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Financial Crisis

Law Firm Consultant: ‘I’ve Never Seen It This Bad’

Posted Feb 24, 2009 12:15 PM CST
By Martha Neil

Last year, as the economy began to plummet, many law firms saw bankruptcy as a hot practice area that would counterbalance a sudden shortage of corporate work. Now, some are thinking about filing themselves.

"I have never seen it this bad," legal consultant Bill Brennan of Altman Weil tells the Philadelphia Inquirer. "Demand has been slow. Essentially the spigot of work has turned off, and law firms are working down their current inventory."

One top rainmaker recently told him that he had billed a total of three hours in a month.

Although the economy will recover at some point, getting to that point is going to be painful for some law firms. And, for those worried about staying in the black, long-term planning is now an unaffordable luxury, he says. These law firms need to focus on the short and medium term, and make the cuts needed to stay in business.

Comments

1.

B. McLeod
Feb 24, 2009 12:24 PM CST

Soon, the consultants, too, will be peddling their wisdom on street corners.  Explaining to a Big Law partner how to sell a pencil should be worth at least a couple of cents.

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2.

tim
Feb 24, 2009 3:59 PM CST

Corporate work for all practical purposes is dead unless it was in the pipes. 

If this keeps up, expect lots of firms to go under or keep laying off workers.

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3.

Paul
Feb 25, 2009 7:11 AM CST

Maybe this downturn will teach people that hyperspecialization might not be such a good idea. If all you know is banking and finance, I bet finding a job is pretty hard right now.

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4.

Stephen G. Cobb
Feb 25, 2009 11:35 AM CST

My law firm has made $1,500 so far this year. People call, but they want to pay a pittance down and then make ‘monthly payments.’ In criminal law, whatever you get up front is about all you are going to get.

Welcome to the Second Great Depression (2GD).

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5.

C
Feb 25, 2009 1:16 PM CST

To #4,
Has it really ever been different with poor defendants in criminal matters?  There’s plenty of work out there, just not much of it pays very well.  I 100% agree with your assessment that what you get up front is all you’re going to get.  If a client goes to jail, suddenly paying their legal bills doesn’t seem that important.

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6.

jose
Feb 25, 2009 3:08 PM CST

#4 - that is why you make criminals pay with a credit card (either theirs or a family members).  If they can’t make the payments, it is not your problem.  SInce they are paying on a credit card they don’t view it as real money.

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7.

fed up
Feb 25, 2009 3:10 PM CST

Lawyers bear significant responsibility for this economic downturn as previously noted in ABA articles.  Ye reap what ye sow.

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8.

B. McLeod
Feb 25, 2009 4:13 PM CST

Si.  Tambien, I sew what I rip.

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9.

TJC
Feb 27, 2009 6:16 AM CST

My country lawyer daddy gave me this advice when I announced I’d follow him into the practice: “You’ll always be busy, but you’ll never be rich.”  Timely then, and now.

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10.

JL
Feb 27, 2009 7:43 AM CST

Has it occurred to anyone that there are simply WAY too many lawyers in this country?  What we’re seeing is much like the demise of the real estate boom.  Too many people made easy money doing mediocre quality work for top dollar.  Sorry folks, but now we’ll, hopefully, weed out the attorneys just in it for the buck and we’ll be left with the those who practice for the love of the profession.

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11.

illnana
Feb 27, 2009 8:24 AM CST

#10
Your comment is so true, not only with law a lot of other professions.

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12.

Hadley V. Baxendale
Feb 27, 2009 8:33 AM CST

Altman and Weil surprised?  They and their colleagues pushed the Biglaw Business model which is now collapsing—and not to the surprise of bankruptcy lawyers, any more than we were surprised by the collapse of the housing market coinciding with the reset of ARM payments.
Oh, and fire that 3 hour rainmaker, but keep the poor two-year associate with 2 children and a mortgage who is doing his/her best to give good service to the clients and the failing firm.

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13.

T Fox
Feb 27, 2009 9:52 AM CST

Is it really a such a shame that the public is paying less in legal fees right now?

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14.

To-JL
Feb 27, 2009 11:32 AM CST

JL:
Would you be the first to surrender your license? What an elitist!

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15.

sue
Feb 27, 2009 12:35 PM CST

What’s wrong with more laywers?  If it drives down salaries to $50,000 a year for every lawyer so be it.

