Law firms report lawyer oversupply and 'chronically underperforming lawyers' Forum

[Nebby]

Highlights from the 2017 survey include:

- Chronic under-performance: 88% of firms say they have chronically under-performing lawyers. Equity partners are not sufficiently busy in 52% of firms, and non-equity partners aren’t busy enough in 61% of firms. Overcapacity is diluting profitability in 61% of law firms.

- The levers of profitability: Cutting office space, under-performing lawyers, excess staff, and low margin practices and offices are yielding immediate bottom-line results. Lateral acquisitions and investments in business development, while widely pursued, are less effective drivers of profitability at least in the short-term.

- Linking pricing and efficiency: Only 30% of law firms routinely link discounted, capped and alternative fees to changes in how work is staffed and delivered – displaying a critical misunderstanding of the interdependence of the elements of their business model which include scope, staffing, price, work flows, project management and margin.

- Innovative experiments: 50% of law firms report they are actively engaged in experiments to test innovative ideas and methods. These initiatives run the gamut from technology and data analytics to new business ventures, efficiency, pricing and staffing improvements, and efforts aimed directly at client engagement and retention.

- The problem of partner resistance: 65% of law firm leaders say their partners resist most change efforts, and 56% say most partners are unaware of what they might do differently. This reluctance to change is an intractable problem in many law firms.

“Lawyers are very good at interpreting data that’s set before them, but they also need to ask: What don’t we know that might matter?” said Altman Weil principal and survey co-author Tom Clay. “Adequately educating partners about current market realities is a critical first step in achieving necessary strategic change.”

Survey Methodology
Conducted in March and April 2017, the Law Firms in Transition Survey polled Managing Partners and Chairs at 798 US law firms with 50 or more lawyers. Completed surveys were received from 386 firms, including 50% of the 350 largest US law firms and 50% of the Am Law 200.

The complete survey report includes sections on industry trends, market demand and competition, profitability, pricing, efficiency of legal service delivery, lawyer staffing strategies, law firm growth and economic performance.

It is available to download at: www.altmanweil.com/LFiT2017.

[Abbie Doobie]

are the 'chronically underperforming lawyers' a result of law firms outside the t14 dropping their admissions standards to maintain class sizes? where are these 'chronically underperforming lawyers' coming from school-wise?

[Jchance]

^
for overachievers, aka non-underperformers, law firms are better off hiring federal clerks and Coif grads from T25 or T1 than medians from T14.

[RaceJudicata]

^
for overachievers, aka non-underperformers, law firms are better off hiring federal clerks and Coif grads from T25 or T1 than medians from T14.

I agree with this.

[Npret]

Are t they talking about underperforming partners?

[Jchance]

Are t they talking about underperforming partners?

Not necessary.

"in 25% of firms, associates don't have full workloads.
... 88% of firms leaders said they have chronically underperforming lawyers." (pg. 8 )

[Npret]

Are t they talking about underperforming partners?

Not necessary.

"in 25% of firms, associates don't have full workloads.
... 88% of firms leaders said they have chronically underperforming lawyers." (pg. 8 )

But associates not having full workloads is due to partners not getting work/ there not being enough work. Idontsee how it ties to grads necessarily.
Hasn't the same thing been reported for 5 or 6 years now?

[dabigchina]

The bit about alternative fee structures blows, If anyone has ever worked on a poorly negotiated fixed fee engagement, they would know that it's the most miserable experience possible.

[Anonymous User]

The bit about alternative fee structures blows, If anyone has ever worked on a poorly negotiated fixed fee engagement, they would know that it's the most miserable experience possible.

I work on patents at an absurdly low fixed budget. This is biglaw too. My realization rate is fucking terrrrrible.

I have no idea how this will look come review time. It can't possibly be sustainable

[Anonymous User]

Litigation is taking a hit. At my firm, 2nd and 3rd years are being asked to leave, which isn't typical. This isn't happening to too many people yet, but give it a few months. People are being told to get their hours up, even though everyone is supposed to go exclusively through an assigning system. At a V50.

[Anonymous User]

The bit about alternative fee structures blows, If anyone has ever worked on a poorly negotiated fixed fee engagement, they would know that it's the most miserable experience possible.

I work on patents at an absurdly low fixed budget. This is biglaw too. My realization rate is fucking terrrrrible.

I have no idea how this will look come review time. It can't possibly be sustainable

It's not. If you're in pros in particular, I'd seriously start looking at boutiques/in-house.

