Does Globalization Slow Firm Profit Growth?
When it comes to deciding whether to go global, law firms have been described as “homebodies,” “adventurers,” “colonizers,” “conquistadors,” or “citizens of the world.” In the Economist, Erik Ramanathan, Executive Director of the Program on the Legal Profession at Harvard Law School, highlights three strategies that law firms use to venture overseas. The first occurs when semi-independent national firms join in a Verein seeking to be local firms, which may not be the most profitable. The second strategy used by some large American law firms with sterling brand names is to move abroad with “beachhead” offices to serve existing clients, however they face corporate culture clashes. The third, and perhaps riskiest, strategy are law firms that bet on a single market and choose to either transplant their lawyers or find the right talent from abroad.
Blake Dawson to be First Top-Tier Australian Practice to Merge with Foreign Law Firm
The increased interest in the Asian legal market in recent years has pulled Australia into competition and cooperation with many international law firms. In March 2012, Ashurst and Blakes intend to combine their Asia departments with Blakes’ domestic Australian operation, and to be rebranded as Ashurst. With Blakes’ 13 and Ashurst’s 18 partners in Asia, this merger is a good example of trends to be expected in the expansion of large international law firms.
Rule of Law: One of London’s Greatest Exports?
London law firms have been ahead of the game in the global legal services market and have expanded aggressively around the world along with their global clients. As well as producing 1.8% of Britain’s GDP, legal services generated £3.2bn in exports in 2009, which is nearly three times as much as a decade earlier. The UK’s liberal regime has allowed more than 200 foreign law firms to open offices in the UK, and has attracted business due to the influence of the common law around the world and a judicial system trusted to produce fair results. The government launched an action plan for growth of legal services with UK Trade & Investment in May, and committed to work with the Law Society, Bar Council, and trade promotion body TheCityUK.
Globalization of Legal Services in India—A Mirage?
The UK has been actively pushing for changes to India’s current policy that prohibits foreign law firms and lawyers from providing legal services in the country. The UK prides itself on its competitive legal services industry believing there is a huge market potential in India. Indian policy makers have been slow to make changes due to domestic pressures from Indian law firms and activists. UK Justice Secretary Kenneth Clarke was in India recently where he met with Indian Law Minister, Salman Khurshid, urging him to initiate and expedite the process of change.
Regulating Cross-Border Legal Services
The need for an international or regional authority to regulate cross-border legal practice was highlighted by Chief Justice Corona of Philippines at the 5th China-ASEAN Forum on Legal Cooperation and Development in Kuala Lumpur, Malaysia. Chief Justice Corona stated that uniformity in standards of education, qualifications, and licenses and certificates would help cross-border trade in legal services. However, he cautioned that lawyering is not just a profit-making business and there is a public interest component to be protected. Lawyering is a “time-honored profession anchored on the dictates of truth, justice and equality, partaking of the nature of true and selfless public service for the betterment of society and the nation.”
Botswana’s Law Society Concerned about Influx of Foreign Lawyers
The Botswana Gazette
Some of Botswana’s attorneys are concerned that the legal market is being flooded by foreign lawyers, especially those from Zimbabwe, while local law graduates are unemployed. They have created a group called Botswana Indigenous Attorneys that aims to protect local lawyers. The group is lobbying to amend the Legal Practitioners Act (LPA) to regulate the admission of foreign lawyers. Botswana’s Law Society—comprised of 500 lawyers, 25% who are foreigners—is considering amending the LPA in considering petitions for admission by foreign attorneys.
Ukraine’s Domestic Law Firms Successfully Compete with International Law Firms
Out of the top-five law firms working in corporate, mergers and acquisitions, banking, and finance sectors in Ukraine, three of these firms are Ukrainian. There are no locally owned companies who made the top five in comparable rankings from Russia, and only one in Poland. Why are Ukrainian firms so successful? Arguably, according to the Kyiv Post, top international firms in the mid-1990s simply saw Russia as a major business opportunity and ignored Ukraine’s relatively small market, which allowed Ukrainian law firms to develop enough capacity to establish a strong presence on the market, and to hire English-speaking and Western-educated lawyers for local and international transactions at lower rates. Domestic law firms have unique knowledge of the complex local market, expansive business connections, and the ability to adapt to constant legislative changes.
