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PLP Pulse: News from the Frontiers of the Legal Profession
August 2011
 

Globalization

King & Wood and Mallesons Stephen Jaques Discuss Strategic China-Australia Alliance
The Asian Lawyer

Sources from both China’s King & Wood and Australia’s Mallesons Stephen Jaques, leading law firms in their respective countries, have confirmed discussions of a strategic China-Australia alliance. The talks highlight the increasing integration of Australia and China’s economies and the enthusiasm of firms to secure work in Australia’s natural resources industries, which have taken off following the surge in Chinese investment. Clifford Chance, Allen & Overy, and Norton Rose have all expanded into Australia recently. While there have been alliances between Chinese and international firms, an alliance between King & Wood and Mallesons would be groundbreaking in its scale. In addition, The Asian Lawyer reports that the alliance could possibly take the form of a Swiss Verein, which may controversially allow joint operations in China despite laws prohibiting foreign law firms from practicing Chinese law. The strategic alliance is in line with King & Wood’s ambition to be China’s first global law firm but could cost King & Wood referrals from other international law firms who do not wish to benefit from a more direct competitor such as Mallesons.

Russian and Ukrainian Merger between Egorov and Magister Represents Market Breakthrough
The Lawyer

One of Russia’s largest law firms Egorov Punginsky Afanasiev & Partners has signed an agreement to merge with Magisters, a leading CIS-based law firm, towards the end of 2011. Together, under the name Egorov, the new law firm will employ 300 lawyers and 27 partners with offices in Astana, Kieve, London, Minsk, Moscow, and St. Petersburg. The merger will transform Egorov into Europe’s 17th largest independent law firm and a market leader in the region. Egorov chairperson Dimitry Afanasiev states, “this merger is unprecedented for our market. We’re a step ahead of any national or international law firm in size, market penetration and regional coverage in Russia and the CIS. Growth through consolidation is necessary to sustain the positive momentum in our development as the leading firm in Russia.” Egorov will open a law office in Washington D.C. and announced intentions to hire English-qualified lawyers.

31 Foreign Law Firms in India Deny Allegations of Illegal Practice
Bar and Bench News Network

The 31 foreign law firms subject to a public interest litigation petition filed by A. K. Balaji, an advocate and member of the Association of Indian Lawyers, in the Madras High Court have filed responses denying all allegations made against them. The petition against the group of U.K. and U.S. law firms alleges that the firms are violating provisions of the 1961 Indian Advocates Act by providing legal services in India. The allegations include violations of immigration law by engaging in business under tourist visas and operating out of hotels; illegally establishing offices and practicing law via legal process outsourcing outfits in India; and treating the practice of law as a trade or business rather than a ‘noble profession.’ The petition also claims that the lack of reciprocity in allowing Indian lawyers to qualify to practice law in the U.K. and U.S. should bar lawyers from these countries from practicing in India. In response, the 31 foreign firms have denied all allegations and have taken the position that their activity within India does not violate the 1961 Act, as there is no restriction on the practice of foreign law and the advising on international law within India.

Ashurst, Clifford Chance, Allen & Overy FY2011 Results Bolstered Asia-Pacific Growth
ALB Legal News

U.K. international law firms Ashurst, Clifford Chance, and Allen & Overy have posted strong provisional results for the fiscal year 2011. The increase of year-on-year revenue for all three firms reflects the robust returns of their respective expansions into the Asia-Pacific region. Allen & Overy pursued a client-driven Asia-Pacific expansion strategy and doubled its number of partners in the region through the launch of two offices in Australia and one in Jakarta; 12 of the 23 freshly-promoted Clifford Chance partners are in Asia and the firm is looking to seal a three-way merger with two Australian boutique firms; Ashurst recently launched a Hong Kong office and non-UK business now accounts for 40% of the firm. Profit-per-equity partner also increased at Clifford Chance and Ashurst, and remained steady at Allen & Overy. “We see that the much talked about shift from the West to the East is now a reality; one highlighted by our exceptionally strong performance in the Asia Pacific region,” said Allen & Overy global managing partner Wim Dejonghe. According to Simon Bromwich, managing partner of Ashurst, Ashurst’s revenues from Asia grew by 50% last year.

Moroccan Legal Profession is a Hotbed for U.K. Big Law Firms
The Legal Week

The development and evolution of the Moroccan legal profession has managed to catch the eye of large law firms around the world and most recently, in a span of two weeks, three top 10 U.K. firms have chosen to open offices in the North African country. Large foreign firms have often had a presence in sub-Saharan Africa; although these firms deny the moves as being politically or economically driven, this new trend of U.K. firms in the region appears to draw a potential link between Europe, North Africa, and the rest of Africa.