[Desert Fox]

The problem isn't that revenue is falling. It's that firm just want to raise profits. The only option left is to make associates more efficient. They want to push average billing per associate higher. Only way to do that is to fire people.

I think what they don't realize is that you need some extra capacity to be able to take a good case when you can get it.

Also, I think there is a lot of hidden uncollectable billing being foisted on associates. My old firm kept raising rates despite nobody wanting to pay them. To win cases they'd bid on cases with budgets that were too low. You'd often get told "you have 50 hours on this case this month." If you really have 80, tough shit.

When a beancounter looks at the average hours they don't see those lost 30 hours.

Firms encourage this by not letting partners write off time. The partners then force you to do it on your own. And the wasted time isn't accounted for.

People on TLS says not to listen to teh partner and do it anyway. Sure that works for a lame partner who barely brings in work. But when its the HNIC of the group, you gotta do it.

[Jchance]

The problem isn't that revenue is falling. It's that firm just want to raise profits. The only option left is to make associates more efficient. They want to push average billing per associate higher. Only way to do that is to fire people.

I can see how it's a strategy but such strategy is not sustainable for either the firm or the profession. If not enough junior lawyers are being trained, soon there won't be much mid-level lawyers left.

[dixiecupdrinking]

I think what they don't realize is that you need some extra capacity to be able to take a good case when you can get it.

Lmao at law firm management ever turning down a case because their associates don't have capacity.

Partner: "sorry you have to work memorial day, the firm is really busy"
Associate: "did you consider hiring more associates or not taking this case we can't reasonably staff?"
Partner: [blank stare]

[Anonymous User]

I think what they don't realize is that you need some extra capacity to be able to take a good case when you can get it.

Lmao at law firm management ever turning down a case because their associates don't have capacity.

Partner: "sorry you have to work memorial day, the firm is really busy"
Associate: "did you consider hiring more associates or not taking this case we can't reasonably staff?"
Partner: [blank stare]

Idk. Chairman at my (NYC v20) firm specifically listed it as a reason we have so many lawyers. The types of matters he seemed to be talking about are a little bit more than involving one day or weekend though.

[lolwat]

I think what they don't realize is that you need some extra capacity to be able to take a good case when you can get it.

Lmao at law firm management ever turning down a case because their associates don't have capacity.

Partner: "sorry you have to work memorial day, the firm is really busy"
Associate: "did you consider hiring more associates or not taking this case we can't reasonably staff?"
Partner: [blank stare]

If everyone's already killing themselves billing 2.7k/year working nights, weekends and holidays, and 10 great cases suddenly come through the door, the firm isn't going to turn down those cases but now they suddenly have to hire more people. When those cases settle or work is otherwise slow and everyone's only billing 1.7k/year, rather than just being okay with that, the firms then decide to fire a bunch of associates to get the remaining ones billing 2.7k/year again. And then when cases come in again, they hire again, etc...

Or the firm can be reasonable and just keep a good balance of lawyers and not care so damn much if there's a few months or a year where the associates are only billing 1.7k.

I think firms are too focused on profitability but then again if it were my $3mil/year that's being dipped into by associates not billing enough I would probably think about how to raise it back up to $3mil/year too.

[TheoO]

In other news, partner dismayed by small size of yacht relative to neighbor's

[dixiecupdrinking]

I think what they don't realize is that you need some extra capacity to be able to take a good case when you can get it.

Lmao at law firm management ever turning down a case because their associates don't have capacity.

Partner: "sorry you have to work memorial day, the firm is really busy"
Associate: "did you consider hiring more associates or not taking this case we can't reasonably staff?"
Partner: [blank stare]

Idk. Chairman at my (NYC v20) firm specifically listed it as a reason we have so many lawyers. The types of matters he seemed to be talking about are a little bit more than involving one day or weekend though.

Point is, the ideal staffing model for biglaw is to have all your associates at 100 percent capacity all the time, then when you get busy you don't turn down work, you just have them go to 125 percent. If they get down to 75 percent you fire them. That's not how a humane business works, but it's how biglaw has to in order to pay 180k while continuing to goose PPP.

Also, not for nothing, but what your firm chairman says to associates about its staffing practices may be a little selective.

[Mickfromgm]

Well, associates might be considered chronically underperforming because they don't have work . . . . i.e, the rainmakers and other partners not generating enough work, or the clients are farming out less work to outside counsel.