Norton Rose’s Rapid Global Expansion
The American Lawyer
Norton Rose has expanded rapidly and, as a result, has enjoyed success in the rankings according to the American Lawyer. In the last year, the firm’s rankings in the American Lawyer’s annual Global 100 Rankings increased from 67th to 34th position, following its merger with Deacons. Norton Rose recently announced further global expansion with the Canadian law firm Macleod Dixon. This latest expansion has spurred speculation that the firm is positioning itself to join the US market.
Bar Council Grooms New Teachers of Law in India
The Bar Council of India (BCI) is embarking on a program to train 50 PhDs in Law to become teachers at an international standard. The BCI will aim to train 250 such professors over the next five years. The program is in response to what former Chief Justice of India GB Pattnaik called the deterioration of legal education after independence. He recommends that the examination system of law students in India emphasize moot courts, problem solving, drafting, and greater integration among law schools, courts, and lawyers.
Inaccurate Admissions Data from University of Illinois College of Law
The University Illinois College of Law reported posting inaccurate admissions data, specifically LSAT scores and grade point averages, on its website for the classes of 2011 to 2014. Although the discrepancies may be slight (the law school reported its median LSAT test score for the class of 2014 as 168 when it was actually 163), test scores factor heavily into the annual US News and World Report rankings. The school has not stated whether the inaccurate reporting was intentional, and the ABA’s accreditation committee is considering the matter.
Judges and Clerkship Candidates Race to Beat the Calendar
New York Times
Despite the existence of clerkship hiring guidelines aimed at leveling the playing field and promoting fairness, some federal judges are interviewing and selecting their preferred clerks before the officially scheduled date and time. Due to layoffs and reduced hiring at major corporate law firms, top students at elite law schools are now competing with recent graduates (who are not bound by the application and interview schedule guidelines) for the highly coveted federal clerkship positions. Candidates are under pressure from their law school advisors to accept any offer immediately. Students are competing to get the earliest interview slots with their preferred judges, while judges are competing to make their decisions quickly to snap up their favorite applicants.
ABA Delays Refining Law Schools’ Job Placement Reports
National Law Journal
An ABA questionnaire aimed at the class of 2010 will not include the percentage of law graduates who landed jobs requiring bar passage or the percentage in part-time jobs. The decision by the ABA questionnaire committee came amid harsh criticisms from reformers claiming that the omission of such information protected law schools from reporting poor statistics and accurately reflecting the job market. According to Professor Brian Tamanaha, the class of 2009 shows that 30 ABA-accredited law schools had 50% or fewer of their graduates in jobs that require a JD after nine months. ABA committee chairperson, Art Gaudio, reports that they dropped the questions from the survey because “members were uncomfortable with how jobs were being defined and [they] could not come to a conclusion about what definitions there should be.”
Acculaw: Providing an Alternative Legal Training Option
In the wake of a decreasing number of jobs available to law school graduates, former UK Hogan Lovells lawyer Susan Cooper has established a company to rectify the issue. The new project, Acculaw, will assume responsibility to train recent graduates and contract them out to law firms. In the UK, students are required to complete training before qualifying as a solicitor. The project is particularly appealing for specialist firms who are not able to train students fully in all aspects of law. Some British firms, such as Olswang, see the project as providing flexibility in hiring new associates and removing the burden of dedicating resources into training graduates.
Innovation & New Models
Should Law Firms Compete or Cooperate with Non-Firm Firms?
