"… it’s more based on the data I’m seeing on the firms’ financial performance. The data is dismal, and it leads you to certain conclusions. Often consultants draw those conclusions sooner than the firms do, but they’re going to draw the conclusions too."
So spoke law firm consultant Peter Zeughauser, in the WSJ Law Blog, in a scary post titledWill BigLaw Slash Hiring By 90%?. A few more observations:
"Well, we’re still way ahead of 2006 in terms of compensation. We’re going to have a down year this year, and according to some calculations I’ve read, profits-per-partner across the board could be down as much as 30 percent unless there’s at least a 10 percent reduction in headcount."
"I think you’re going to see underpeforming or poorly performing partners managed out, and I’m talking about both equity and non-equity partners. When I talk about poor performers, I mean I’m referring not just to hours and billable rates, but also their ability to attract clients. I hear from a lot of managing partners the lament that “my partners don’t act like owners.” I think these partners — the partners who “don’t behave like owners” — are going to struggle."
These observations beg the question–what drugs do BigLaw managing partners take? Seriously, can you imagine the carnage if PEP are down anywhere near 30%? Because you know that 30% will not be borne equally by all partners–the gorilla rainmakers are not going to be hurt like others. And then there is the question about bank debt, lease guarantees and other financial commitments that are certain to take center stage as the profit numbers plummet.
The real question for law firm customers–are your lawyers going to paying attention to you and your matters while fighting for survival?
SPECIAL NOTE: A few days ago, I posted about Twitter. Well, I took the plunge, and this post is courtesy of a tweet by Ron Friedmann, who also blogs at Strategic Legal Technology. Thanks Ron.