Back from a week in London. (Close readers may recall I was there six weeks ago, and while I may be imagining things slightly, I believe the tone in the City has changed perceptibly even in that short time.)
Herewith a concise report, albeit one consisting more of questions than answers: This period is like that.
One consensus is firm: That revenues and headcounts are going to shrink. That is to say, firms are going to get smaller before they again get larger. Here are some of the other topics that seemed to be widely on people’s minds:
- Are clients finally going to get serious about reducing overall legal costs, no matter what?
- Will that mean that alternative or "strategic" fee arrangements, at long last and after great, ineffective, and gassy fanfare, finally gain traction?
- How long is this recession going to last?
- More importantly, will it be "V" shaped or "U" shaped?
- If it’s "V" shaped, we know how to deal with it: Cut back a bit, hunker down, and last it out.
- If it’s "U" shaped, on the other hand, we can’t assume business as usual. Firms will have to shrink (see observation #1, above). How, then, precisely, does your firm shrink?
- What will the financial services industry look like on the other side of all this?
- If large portions of the banking system are owned by either Her Royal Majesty or the United States Treasury, won’t that imply a fundamentally different way of buying high-end legal services?
- If Merrill Lynch is acquired by Bank of America (for example), won’t it be BofA’s and not Merrill’s culture that prevails? (Note that this opinion was offered, or this speculation widely floated, before John Thain’s abrupt eviction from his exquisite office [remodeled at a cost of $1-million+, it was conveniently revealed, on the occasion of his professional dismissal and embarrassment].)
- Will the financial services industry, source of outsized revenues to BigLaw, itself become a smaller component of the economy?
- Associate attrition is now essentially zero. How do we maintain freshness in the talent pipeline with no room opening out in the mid-levels? Or do we create room by force, through layoffs and "redundancies?"
- Is there a similar demographic logjam developing at the other end of the age curve, as Baby Boomers postpone retirement based on the shocking and deplorable recent performance of their retirement portfolios?
- If your firm must engage in layoffs, the only questions that remain are whether to do it:
- Quietly or publicly;
- All at once or gradually.
- Are geographic areas outside the major global capital markets centers–to wit, the "BRIC" countries, the Middle East–going to be able to serve as counterweights to the First World?
- Are practice areas outside the mainstream–the mainstream being corporate, transactional, banking, and finance work, as well as litigation in the US–going to be able to serve as counterweights to the mainstream slowdown?
- Is this the time to take a perhaps overdue look, and a rigorous, even harsh look, at colleagues who may be failing to display the sense of urgency, energy, and resolute optimism this situation demands?
It is quite early to expect answers to these questions. But I for one am more determined than ever to ambitiously seek every indicator I can that may begin to give us the sketchiest shadow of answers.