Expanding Across the Pond: British Firms Come to D.C.
National Law Journal

In an effort to strengthen their global presence, two more of Britain’s Magic Circle firms have leaked plans to move into Washington, D.C.: Allen & Overy has officially announced plans to open an office and it is reported that Linklaters plans to do the same. Matthew Huisman of the National Law Journal comments that while this would mean that four out of five Magic Circle firms have opened in D.C., the transition is not a guaranteed success. The opening of a D.C. office by Clifford Chance in 2000 “is recounted by law firm consultants these days as a tale of how not to execute a trans-Atlantic merger.” However, the assumption of many of these expanding firms is that regardless of the challenges the global presence is worth the risk.



Legal Education

Class Action Against Law Schools for Fraud and Misrepresentation of Job Placements
Inside Higher Ed

Two class action lawsuits alleging fraud, negligent misrepresentation, and deceptive business practices were filed against New York Law School and Thomas M. Cooley Law School regarding job placement information for JD students. According to a Press Release issued by Kurzon Strauss LLP, the law firm handling the matter, “These suits are not just about NYLS and Thomas Cooley—we believe the practice of inflating employment statistics and salary information is endemic among law schools” stated David Anziska. “We hope these suits bring systematic change in the way legal education is marketed by making transparency and accuracy the rule, not the exception. Our efforts to bring about that change begin today.” According to Inside Higher Ed, the law schools deny the charges and Cooley has filed a defamation suit against the lawyers suing them. William D. Henderson, professor of law and director of the Center on the Global Legal Profession at Indiana University states, “The fact that you have some serious class action law firms filing suit should give anybody pause.”

Japanese Exam Sets the Bar Too High for 75% of Law Graduates
New York Times

Japanese law school graduates are taking as much as two years to prepare for a bar exam passed by only 25% of examinees. In recent years, legal education reforms in Japan have led to a shift from an undergraduate to a graduate legal education system. Yet, only 50% of graduates of law schools with the best pass rate succeeded last year. Although legal education reforms were developed to increase the numbers and professional diversity of Japanese lawyers, the goal of passing 60 to 70% of test takers has not been met.

Which Law Schools Produce the Largest Number of Partners and Why?
Wall Street Journal

Professor Ted Seto, of Loyola Law School, recently published an article that surveyed junior and mid-level partners at the 250 largest law firms and created a ranked list of schools based on how many partners they produced in the last quarter century. According to the abstract, “The article identifies the top 50 feeder schools to the NLJ 100 nationwide and the top 10 feeder schools to those same firms in each of the country’s ten largest legal markets. U.S. News rank turns out to be an unreliable predictor of feeder school status. Hiring and partnering by the NLJ 100 are remarkably local; law school rank is much less important than location.” Harvard, Georgetown, and NYU comprised the top three.

Law School Grads Face Difficult Job Market, Deflated Salaries
Las Vegas Sun

Nevada Law school graduates are experiencing the ill effects of a battered economy. A recent survey from the State Bar of Nevada found that members aged 36 and under, with less than five years of practice experience, have seen their base salaries drop in 2007 from $95,000 to $80,000. Individuals in bankruptcy law fared better than those practicing real estate, which was an area of the economy hit hard by the recession. “In this market we’re seeing a lot of firms seeking attorneys with one to five years of experience,” says survey co-creator Layke Stolberg of UNLV’s Boyd School of Law. “The thinking being that these attorneys can hit the ground running.” Despite the tighter job market, most new graduates of Boyd are finding employment, although not always in the field of law.

Law Schools Pressure Law Firms to Recruit Earlier For Competitive Edge
Wall Street Journal

According to employment data released by NALP, only 25% of graduating law students obtained a position with a big law firm in 2010, down from 33% in 2009. Traditionally, law firms began the recruitment process two years ahead of when students would actually begin working as an associate, typically around the end of October. Now, according to Mark Weber, assistant dean for career services at Harvard Law School, there are over 100 law schools pushing law firms to begin the recruitment process earlier towards August. In 2000, only seven law schools held their interviewing processes in August, but more law schools have become attuned to the value of providing their students a competitive edge with early interviews.



