Last week I attended NALP’s Program in New York, which featured speakers who gave us an overview of the Big Law legal market and hiring trends. Gretta Rusanow provided a summary of the Citi Hildebrandt Client Advisory Report, which is based on Am Law 100 Firm leaders’ feedback. The report revealed the following findings:
- Despite the uncertainties of the overall business market, AmLaw 100 Firms are growing an average of 5% a year.
- New York and DC are seen as the greatest growth-potential markets for legal services, followed by Silicon Valley.
- Only 59% of lateral Partner hires are considered to be successful, as opposed to 72% of “homegrown” lawyers promoted to Partner.
- Opportunities to become an Equity Partner remain very limited.
- General Counsels, many of whom are former Law Firm Partners and know first-hand how law firms bill, are putting a great deal of pricing pressure on law firms for alternative fee arrangements, more efficient service models and predictable pricing. At WCE, we are seeing a greater focus on pricing experience in BD positions.
- Alternative service providers like the Big 4 and in-house legal departments are taking business away from law firms.
- Law Firm leaders are experiencing significant pressure to reduce overhead expenses. We are seeing more and more firms move from private offices to a shared office space model, especially in non-income producing departments like Marketing and Recruitment.
- We are seeing more practice management processes being put in place by firms with a focus on pricing strategies and monitoring budgets for matters.
- Some practice areas are embracing artificial intelligence, especially in E-discovery, contract document analysis, due diligence and document review.
- Growth industries for the future include Technology, Healthcare, Energy, Private Equity, Life Sciences and Pharmaceuticals. Financial Services no longer offers the greatest growth opportunity for large Law Firms.
It’s true this is a very competitive marketplace for large firms, but interestingly, the top 25 AmLaw Firms had very strong revenues in 2017. The Citi Hildebrandt report identified the 15 most successful firms in the AmLaw 100, and it included “smaller” firms who had high profits, not just revenues. What we learned was that to be amongst the most successful firms going forward, you must have a strong brand and clients must be able to differentiate your firm from competitors. To accomplish this, you attorneys need to stay close to the client and know what they need, even before they do.