Martha Neil of the ABA Journal claims problems in the economy are affecting law firms.
Law firms saw average profit per equity partner drop some 9 percent in the first half of 2008, [Dan DiPietro] writes in the lengthy article. Meanwhile, expenses rose by about 10 percent, pushed up, in large part, by increases in associate pay.
The second half of 2008 won’t be any better than the first half, DiPietro predicts. And it could be worse—”the common wisdom is that this economic slump is more akin to the downturn of 1991.”
But there is a silver lining, he writes: Financial pressure will likely encourage partners to watch expenses more closely and winnow out unproductive attorneys. He also urges law firms to start focusing now on year-end collections.
[emphasis added]
Translation of the “silver lining:” those with the lowest billable hours are likely to get axed.
Keep an eye out readers.
Might be a good time to review projected areas better insulated from downturns and slumps.
Really, there is a a fair bit of wisdom in associates who are “unproductive” (i.e. unwilling to entirely sacrifice the maintenance of their personal identity so partners can maintain the lifestyle to which they have become accustomed) to band together and start firms of their own. Aside from the accounting side, running a small firm should be well within the capabilities of a small group of junior lawyers. It’s not as safe, nor lavish, but at least you control your own direction and the surplus of your labour remains your own.