Diversity

New Model Aims to Balance Career Progression with Family Life
Wisconsin Lawyer

Balancing one’s work and family life can represent a challenge for lawyers so that flexible working arrangements are becoming an important tool to expand and preserve career options. Achieving such a balance is especially true for women where only 6% have a stay-at-home partner (compared to 40% of men). At the 2011 Wall Street Journal’s “Women in the Economy” conference, the idea of a career “lattice structure” was recommended rather than the traditional “ladder structure”—the idea being that a lattice structure “depicts people’s career growth as multidirectional, zig-zagging up, down, and diagonally across the organization.” This model expands the possibilities beyond off-ramping and part-time work, and provides women more varied options in the legal profession.

Law Society of NSW Examines Retention and Promotion of Women in Law and Develops Strategies for Change
ALB Legal News

The Law Society of New South Wales (NSW) is looking to explain the low retention rate of women solicitors and their small proportion within senior roles of the legal profession. According to the Law Society, despite women constituting 46% of the profession in 2010, only 23% of women were principals of law firms with greater than 20 partners and 18% were principals of firms between 2 to 20 partners. Nonetheless, these percentages represent an increase over the past 5 years. The Law Society organized events to gather input from legal practitioners who have highlighted three common issues: flexible work arrangements, mentoring, and support for women returning to the workforce after an extended break. The Law Society intends on releasing a report with research findings and recommendations later this year to be used as a catalyst to kick-start changes in attitudes of women in the legal profession.

Australian Law Firm Leading Change with Targets for Female Partnership
The Australian

Corrs Chambers Westgarth is the first large Australian law firm to pioneer the introduction of targets for female partnership. As part of its gender diversity strategy Corrs has set a target proportion of 35% women to be on the partnership track and 40% in senior management roles by 2015. According to Corrs’ managing partner, John Denton, “by setting targets we will not be making empty statements but rather we will be able to measure our progress against it and marshal our resources effectively so we have effectual outcomes.” The targets are intended to be a performance indicator rather than an affirmative action quota. Philippa Stone, a partner at Freehills involved in launching a “thought leadership” initiative for women in the legal profession, is anti-quota and targets for women. Stone “believes in a merit-based promotional system supported by good programs that encourage the retention of women in the profession,” but “would never want to think that my or other women’s success in the profession is quota-driven.”



Corporate Counsel

Reverse Auctions Used to Contract Outside Legal Services
Wall Street Journal

An emerging trend among several large companies such as GlaxoSmithKline PLC, eBay Inc, Toyota Motor Corp, and Sun Microsystems is to use reverse auctions or competitive bidding models when negotiating legal services with outside counsel. According to the Wall Street Journal, “Reverse auctions pit multiple law firms against each other in an online chat room where they anonymously submit quotes for a particular job. Firms then race against the clock to tender incremental discounts against competing bids.” The competitive bidding model may help reduce legal costs by 15% to 40%, but some have expressed concern that such models could undermine a client-firm relationship traditionally built on trust and loyalty. Rich Olin, general counsel for Costco, states, “the history of who we have working on a matter, how we trust them, [and] how they understand our business…make the relationship work.” Other general counsel, such as Don Liu of Xerox, also raise concerns about whether being in a chat room is the ideal format for fostering creative thoughts.

Job Market Remains Stable for In-House Counsel, Recruitment Levels Still Low
Lawyers Weekly

According to the 2011 Taylor Root Market Update & Salary Review, the job market for in-house counsel in the banking and financial industry has stabilized over the previous 12 months, yet recruitment levels remain low. The Review states that, “a prolonged approval process is often still required before job offers are forthcoming and fixed term contracts or temporary appointments are still being offered to circumvent this arduous process.” There is a “reasonable demand” for lawyers in areas such as financial services, retail banking, superannuation, regulatory and compliance, derivatives and ISDA documentation, equities/structured products, and investment management. “Since the start of this calendar year, when companies have recruited, there has been a real focus on hiring lawyers at the junior to mid-levels—three to seven years post-admission—with very few roles available for lawyers looking for more senior counsel positions.”



Innovation & New Models

ABA Legal Technology Survey Update Includes Tablets and Social Networking
Law.com

Each year the ABA’s Legal Technology Resource Center conducts a survey about technology used at member firms, covering a wide array of categories including law office technology, litigation, courtroom technology, and mobile lawyers. The 2011 edition of the survey is even more inclusive as it now collects information on the usage of tablet computers (such as the Apple iPad and Samsung Galaxy Tab) as well as social networking sites like Twitter and Facebook. One-fifth of respondents stated that a tablet device was available at their firm. The smallest (2-9 attorneys) and largest (500+ attorneys) firms had the highest percentage of tablet availability at nearly 25%, with no group being lower than 14%. The most important benefits of cloud computing and storing data on an internet-accessible server were the ability to access data anywhere (70% of respondents), 24/7 availability of data (55%), and low cost of entry and predictable monthly expenses (49%). Many lawyers reported using blogs, Twitter, or online community sites as part of their work routine to increase work efficiency.

