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Who do the Fortune 500 corporations turn to when they need intellectual property litigators?  According to a recent survey by The American Lawyer, these companies don’t rely exclusively on the giant brand-name law firms, but instead often depend on mid-sized IP firms for their defense.  See the survey results at: http://www.corpcounsel.com/id=1202737903224.

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The world’s largest law firms are still feeling the heat from their stagnated approaches, as discussed in last week’s post.  A report released by CounselLink concluded that firms with 201 to 500 attorneys–termed “large enough” firms–are “increasingly winning the market share at the expense of the largest U.S. law firms.”

Buildings in the city

CounselLink Strategic Consulting Director Kris Satkunas suggests that the success of these ‘large enough’ firms is generally due to lower billing rates (for similar levels of service) and the increased willingness to engage in AFAs, the ‘Alternative Fee Arrangements’ widely preferred by clients today.  She reports that as a result, corporate clients are “finding the same value from this size law firm for less or at least more predictable costs–and that is driving the migration of legal work into this segment of the law firm market.”

This trend is exemplified in the recent layoffs by megafirm Reed Smith, a 1750+ attorney firm who laid off 45 lawyers and a “comparable” number of administrative staff in January 2016, according to their press statement.  Sandy Thomas, the global managing partner at Reed Smith who gave the statement, blamed the layoffs on the “fundamental shift in the nature of the demand for, and the delivery of, legal services in recent years.”

Another ‘big law’ firm, global giant Dentons, (now, with a 6,600 employee headcount, the largest law firm in the world), has been the subject of skepticism for its continued ‘bigger is better’ growth philosophy.  Jordan Furlong of global law firm consultancy Law21 argues that since there are already many multinational firms, “having dozens of offices and thousands of lawyers isn’t enough to set you apart, and I’m not sure if 80 offices and 8,000 lawyers will do it either” (as quoted in The American Lawyer).

Time will tell if “bigger really is better” for today’s law firms, but for now, all signs seem to point to an ideal amalgamation of factors for middle market firms to flourish.

Big law firms have always been pathologically conservative in updating their policies, but has this mentality begun to affect their overall profitability?  The American Lawyer recently released an article investigating whether large firms’ aging partners, who often control a majority of the client base, habitually put their self-interests above the firm’s longevity—to the point that the partners’ “short-term gains could become the institution’s long-run catastrophe.”

lawyer and client looking at each other while discussing papers in office

The New York Times released a statistic in their Dealbook stating that nearly half (46 percent) of all managing partners are between 60 and 70 years old, with only 3 percent under age 50.  And, according to The American Lawyer, these partners are hoarding their clients with an “eat what they kill” mentality–which, AmLaw argues, makes the eventual succession of new partners that much more difficult.

Interestingly enough, this problem does not go unnoticed at the big law firms.  A 2011 survey by Altman Weil found that 47 percent of firm leaders identified the “retirement and succession of baby boom lawyers in their firms” as their greatest concern.  Yet, in Altman Weil’s 2013 survey, “only 27 percent of managing partners reported that they had a formal succession planning process.”

The American Lawyer concludes that aging partners should work to “encourage long-term institutional stability,” through prioritizing client service, encouraging partner cooperation, helping partners prepare for their “second acts,” and encouraging them to sacrifice some self-interest for the long-term betterment of the firm.

However, while Big Law partners should certainly concerned be about the futures of both their firms and themselves, many big law firms are already feeling the heat from their stagnated approach.  In 2013, a study of over $10 billion in client fee invoices by LexisNexis/Counsel Link found that mid-sized firms (termed “large enough” firms, of 201-500 lawyers) are quickly grabbing the market share from biggest firms (those with 750+ attorneys).  In fact, the study found, while big law firms saw a drop in their market share from 2010 to 2013, ‘large enough’ firms successfully grew theirs from 18 to 22 percent.

So, while the biggest firms continue to turn a blind eye to future strategy, it’s safe to conclude that their mid-sized competitors are eagerly seizing the opportunity to thrive.

The National Law Journal recently released a review of the major legal news in Washington’s ‘big law’ for 2015, including reports on the paramount moves and mergers, influential administrative changes, and the “reinvention” of the D.C. law practice.

US Capitol, Washington DC

Dentons continues its reign as the world’s largest firm, announcing ten “tie-ups” with other firms in 2015, including those in China, Australia, and Mexico, among other countries (as reported by the National Law Journal).

Litigators with multi-millions in portable business and experience in the federal government were in high demand, according to the National Law Journal, since “the hotbed of white-collar enforcement activity is now centered squarely in Washington, D.C.” (Debevoise & Plimpton partner David O’Neil, as quoted by The National Law Journal).  Many former representatives and senators flocked to the ‘big law’ D.C. firms in search of positions in lobbying and legislative practice groups.

