Is it here? To be sure, predicting any storm, let alone the Perfect Storm, is a perilous undertaking. But the stars sure look to be lining up like never before. So take a pinch of salt, throw it over your left shoulder, sit back and let me explain.
Remember back in August when Gerry Riskin predicted bad times were ahead for the profession? His words were “doom and gloom.” If you look at the specific factors he listed as the underpinning for his conclusion, he looks like an awfully good soothsayer. Add some recent data to the mix. This past week, I participated in a Managing Partners Summit and listened to Dan DiPietro, head of Citibank’s Law Firm Group, share his data on 2007 and predictions for 2008. Two days later, I was a panel with Dan at Hildebrandt’s Marketing Partner Forum, so I have heard his data twice in a short period. It sank in the first time. It sent chills down my spine the second. Short story–2008 is not likely to be a year lawyers look back at fondly.
There’s more from my last week that fits in here. I was fortunate enough to have lunch with Susan Hackett, the General Counsel of Association of Corporate Counsel. She spoke to me about how angry her members are with outside counsel. Angry! Not shockingly, the things giving rise to the anger are the things you would guess–rising salaries for starting associates and the ripple effect, the impact of those salary increases on their fees, and law firms more focused on their business than that of their clients. (To this latter point, I believe that it is not wrong for a Managing Partner to be more focused on his or her firm’s business than that of the firm’s clients. It’s just a mistake to let your clients believe that to be true.)
If law firms heard all of this and were lining up to abandon billable hours, provide far greater service and generate more value for the clients, the storm would pass with some positive results and little damage. But what I heard this week is that large and mid-size firms seem to think this is “just another minor meteorlogical event.” They could be right–these law firm leaders are, after all, really smart people. But the wild card here is the economy–back to Gerry Riskin’s prediction. And its not just how the economic downturn will hurt firms. Its how the economic downturn will hurt the firm’s clients with (and this is where Dan DiPietro’s data comes in) not many more things to do to drive up productivity without increasing legal spend. But the client’s won’t have the economic option to increase legal spend–to the contrary, many clients will face CEO demands to dramatically lower legal spend. And too many firms are not ready to respond in a meaningful way.
You know the old saying that firms are never fired, they just aren’t hired for new matters? If the Perfect Storm develops, 2008 could turn out to be the year that the old saying was put to rest and firings became prevalent.