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16.

GRANT H. GOODMAN, PLLC
Feb 27, 2009 1:25 PM CST

Comment removed by moderator.

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17.

KR
Feb 27, 2009 1:29 PM CST

At $50,000 it would not even be worth the stress.  I did a refi for a FEDEX driver who makes $60,000 and he has no stress, has nights, days off and vacations, is eligible for PAID ofvertime, etc.  Lawyers expect and worked hard to get where they are, and while we may talk about blessed be those who do it for the “love of the job”  the reality is that we expect to live failrly well and be well compensated.  If this economy keeps up, the legal profession will no longer be one which people want to pursue.

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18.

sue
Feb 27, 2009 2:14 PM CST

We aren’t lawyers for the money so if everyone got paid $50,000, who cares.

You shouldn’t be a lawyer to get rich

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19.

John Smith
Feb 27, 2009 2:14 PM CST

The world of the pampered big firms who are mainstays of ABA contributions and policy is not shared by “The lawyer on the Street”. Criminal law and dom. rel. don’t take vacations,  I expect to have a good 2009. Why?

I keep my overhead down. I don’t have an office full of Roche BoBois furniture and potted plants. We use use two year old software, which works for a firm of three people. In this way, we can maintain affordable fees.

We return phone calls quckly. If we can’t help a client who has “messed up”, we tell the client what the consequnces will be. We don’t have to beat the bushes for clients because we have plenty of referrrals.

The big firms forgot that they are not better because they are bigger. Even the wealthiest corporate client does like a law firm to take advantage of them. Hopefully this lession will not be lost of future generations of lawyers.

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20.

Tired
Feb 27, 2009 2:15 PM CST

Maybe some people need to realize that some of us actually love working in law, but our concern with money has more to do with being able to pay rent, bills, car payments,and, most of all, the student loan debt that tower over $100,000.

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21.

Ken
Feb 27, 2009 3:08 PM CST

As to commenter 20, all of that requires a fairly handsome income.  I challenge someone living in the Northeast to be able to accomplish #20’s concerns on $50,000.  As my friends in Montréal, “Bon courage mon ami.”  Let me know how that works out for you.  As to #/9’s comments you don’t have to be in a big firm to have problems even if you keep overhead down and do everything the right way.  As to #18, maybe we aren’t lawyers to get rich but why bother if you have all the stress and nothing good to show for it?  Be honest with yourself, maybe you love the law but would you have the same passion for it if you can’t pay your bills?  I doubt it.  Law is a business now adn a profession second - as a business the job is to do a good job and make a profit.

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22.

Big Wave Dave
Feb 27, 2009 5:09 PM CST

To #17: If most people don’t want to pursue law, then it makes life easier for those who do. And those FEDEX guys work hard for their money. I bet the $60k is with overtime, not just working only 40 hours per week. I would rather be in a skilled trade than a FEDEX driver, but I digress.

#21: Law has always been a business.  People pursue law to do work they presumably tolerate and to live comfortably. It’s ultimately about paying your bills, aka a job. If you want spiritual fulfillment, become a priest/minister/rabbi, or get a hobby or some other outside passion.

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23.

High Powered Attorney
Feb 27, 2009 6:38 PM CST

A consultant is defined as a person who knows how to expertly present defecation in the ventilation.

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24.

Kalifornia Arnold
Feb 28, 2009 10:33 AM CST

If ,as a lawyer, when you enter the profession and “count your chickens before they hatch,” you will end up working for chicken-feed (which, as everyone knows, is defined as a poultry sum)

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25.

greg
Feb 28, 2009 2:23 PM CST

Actually, FedEx recently got hammered by the IRS. Why? Because they treated all their drivers as independent contractors! That means your guy is making $60K before tax, which in this case is about$20,000 once you include SE taxes. On the other hand, he’s probably deducting every single expense as “business-related”, so his taxable income is $15,000.00.

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26.

associate
Mar 2, 2009 11:56 AM CST

#20, Tired:

You only have 100k in loans after 7 years of school?  Wow, that’s impressive.  I went to a cheap state school, an even working my way through and getting a rent discount because the house was owned by family (still having 2 roommates), I figure I had about 110k in loans the moment I got out.

You made out like a bandit.

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