Novus Law is First Law Firm Globally to Receive ISO Combined Security and Quality Management System Certification
PR Web, Digital Journal

Novus Law LLC has received an International Organization for Standardization (ISO) 27001/9001 combined security (27001) and quality management system (9001) certification based on an independent audit by UL DQS, Inc. The 27001/9001 global certification from ISO, one of the most prominent organizations that develops internationally recognized benchmarks, makes Novus Law the first firm in the global legal profession to receive the certification. According to the Novus press release, Novus Law received this combined certification “specifically for document review, management and analysis services in association with litigation, investigations, corporate transactions, enterprise content management and corporate governance services for corporate legal departments and the law firms that serve them”. Novus President and CEO Raymond Bayley further claims that the Novus Process reduces document management, review and analysis costs by up to 60-80%. According to Bayley, “the legal industry is continuing to embrace the reality that better work processes, quality management and control systems can have an enormous impact on their bottom line. Novus Law is uniquely positioned to address that reality, which is further reinforced by this certification.”



Law Firms & Practice Management

New Study Reveals Five Forces that Will Change Legal Practice
Law Technology News

In a study by advisory company Corporate Executive Board interviewing 100 members and surveying 70 legal executives, there are five forces that will change trends in legal practice. First, issues such as data privacy, executive compensation, anti-bribery, and antitrust are regulated differently across many countries and U.S. states making it difficult to harmonize policies. Second, how companies organize and manage an increasingly large amount of electronic information has come under scrutiny. Third, competing demands exist between corporate transparency and consumer privacy requiring legal departments to become better informed technologically. Fourth, as companies enter emerging global markets to capitalize on growth, managing legal risks in a de-centralized fashion will be done locally, requiring a good understanding of local culture. Fifth, the legal services market will mature, with legal and business outsourcers being used instead of traditional law firms for matters involving discovery and document review.

Sleep Pods Enable Lawyers to Remain At Law Office All Night
The Guardian

The ability to work long hours and establish oneself as a hard worker has led some London law firms to create separate sleeping quarters and sleeping pods that resemble Japanese capsule hotels. Sleepless nights from working long hours can be a liability to individuals and law firms if mistakes ensue, yet many continue to pull all-nighters to “close the deal.” As one lawyer turned psychotherapist reminisced about his days at a prominent New York law firm, “There’s a machismo around staying up all night, night after night—like doing 10 shots of tequila. You’re tough. Not a problem.” These sleeping quarters are perceived by some as a solution to the problem; others view them as exacerbating an unhealthy and risky model.

Why Partners Leave Law Firms
New Jersey Law Journal

As lateral and associate hiring is on the increase, some partners and associates who were dissatisfied with their law firms during the economic downturn have started to look elsewhere. The New Jersey Law Journal offers eleven reasons why partners leave their law firms. Among them is the inability or unwillingness of law firms to provide flexible or alternative billing arrangements in order to retain certain clients, not having sufficient marketing support to meet with prospective clients, and lack of succession planning in training younger partners. Other reasons for departures of partners include lack of financial stability, equitable compensation systems, and opportunity for advancement in the firm.

Hiring and Supervising Contract Lawyers in an Era of E-Discovery
American Lawyer

With an increasing number of outside contract lawyers employed to handle e-discovery documents, the standards for supervision of vendor lawyers’ services remain unclear. When federal and state investigators subpoenaed J-M Manufacturing Company Inc for allegations into a whistleblower lawsuit, the law firm McDermott & Emery handed over 250,000 documents to investigators. J-M filed a lawsuit against McDermott for producing too much information and alleging that they did not thoroughly review the contract attorneys’ work. Federal investigators made the documents available to the whistleblower’s lawyers who refused to destroy or return them, according to American Lawyer. The case raises unique ethical challenges when large amounts of e-discovery documents are involved. As Stephen Gillers, an ethics professor at New York University, states, “This is an emerging issue because of the increase in outside service providers, especially in discovery.”