As the legal profession changes with cost competition assuming a greater focus, “non-firm firms” (NFFs) are proving that they can add value without adding considerable costs. As Paul Lippe states in the ABA Journal’s “The New Normal,” these “NFFs are challenging traditional firms’ monopoly on process-focused work like document review. The reality is that many NFFs perform this work far better—by any standard—than most traditional law firms do. And they do so at a fraction of the cost.” The concern for law firms is that a large portion of their business will be eaten up by these NFFs; others argue that the benefit of allowing NFFs to conduct “process work” with increased accuracy and efficiency is that it then frees lawyers to focus on the more lucrative side of the business.
LegalZoom Defends Its Practices
LegalZoom is challenging the notion of legal practice. A website providing standard legal documents for customization by clients aims to cut down the high legal cost incurred when working with lawyers directly. LegalZoom has been sued in various US states for charges relating to “misleading consumers and practicing law without a license.” Some lawsuits were settled in states such as Washington, where LegalZoom paid a fine but did not admit to wrongdoing. As some lawsuits continue, LegalZoom’s founder John Suh is looking to expand its services into divorce matters.
Law Firms & Practice Management
Lawyers Who Lost Their Jobs Quickly Land on Their Feet
The National Law Journal
In 2008 and 2009 more than 1,400 lawyers from six large law firms that failed found themselves looking for work, but not for very long. According to a study from Emory University, nearly 88% of the 1,400 lawyers found jobs after leaving their law firm. The study found that networking, alumni relationships, and former work relationships were responsible for most of individuals’ success in reestablishing themselves professionally.
Too Few Lawyers in America?
Press of Atlantic City
A recent study conducted by three economists suggests that the problem with the legal profession is that there are not enough lawyers, driving up the cost of legal services. In 2000, the average lawyer at a US law firm earned $191,000, with a total legal tab for America of $170 billion; $64 billion of that cost, the economists claim, is due to market distortions caused by regulatory restrictions on the practice of law. Lawyers responding to the economists on the American Bar Association website argue that deregulating entry into the practice would allow unscrupulous and unprofessional operators into a crucial field.
The America Invents Act and Patent Lawyers
The America Invents Act has spurred demand for patent lawyers with graduate backgrounds in engineering and technological fields. While employment rates of new lawyers have fallen according to NALP, as of October 2011 there were 230 open postings for patent lawyers among the more than 1,400 attorney positions available nationwide. The increased competition for patent lawyers has lead to an influx of lateral hiring across firms. Patent agents who have passed the patent exam, but not the state bar exam, are also in high demand. According to Businessweek, the ideal candidate holds a doctorate degree in engineering, a JD from a top 10-law school, and has four years of work experience.
UCLA Study: Socioeconomic Diversity Lacking at Law Schools
A recent UCLA study based on the After the JD study, co-sponsored by Harvard Law School's Program on the Legal Profession, reveals that among the top 20 US law schools, 75% of students come from the wealthiest quarter of the population. Professor Richard Sander reports that more than 50% of these students come from the wealthiest 10% of families. He recommends that law schools offer more need-based scholarships, eliminate legacy preferences, and revise admissions policies to account for grade inflation at private colleges compared to public universities as a way to promote socioeconomic diversity.
Major UK and Irish Law Firms Launch Joint Diversity Initiative
A collection of twenty-three UK and Irish law firms are joining forces in an innovative new diversity initiative aimed at boosting social mobility in the legal profession. The idea behind the initiative, known as PRIME, will have each of the participating firms provide work-experience programs for state schoolchildren of non-privileged backgrounds. The effort to improve social diversity and provide avenues into the legal profession will target 2,500 placements annually by 2015 for state-school students aged 14-18. Each placement consists of 30-35 hours per week of relevant work experience for each student. The desired outcome is to encourage students from non-privileged backgrounds to view the legal sector as a realistic career.
Work-Life Balance Key to Female Lawyer Retention
While more women than ever before are entering the legal profession, many law firms struggle with retention of talented female attorneys. At BPP Law School in London, the ratio of women to men is 60-40, and almost 63% of new trainee solicitors were women across the UK profession. A survey by the General Council of the Bar reveals that women make up a third of practitioners, but almost half of those leaving the profession (42%) were women. When asked why they chose to leave the profession, 48% cited concerns over future earnings, 50% cited wanting more time with family, and 32% stated they left due to inflexible working arrangements.
