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Legal economics, law graduate job prospects, and inside-outside relationships are just a few of the recent legal industry studies published of late. We’ve collected and combed through the surveys, data and reports to provide an at-a-glance summary of the latest in legal trends here.
Where possible we’ve also provided links surrounding these studies for those interested in additional reading.
In addition, for inside counsel and law firms with a specific interest in property and casualty litigation claims data, we’ll be reviewing, for the first time, survey results today during a live webinar at 1:00 p.m. EDT.
For those tied up, the webinar will almost assuredly be recorded and registrants will receive a notification. We’ll also aim to dive into the data and present it on these pages at a later date. The webinar is complimentary; register here.
Here are summaries of seven current legal industry studies:
1. Law Firms: Pressure vice Invoice Processing
Law firms are under pressure to deliver quick evaluations and legal resolutions, but are also finding clients becoming slower to pay legal invoices, according to Ed Silverstein writing for InsideCounsel.
The article stems from a survey conducted by the International Association of Defense Counsel (IADC) – IADC Inside/Outside Counsel Relationship Survey. In the survey, the IADC asked 689 attorneys, about evenly split between corporate counsel (386) and law firms (303), about shifts in legal spending, relationships, and motivations for hiring outside counsel, among others.
Key observations from the report included:
- 53% of corporate respondents say they have sent more work to outside counsel in the last 12 months; with nearly the same seeing the trend continue.
- Timely bill processing, expenses and costs are “the biggest disconnect between in-house and outside counsel in their working relationship.”
- Respondents from both sides of the table cited “expertise is the primary reason for hiring outside counsel or being hired as outside counsel.”
Citing open-ended comments stemming from the survey, Law360 reported:
“We’re under tremendous pressure from management to hold the line or reduce legal expenses,” one in-house respondent said, “but firms often seem oblivious to this and just assume a 3 to 5 percent increase in rates is not an issue — IT IS!”
Additional sources: IADC slide presentation (PDF) | IADC press release (summary)
2. Mixed Bag: Legal Sector Economics
Citi Private Bank’s Law Firm Group is out with its latest flash survey. The sample survey counted 177 firms across the Am Law 100, Second Hundred and boutique law firm segments. Writing for The American Lawyer, Citi’s John Wilmouth largely reported improvements in the second quarter of 2015 compared to the first – but slower growth year-over-year. Demand picked up in the second half of 2015 but Citi is “revising downward our 2015 performance forecast for the legal industry.”
Mr. Wilmouth says there’s room for optimism and pessimism alike:
“While the second-quarter results are better than the first quarter’s, however, revenue growth is still behind what it was through the first half of last year, and expense growth is higher. Year-over-year comparisons for the remainder of this year will be even more challenging, given that demand growth accelerated in the second half of 2014. Therefore, we are revising downward our 2015 performance forecast for the legal industry.”
The largest law firms “demand and revenue momentum build,” while “the Second Hundred was the only segment that saw a drop in demand.” The smaller niche firms, or boutiques has the best first half of any category of law firms by size, he wrote, but cautions the latter half of 2015 may be harder for these smaller firms.
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Related content:
What are the Going Law Firm Billing Rates by Practice Area?
5 Takeaways from the 2015 Litigation Trends Survey
Budgets, Compliance, Security Top CLO Priorities, ACC Survey Says
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3. Inching Up? State of Legal Hiring
In a survey for 200 US-based attorneys by Robert Half Legal, three in every 10 say their law firm has plans to hire in the latter half of this year. An underlying driver? The economy is picking up according to InsideCounsel reporter Juliana Kenny:
“The survey found that nearly three in 10 (29 percent) lawyers interviewed said that their law firms or companies will be expanding their legal teams in the second half of 2015 — compared to 26 percent from six months ago and 29 percent from one year ago. (In a separate study the agency released this past spring, nearly one-third (32 percent) of lawyers said their law firm or company plans to increase its hiring of entry-level associates in the next 12 months.)”
The survey also hinted that the legal hiring is facing several developing challenges. For example 64% of lawyers said, “finding skilled legal professionals is somewhat or very challenging.” Similarly, 39% “expressed concern” over existing employees leaving as other opportunities are opening up. Additional sources: Big Law Business | New Jersey Law Journal
4. Best Place to Live and Work for New Lawyers
Conventional wisdom says new law school graduates should aim for New York, Chicago, Atlanta, Boston or any of the other big cities with the promise of law firm jobs. Conventional wisdom might be wrong, according to a data analysis by Good Call.