[dixiecupdrinking]

I think what they don't realize is that you need some extra capacity to be able to take a good case when you can get it.

Lmao at law firm management ever turning down a case because their associates don't have capacity.

Partner: "sorry you have to work memorial day, the firm is really busy"
Associate: "did you consider hiring more associates or not taking this case we can't reasonably staff?"
Partner: [blank stare]

If everyone's already killing themselves billing 2.7k/year working nights, weekends and holidays, and 10 great cases suddenly come through the door, the firm isn't going to turn down those cases but now they suddenly have to hire more people. When those cases settle or work is otherwise slow and everyone's only billing 1.7k/year, rather than just being okay with that, the firms then decide to fire a bunch of associates to get the remaining ones billing 2.7k/year again. And then when cases come in again, they hire again, etc...

Or the firm can be reasonable and just keep a good balance of lawyers and not care so damn much if there's a few months or a year where the associates are only billing 1.7k.

I think firms are too focused on profitability but then again if it were my $3mil/year that's being dipped into by associates not billing enough I would probably think about how to raise it back up to $3mil/year too.

I agree with all of this. I'd add that firms are only as good as their partners, obviously, and whereas firms are wholly anticompetitive in how they pay associates, there is cutthroat competition for partners. When your only real asset as a business is maybe a hundred people who can leave at any time, you can't afford to let PPP slide too much. So I get it. It's just a garbage business.

[jd20132013]

What an awful profession. Lmao

[Wild Card]

^
for overachievers, aka non-underperformers, law firms are better off hiring federal clerks and Coif grads from T25 or T1 than medians from T14.

Firms do this already. If you look at the summer class lists, there is significant TTT representation.

I was browsing through People You May Know on LinkedIn the other day and came across the profile of a V5 associate who looked like a mouthbreather, a dullard. I suspected that he was #1 in his class at a TTT. I opened his profile--I was right!

[jkpolk]

This has already been said, but fucking of course the law firms, i.e. the self-described "productive" partners, would blame their shit on people "not pulling their weight."

For the dead-weight equity partners, boo fucking hoo, that's the risk you took when you made an equity partner. The possibility of a couple people spending their time on their new boat is priced into the model so not "under performing."

And literally FUCK the firms for saying any associate is under performing. It's a job that people do for money. There is no skin in the game other than the continued paycheck. If management doesn't like performance, the answer is not to passive-aggressively waive "underperforming" at people through some poll - management should work with folks, figure out whether expectations are reasonable, etc. or, alternatively, put on grown up pants and accept it as life, we aren't automatons. People can only work as much as people can work/are given opportunities.

If law firms are systematically hiring idiots/the wrong people who can't mentally do the work, that's not the fault of the associates in question. Revisit hiring models. Ask a fucking battery of consulting "thought process" questions regarding how someone would tackle a legal issue. If hiring is the problem, that's all on the firms, not the employees (and i seriously doubt this is the problem).

[sanzgo]

god this profession sucks

[run26.2]

And literally FUCK the firms for saying any associate is under performing. It's a job that people do for money. There is no skin in the game other than the continued paycheck. If management doesn't like performance, the answer is not to passive-aggressively waive "underperforming" at people through some poll - management should work with folks, figure out whether expectations are reasonable, etc. or, alternatively, put on grown up pants and accept it as life, we aren't automatons. People can only work as much as people can work/are given opportunities.

If law firms are systematically hiring idiots/the wrong people who can't mentally do the work, that's not the fault of the associates in question. Revisit hiring models. Ask a fucking battery of consulting "thought process" questions regarding how someone would tackle a legal issue. If hiring is the problem, that's all on the firms, not the employees (and i seriously doubt this is the problem).

I agree that big firms mismanage how they handle associate hiring and training. But I don't see it changing soon, if ever. It's just how they've done it and managed to be wildly successful. I think the ethical rules preventing a non-lawyer from running a law firm (which may have changed?) has kept some needed reform from entering the industry. A model that naturally selects based on purely legal skills will select from some great lawyers, but not necessarily people that will generate the firm more money or make it a place where people that may not learn as well on their own from advancing.

But why can't a firm say an associate is underperforming? Certainly some are going to be better than others. To me, a firm should help lawyers that are struggling (some probably do), but obviously there must be some limit to how far a firm should go.

ETA: Is any of this new? Seems like these figures on underperforming lawyers may adjust upward or downward, but they're always there.