The Great Recession of 2008 did more than William Shakespeare ever could when it comes to reducing the number of new lawyers, both locally and nationally. Perhaps even more startling, the recession is revolutionizing the legal profession from Miami to New York and across the continent.
Shakespeare’s “Dick the Butcher” sought to kill all the lawyers, viewing them as paper-pushers who stood as the last barrier to tyranny. While far from being killed off as a class, a constricting economy over the past four years has led to a reduction in enrollment at local law schools and a sluggish hiring trend in South Florida.
“The legal market is in an unprecedented state of flux,” says Robert H. Jerry II, dean of the Levin College of Law at the University of Florida. “Unless they adapt, many traditional firms will fail.”
The good news is that the caliber of attorneys is up and the downturn has helped some local firms, particularly the small- to mid-sized firms, deepen their bench. More good news — perhaps — is that the recession has led to a revolution within law schools and law firms for more reliance upon technology. This development, in part, is aimed at cutting costs by letting computers do a lot of the time-intensive work originally allotted to associates.
These changes are a direct response to advancements in technology and overall changes in corporate culture, says Richard A. Rosenbaum, chief executive officer of Greenberg Traurig. In the past, corporate executives were more focused on results and less consumed with cost, Rosenbaum says. Now they not only want results, but also they want it at a reasonable price. With that mentality, he says, the sky’s-the-limit legal model of the white-shoe East Coast law firm is headed for extinction.
“New York firms have high-priced locations,” Rosenbaum explains. “They are paying people a lot of money and paying rent and charging rates that are enormous. That business model is being threatened. Firms have to deliver quality work at a fair and reasonable price. Firms that are able to do that are going to be just fine. Firms that cannot are going to get smaller — or worse. You’ll see consolidating, or going out of business.”
The recent mass layoffs and reduction of partner profits at New York’s Weil, Gotshal & Manges bears out his hypothesis, Rosenbaum says. Last June, the prestigious law firm that recently handled the Lehman Brothers bankruptcy fired 60 associates, amounting to roughly 7 percent of Weil’s junior lawyers, and reduced compensation for roughly a tenth of the firm’s 300 partners. In addition, 110 members of the support staff, mostly secretaries and paralegals, lost their jobs.
The blood-letting stunned the legal world.
What happened to the now-bankrupt New York-based firm of Dewey & LeBoeuf also serves as an object lesson, says Steven Sonberg, managing partner of Holland & Knight. At the time of its bankruptcy filing last year, more than 1,000 attorneys worked for the firm in 26 offices worldwide. “We looked at the things that we thought went wrong there to see if we could bar against them,” Sonberg says. “Large amount of debt was one of the factors. They were promising bonuses and paying outrageous salaries. We have no debt.”