So where is the best place? Washington….that is Washington, North Carolina; population 9,744. Better known as “Little Washington” in ya’ll-parlance, the small city sits about two hours east of Raleigh on the Pamlico river which quickly widens into the Atlantic Ocean.
Good Call took a range of factors to create a blended score ranking the Top 10 Small Cities for Law School Graduates (the post itself contains a spreadsheet of 100 small cities).
Juliana Kenny summed it up this way for InsideCounsel:
“For perspective, Washington, NC received a GoodCall score of 487.25, its population is 47,585, the average lawyer salary is $130,920, the housing affordability index is 7.91 percent, amenities per 1,000 housing units are 2.37, and the employment attractiveness rank is 20. For comparison, Cheyenne, WY achieved a GoodCall score of 437.25, its population is 96,389, average salary is $109,540, housing index 11.01 percent, amenities clocked in at 1.48, and its attractiveness index is 2.”
Little Washington is just a stone’s throw away from the LexisNexis Technology Center of Excellence based on NC State’s Centennial Campus. We’re currently counting 400 legal tech professionals in the office and still hiring.
5. Law Grads and Skill Expectations
A survey of 300 US attorneys (PDF) involved in hiring found that 95% believe “law graduates lack legal research, litigation and transactional skills.”
In a statement, Paul Speca, vice president of Law Schools at LexisNexis, which commissioned the study, noted:
“With an estimated price tag of $19,000 to train one new hire, this gap between graduates’ readiness and real-world practice costs law firms considerable time and money.”
“The attorneys surveyed placed advanced legal research skills alongside drafting pleadings and motions as the skills both “most needed” and “most lacking” in litigation practice,” according to Nota Bene, a blog by the librarians at the University of Houston O’Quinn Law Library.
“Any law firm librarian who works with summer associates and recent law school graduates can tell you how ill-prepared they are for the “real world” in a firm. And, as fellow Geek Casey Flaherty will tell you, clients don’t want to pay for this group to learn to these skills. Nor should they have to,” according to Mark Gediman in a post for 3 Geeks and a Law Blog.
According to the survey, new associates spend conduct legal research between 40% and 60% of their time. More than half – 60% – point to a certification program as a solution. Additional sources: Legal Skills Profs Blog | Nota Bene
6. GCs feel unease about cybersecurity
A survey of 49 senior legal professionals in Fortune 1000 companies found cybersecurity is top of the General Counsel mind. The study, by event firm Consero, says 60% reported inadequate preparations to defend against a data breach, although 70% also said they had not experienced a breach in the last 12 months.
In an interview with reporter Sue Reisinger of Corporate Counsel, Consero CEO Paul Mandell explained:
“Cyberthreats pose perhaps the most destructive potential risk to these sophisticated global businesses. But the data indicate an alarming percentage of those huge companies remained unprepared.”
Even so, “regularity compliance, operational risk and data security” were cited as the top legal department focus-areas in the near future. The results appear generally consistent with the findings from the ACC, which were published earlier this year in its annual CLO survey.
Separately, Legaltech News recently explored the heightened risk of cyberattacks, which examines pressures for corporate legal and law firms alike.
7. Tale of Two Legal Surveys
“For corporations, change is good; for law firms, change is necessary,” according to an assessment on BLLAWG, comparing two surveys by Altman Weil. One survey focuses on CLOs while the other on law firms. While this is an analysis of surveys, as opposed to a standalone study, the content makes an interesting case for finding common ground between inside and outside counsel:
“Winners from either side will have to be proactive and ‘hustle, be lean, be businesslike and understand and deliver client service and value to outperform’ the competition.”
The author calls for collaboration, analytics and conversations focused on staffing and pricing. Additional sources: Big Law Business | The American Lawyer
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If you have a strong view point on any of the industry data presented here, we’re always interested in original, authentic perspectives in the form of a guest post. If you have survey data you’re releasing, feel free to send us a link or give us a shout on Twitter: @business_of_law.
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A Cheat Sheet for 5 Recent Legal Industry Studies
Photo credit: Flickr, Sigfrid Lundberg, Spectacles and vertebrate zoology (CC BY-SA 2.0)