From the Front Lines: Change Is Never Easy
Altman Weil has released the results of its Law Firms in Transition flash survey. The results are fascinating. Here are some highlights :
- The top four areas of permanent change identified by all survey respondents were: more price competition (chosen first by firms in all size categories), a longer partner track, more contract lawyers and more non-hourly billing.
- The top four changes identified as temporary were: reduced first-year classes, reduced associate salaries, lower profits per partner and reduced leverage.
- Seventy-one percent of respondents indicated that the size of their law firm made it more competitive in the current economy; 26% felt their size was not a factor, and 3% were not sure. Not one law firm saw its size as a disadvantage.
- Despite their belief that competitive pricing is key to winning new clients, a very small number of law firms, and none with 250 or more lawyers, reduced any of their billing rates in 2009. (Wow!)
Here is Altman Weil principal Tom Clay's take on the questions regarding alternative fees: "Law firms are slowly increasing the amount of alternative fee work they do, but most still haven’t figured out how to structure and staff projects so they are more profitable."
I've written before that clients should be wary of firms that are based on an hourly rate model trying to compete in the alternative fee world. One cannot be fish or fowl. Best evidence of potential problems? The findings of temporary changes--that reduced leverage and reduced profits per partner are only temporary. The conclusion? Many of these firms are resisting change and believe that we are experiencing short term deviations from an on-going norm. Clients beware.