In fact, despite the financial drawbacks of lobbying as a legal practice, the National Law Journal announces that “the large law firms in Washington still want to do it.”  And lobbying certainly got its fair share of the limelight when Former House Speaker Dennis Hastert, a Washington lobbyist, pleaded guilty to federal charges of evading currency-reporting requirements by illegally structuring cash withdrawals.

Read more about these and the other legal trends of 2015 in the National Law Journal.

 

The annual “Best 50 Law Firms for Women” list, released mid-year by Working Mother magazine, remains one of the key surveys of 2015.

Candid portrait of a joyful cheerful happy employee staff member leader at the office workspace.

The list reports that law firms featured in the Best 50 employed more female equity partners, at twenty percent, than the national average (seventeen percent).  The Best 50 compilation also boasts that sixteen percent of the firms now have three or more women among their “top ten rainmakers,” a five percent increase from 2014.

Five firms appeared on both the Working Mother’s ‘Best 50’ list and The American Lawyer’sEight Firms Where Women Thrive“: Quarles & Brady, Baker & McKenzie, Sidley Austin, Holland & Hart, and Reed Smith.

Read more from the report here.

 

Fifteen Southern California firms have just been featured by The National Law Journal as demonstrating “excellence in practice areas critical to the Southern California economy and legal community.”

Lawyer working with client discussing contract documents

Loeb & Loeb received the top honors in the Entertainment industry.  Nossaman was crowned the winner for Government Contracts, and global giant DLA Piper took the Real Estate category.  Morgan, Lewis, & Bockius won for Litigation.

Read the profiles of the winners and finalists here.

Innovative strategies are necessary for continued firm growth in the corporate legal market, according to a recent article from The American Lawyer.  William Henderson and Evan Parker report that due to decades of organic growth, when law firms simply grew with their clients, the “supply of capable outside counsel [now] exceeds demand,” requiring firms to consider a new, focused approach for future expansion.

Serious woman who is defense lawyer representing defendant.

They posit that the Am Law 200 firms are now forced to grow solely by taking the market share.  Henderson and Parker believe that focus is key to successfully doing so, quoting the approach that Apple’s Steve Jobs took of “starting with the customer experience and working backwards to the technology.”  They encourage law firms to act similarly by exploring their particular niche and studying their existing clients in order to effectively take the market share.

The article also broke down market size by practice area, and found that “the largest market is the one most synonymous with large-firm practice: antitrust, corporate, securities, finance, and insurance”–essentially, the commercial world.

Henderson and Parker use the $15 billion labor and employment market as a case study to illustrate Jobs’ focused approach, attributing the L&E firms success to “working backwards from the needs of the client” in order to build “an ark that won’t sink.”

The article also uses New York City-based firm Skadden to further exemplify the potential success for firms who employ industry focus and who value understanding their particular market.

 

Professor Heidi Gardner of Harvard Law School presented her research at the 20th Annual Law Firm Leaders Forum in early October, where she discussed why law firms should encourage collaboration among firm partners in order to increase innovation and development.

Hands of international coworkers sitting around table, putting colorful puzzles together

Sean Doherty of Above the Law highlights the key points of her talk, noting two trends that lend themselves to partner collaboration: first, the increasing complexity of law, which requires lawyers to specialize and work in discrete practice groups, and also the engagement in the “volatile, uncertain, complex, and ambiguous (VUCA) phenomena” that is often used to coordinate business spanning multiple disciplines.

As part of her research, Gardner interviewed law firm clients about the importance of partner collaboration within the firms, and found that clients believed that such collaboration increased the efficiency, cost-effectiveness, geographic reach, and innovation of the legal services, as well as led to a more complex understanding of the client’s enterprise.

Gardner posits that collaboration will be largely beneficial to firms over time, despite initial costs.  Doherty reports Gardner’s list of benefits from collaboration to include “more successful business development, higher personal productivity, enhanced reputation, and ‘sticky’ (read: loyal) customers.”

 

According to a recent article published by The National Law Journal, a strong corporate presence in Chicago and the surrounding areas is making for some major deals in 2015.

Silhoutte of office people with city buildings in the background

“In the first half of the year, total deal value in Illinois spiked 95 percent to $121 billion, compared with the first half of 2014,” The Mergermarket Group reported. The article suggests these spikes are likely due to a large number of popular companies in the area, as well as the city’s population growth.

With a multitude of transactions on the rise, real estate and corporate among them, “it’s a hot deal market right now in Chicago,” said Vincent Sergi, chairman of Katten Muchin Rosenman.

In a separate article for the “Midwest Report,” The NLJ also cites how this seems to be a trend for law firms across the Midwest as a whole, and an optimistic outcome is projected.

Head over to The National Law Journal to read more.