Very powerful post by my good friend Gerry Riskin in his great blog, Amazing Firms, Amazing Practices. The post, Doom and Gloom for the legal profession–it’s coming, contains Gerry’s prediction that “our legal profession is in for very rough times.” Gerry is very much a “glass-half-full” person, so reaching this conclusion in spite of his optimistic nature, should cause every one to take a deep breath and spend time contemplating Gerry’s post and suggestions.
I am left with this question for my friend: what are the things you see that give rise to your concern? And are they tied to the next U.S. election or is that merely a benchmark for when you think the problems will be apparent?
UPDATE: Gerry Riskin responds:
Patrick Lamb posted the following comment both here and on his own popular blog: In Search of Perfect Client Service in his post: Gerry Riskin’s Forecast: Stormy Times Ahead.
I think he deserves a response:
Patrick’s comment/question: Gerry–very powerful post. Not one that I disagree with at all, but can you share with us the signs you see that lead you to this conclusion? And are the elections tied to result or simply a benchmark for the time by which you think the changes will be apparent? Ciao.
My response: The US election is a process that sees powerful interest groups exercising their discretion in a manner which will increase the probability of their preferred candidate(s) being elected. As a result, a temporary and indeed unsustainable economic climate may be manifested. I think things get very real about six months after US presidential elections. With outcomes certain, interest groups lose their motivation in a hurry – at least for a while. As for the indicators themselves, I am afraid to start because where do I finish? However, here are some things to examine:
Price of oil
Price of precious metals
Increase and decrease in “real” jobs
Geographic location of those jobs
Political stability of job locations
Foreign relations as they affect business
Balance of Trade between countries and regions
Housing markets (not just prices – but demand)
Auto market (demand)
Credit levels (or should I say “debt levels”)
Interest rates (they are not falling, in fact, get ready…)
The advent of the largely unregulated Hedge Fund industry
The establishment pensions that invest in Hedge Funds
The Domino effect – how one indicator impacts many others
And specific to the legal profession:
The disparity between views of General Counsel and Outside Law Firms
Associate starting salaries (and consequential impact on all salaries)
“De-equitization of partners” trend
“Law firms going public” (anticipated) trend
The obsession by partners on remuneration
The expectation of continued increasing revenues, PPP and PPL
The surrealism of the financial expectations of new lawyers
Comments from Citigroup’s law firm market specialists
Disclaimer: Yes, I obtained a business degree before law and yes I studied economics and yes I subscribe to reliable publications like The Economist but I do not profess to be able to predict the stock market or future currency fluctuations. In fact, I will admit that my post is based to a large extent on a hunch – intuition (I read Blink by Malcolm Gladwell so maybe this is OK).
Punchline: If there were a fund that invested in the legal profession worldwide (at least in the western world) I am not a buyer – I might even summon the courage to put some money at risk by “selling short”.
In closing, perhaps not you, Patrick but there are many who will think I am completely wrong – I not only respect their right to hold that view, I hope that their view prevails. I post this because if there I seven a significant possibility I am right, as stated in my original post: “My message to Managing Partners is not to become pessimistic but simply to have a contingency plan in place.”
Many thanks, Gerry, for such a detailed and thoughtful response.