Economic Meltdown Meant Change For Many Firms
You've probably heard this elsewhere: It's been five years since the Wall Street meltdown of 2008. The anniversary has led to analysis of a whole range of economic issues. So it seems only fair to check in and see how the business climate for Connecticut lawyers and firms has been altered over that past five fateful years.
For starters, well-paid summer internships went from being an easy-going transition into the profession to hard-to-get gigs reserved for a select few at only the largest firms.
Business changed for veteran practitioners too. Practice areas involving real estate transactions, such as representing individuals and companies that buy and sell properties, slowed significantly, never to fully recover. Ditto for work in mergers and acquisitions, which hasn't rebounded to 2008 levels.
Instead, lawyers who handle labor and employment law found themselves enjoying busier workloads, helped by a new-found scrutiny of employers by the federal government.
"In the five years since the economic crash, all law firms — big and small — have had to adapt to a much different environment, which may be the so-called new normal," said Louis Pepe, a former president of the Connecticut Bar Association and partner at McElroy, Deutsch, Mulvaney & Carpenter.
The biggest change since 2008, Pepe said, is the realization that clients are in the driver's seat. There's been an impact on prices charged for services offered. And there's been just as big an impact on relationships among lawyers in the face of greater competition. "Legal services since then have been, and still are, offered in a buyer's market where more and more lawyers are competing for less and less demand," Pepe said. "How can that dog-eat dog atmosphere not adversely affect relationships with other lawyers?"
For many, the belt-tightening has dramatically altered billing arrangements.
"I think the big lesson learned from the recession, is we're all confronted with new legal environment, a new business model," said Stan Twardy, managing partner of Day Pitney. "The days of law firms simply raising their rates to increase their profits every year are long gone."
Twardy agreed that the legal marketplace has found itself under increased pressure from clients who want more value out from legal service providers. "Fee arrangements are something that continue to be very important," Twardy said. The traditional billable hour has, in some cases, given way to flat fees for cases and annual contracts.
Another lesson learned out of necessity from the economic downturn, was increased demand for efficiency and transparency for corporate clients. "Efficiency is paramount these days," Twardy said. Because large corporate clients have pushed back on legal fees, more firms are relying on less expensive document preparation contractors instead of using associates for routine tasks.