More work shifted to law partners as demand for legal services dropped, new report says
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Are partners hoarding legal work in challenging times? That is one of the questions raised by a new report that found that the average growth in billed rates reached record highs in the year’s second quarter, even as demand for legal services plummeted.
Demand for legal services dropped 5.9% in the second quarter, the biggest year-over-year quarterly drop since 2009, according to the Thomson Reuters Peer Monitor Index.
At the same time, more work shifted to partners, pushing the average billed rate 5.2% higher than at the same point last year, according to the new report, available here.
An Aug. 10 press release and Law.com (here and here) describe the findings.
Partners took on more work for two reasons, according to the report.
“First, partners with a more ‘eat-what-you-kill’ mindset are focused on staying the course to achieve their own billable hour goals. Second, law firm clients have an increased need for advisory services that cannot be completed by less experienced lawyers.”
Hours worked dropped for associates and partners, but the dip in hours was larger for associates, according to Bill Josten, manager of enterprise content for Thomson Reuters. The same thing happened during the Great Recession, Josten told Law.com.
“We are seeing a reversion back to prior behaviors,” Josten said. “If you go back five or six years as firms recovered from the Great Recession, there was a lot of discussion of a lost generation of associates. Partners stopped pushing work down to them. They didn’t hire as many, and they didn’t get trained in the same way. That is why the lateral market is so competitive for young partners now.”
Other report findings include that law firms have rapidly cut expenditures, with furloughs and layoffs hitting support staff harder than lawyers. Spending on marketing and business development has dropped by an average of nearly 20% on a rolling 12-month basis.
Most major practice areas saw declines in demand, including litigation (down 7.5%), corporate work (down 5.5%), tax work (down 9.1%) and real estate (down 12.2%). Bankruptcy is doing well, with demand increasing 6.2%.
The Peer Monitor Index gathers information from 160 major law firms in the United States and key international markets.