectability” for all lawyers)—and businesses will initially play a dominant role. How will businesses do so? More soon in a post coming your way!
--Marcos Antonio Mendoza