Attorney Regulation & Ethics

New York Attorney General Seeks to Preserve Rule Prohibiting Non-Lawyers from Investing in Firms
New York Law Journal

Jacoby & Myers has commenced a lawsuit against presiding justices in New Jersey, Connecticut, and the Southern District of New York to overturn rules prohibiting non-lawyers from investing in law firms, claiming that the rule is vague and outdated. The personal injury firm argues that outside investors would infuse valuable capital into firms, increasing public access to affordable legal services. New York Attorney General, Eric T. Schneiderman, has moved to dismiss the suit in his district and states in his motion that non-lawyer partners could influence the professional judgment of attorneys.



Professional Development

Apprenticeships—The Right Step for Legal Education?
The Times

As recent law school graduates struggle in the job market, the legal profession in Britain has been reexamining itself increasingly. While law firms are looking at options such as school visits and internships to effect change, the Times-Herbert Smith Student Advocacy Competition is asking students to examine a different idea: The apprentice lawyer. This “learning by working” concept is not new to the British system, but would result in a radical change in both education and practice. The competition requires participants to prepare compelling arguments and a video to examine whether the apprenticeship should be the “new route into the law.”

Summer Associates’ Offers Dropping
American Lawyer

The American Lawyer’s 2010 Summer Hiring Survey confirms that law firms extended 33% fewer job offers than the previous year to their summer associates. The decrease in offers may be explained by the overall lower number of summer associates. NALP Executive Director James Leipold states “Law firms hate to recruit good people, have them come through their summer programs, and then not be able to make them an offer. That is a waste of everyone’s resources and they understand that.”



Program Notes

PLP Launches Interactive Map of the Legal Profession

The Program on the Legal Profession is pleased to announce a new web initiative featuring an interactive map of the legal profession in countries around the world. PLP Research Director John Coates has been working with Harvard Law School students to produce comparative analyses of legal education, law firms, and legal procedure in the U.S., U.K., China, Canada, Israel, and six other countries. Please visit our website to access the map, and feel free to send us feedback. We will be updating the reports and adding new countries in the coming months.

Access to Justice: An Agenda for Legal Education and Research

For decades, bar studies have consistently indicated that a majority of the individual legal needs of poor and middle-income Americans remain unmet. The recent creation of an Access to Justice Initiative within the United States Department of Justice under the Obama administration responds to these concerns. The initiative’s interest in building bridges to legal academics prompted a meeting at Stanford University in 2011 co-sponsored by the Harvard Law School Program on the Legal Profession, the Stanford Center on the Legal Profession, and the American Bar Foundation. That meeting resulted in the creation of a Consortium on Access to Justice to promote research and teaching on access to justice, and the preparation of a report, available for download on our website.

New PLP White Paper—Corporate Purchasing Project: How S&P 500 Companies Evaluate Outside Counsel

This report marks the culmination of our Corporate Purchasing Project—more than four years of scholarly research dedicated to examination of the ways in which S&P 500 legal departments hire and manage outside counsel, drawing from six academic papers in various stages of publication. How are relationships between clients and service providers in the corporate legal market evolving, and why? Our novel empirical data is drawn from surveys and interviews of 166 chief legal officers (“CLOs”) of S&P 500 companies—one-third of all such large publicly traded companies.

Specifically, we sought to explore four topics of substantial importance about which there is little systematic information:

  • How do these companies evaluate the quality of legal service providers when making hiring and legal management decisions?
  • Under what circumstances do these companies discipline or terminate their relationship with their law firms?
  • How do these companies evaluate whether to follow “star” lawyers when they change law firms?
  • In what ways do these companies manage the intersection between law and public relations?

Purchase the report.

Leadership in Law Firms

Harvard Law School Executive Education will be hosting Leadership in Law Firms, September 18-23, 2011. The program brings together leaders from top law firms worldwide to discuss the challenges they face in leading these organizations and developing the skills and perspectives necessary to lead in an increasingly competitive environment. The program will be the inaugural event in the new law school building, the Wasserstein Hall, Caspersen Student Center and Clinical Wing.

Emerging Leaders in Law Firms: New Partners Program

Harvard Law School is delighted to announce its latest one-week intensive executive education program, Emerging Leaders in Law Firms: New Partners Program, specially developed for attorneys who have entered equity partnership in their firms within the past two years. These new equity partners are taking on larger managerial responsibilities and are expected to assume greater leadership roles. The program offers them leadership and managerial perspective and skills to transition to partnership successfully. The program will be held at Harvard University in Cambridge, Massachusetts, March 11-16, 2012. Please visit our website for more information.



Editor: Daniel L. Ambrosini
Managing Editor: Nicola Seaholm
Contributing Editors: Amanda Barry, Nathan Cleveland, Hakim Lakhdar, Mihaela Papa, Erik Ramanathan


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