According to the recently released 2018 Altman Weil “Law Firms in Transition” (an annual survey  they’ve been doing for a decade with invaluable longitudinal data at this point), in 51% of firms surveyed equity partners are “not busy enough.”  They write (and Adam Smith, Esq. agrees) that “demand for law firm services will not return to pre-recession levels–ever” (emphasis original).

Why not?  Some of the culprits include:

  • Commoditization
  • New technology tools
  • “Non-traditional” competitors, a/k/a New Law
  • The growth of in-house headcount and capability.

They count the cost in lost “productivity” (a weird usage here in Law Land that we’ve written about, but which means billable hours) at on average “hundreds of hours per attorney [compared to] before the recession” and add that “as a result, there are too many lawyers in many law firms.”

We’ve seen Citi Private Bank data confirming essentially the same metrics.  Let’s say we assume average annual billables pre-recession were 1,800 and now they’re 200 hours less.  That means nine lawyers today are billing what eight were then; or put rather more pointedly, one in nine of your lawyers should go (about 11%).

This brings us to our Question of the Month.  Take it away, dear readers!

Why do law firms still have so much excess capacity?

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If you have observations or other/better ideas, please use the comment box below, and thanks.

 

 

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