Loose Lips Around Potential Cutbacks at Large Law Firms

Earlier this week, Lisa Smith, managing director of the law firm consultant Hildebrandt Baker Robbins, made news in a blog post and subsequent interview with The American Lawyer by announcing a “possible reduction or shifting of 17,500 of the 65,000 non partner jobs, which is nearly 27% of the total” at large law firms.

Smith’s subsequent AmLaw interview backtracked on the number by saying that these were “just some initial thoughts on what we see going on,” a comment that caused Above the Law to suggest, as Smith’s words apparently confirm, that the numbers were not based on much data.  A summary of the reaction was reported by The ABA Journal.

Above the Law is hardly a cheerleader for the rising number of law school applications and I share its general sensibility that any individual’s significant investment in law school should be fully and carefully considered.

But that works both ways.  Just as cheerleading for law school is easy to do when it’s not your happiness and money at stake (or when the cheerleader’s interests are different from the soon-to-be-lawyer’s), so fear-inducing ought to be based on careful numbers—and Hildebrandt’s view is apparently not.  Clearly, numbers of this specificity should be based on something, and they have to be based on a lot of assumptions, none of which Hildebrandt bothered to reveal.  Headline-grabbing may be a useful publicity strategy but when you’re dealing with people’s futures, it’s not responsible consulting or responsible journalism. 

If Hildebrandt’s data were hard (or if the “initial thoughts” materialize into actual trends), they would be very rough on lawyers.  As the Advise-In website points out, large law firms are market drivers.  I’m not particularly fond of “trickle-down”-type language, but large law firms do have such effects—the more lawyers they hire, the more positions are available for others in the rest of the legal market, and the less they hire, the more pressure is put on other sectors of legal employment.  Just as the sharp decline in large law firm personnel hurt the market over the last few years, further decreases would be similarly damaging.

Some of what Hildebrandt says is undeniable—law firms are businesses that want to make a profit and will look for the most efficient ways to do that; law firms will generally follow economic trends.  Yes.  How that gets Hildebrandt to its numbers is a mystery.  In fact, its conclusion seems a bit at odds with the recent uptick in the drivers of corporate legal activity (M&A activity and IPOs) that were reported in The Financial Times (and on this blog).

I include a lot of legal employment-related data on this blog.  When there’s hard data, I mention it; when there isn’t, I’m cautious about predictions.  The current data make our medium-term view on the legal employment market (that the 2013 and 2014 markets are likely to be somewhat better than the 2009-2010 markets, but far from the 2005-2007 market spike) more likely.  But as we’ve always said, that depends on economic assumptions (for example, that we won’t have a double-dip recession, which does appear less likely than it did a few months ago).  It’s pure hubris, however, to put a hard number on either the size of the market change or a level of confidence in the prediction.  There’s simply no useful way to do that—and I wish that Hildebrandt had been more reticent about picking a number without, apparently, any real support for it.  Everyone, presumably, is trying to help real people make the best decisions they can make—let’s do it without phantom numbers.

~ by Kyle Pasewark at Advise-in Solutions on October 1, 2010.

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