Attorney Regulation & Ethics
Maryland Lawyers’ Ethics “On-the-Go”
The Maryland State Bar Association (MSBA) has developed an innovative new app, the first of its kind among state bar associations, whereby lawyers can now download the Rules of Evidence, Rules of Professional Conduct, Attorney Trust Accounts, and the Code of Civility on their iPhone, iPad, Android and Blackberry smartphones. According to Erek Barron, Chair of the MSBA Young Lawyers Section, “with this free app, there’s no need to guess what the ethics rules are, wherever you are—so long as you have a smartphone, the answer is literally at your fingertips.”
Ireland Establishes Independent Regulator of Legal Profession
A new bill in Ireland establishes an independent Legal Services Regulatory Authority responsible for regulating solicitors and barristers. The regulatory body is comprised of 11 members with a lay majority and lay chairperson who will also have the power to prepare codes of practice and regulate issues including advertising, indemnity insurance, and the structure of the profession. According to Minister for Justice Alan Shatter, “It’s a good day for the legal profession as well because restrictive practices which inhibit the delivery of legal services are being removed through new business models…which provides for the possibility of greater competition in the provision of professional legal training and a reduction in the cost of such training.”
UK Legal Services and Multidisciplinary Practices
UK Justice Minister, Jonathan Djanogly, called it a landmark day for the legal industry with the enactment of the new Legal Services Act. The legislation permits law firms to benefit from investment and explore new markets where lawyers can work in multi-disciplinary practices and offer financial and legal advice under new trading bodies know as Alternative Business Structures (ABS). According to Djanogly, the changes “will enable firms to set up multi-disciplinary practices and provide opportunities for growth.” Conveyancer-led businesses offering property law and probate services will be among the first of the new legal businesses. Clive Sutton, of the Sole Practitioners Group states, “the introduction of ABS puts at risk the independence of legal advice, via the profit interests of commercial owners.”
Vague Rules for Lawyer Advertising Overturned in Florida
Wall Street Journal Law Blog
Federal court judge Marcia Morales Howard recently overturned several of the Florida Bar Association’s restrictions on advertising for lawyers and law firms. According to the Wall Street Journal Law Blog, the Florida bar’s regulations, which prohibit advertisements with “any background sound other than instrumental music” are among the strictest in the US. Plaintiff’s lawyer William Harrell Jr. initially filed a lawsuit in 2008 arguing that the rules, which include a ban on “manipulative” advertisements, are vague and violate lawyers’ free speech rights.
Negligence Claims in the Era of E-Discovery
Negligence claims can arise if lawyers collect either too few or too many electronic records in the discovery process, according to Susan Wortzman co-founder of the Canadian e-discovery law firm Wortzman Nickle. Whereas sanctions for e-discovery negligence in the US generally include large payments, they are far more likely to involve awards for costs in Ontario, Canada. Some clients want to review e-discovery evidence themselves to keep lawyers’ fees down, but there is a risk of lawyers breaching their professional responsibilities if they fail to supervise the collection process adequately. Glenn Smith, founding partner of Lenczner Slaght, states, “I would bet that lower than 10 percent have a written electronic discovery plan…it will be found you’ve breached a standard of care by not having written a discovery plan.”
Segmentation of Legal Work by GCs Will be a Major Change-Agent Next Year
Axiom CEO Mark Harris writes that the future of business innovation in the legal profession currently rests with GCs at top companies in the US. According to Harris, after years of price increases, and firmly established structural limitations, law firms are unable and unwilling to create change in the industry. Instead, it is up to GCs to use “segmentation” to “align various categories of legal work with the most appropriate provider set—law firms, in-house teams, lawyers in India, contract administrators, software programs, etc.” Harris predicts that more GCs will adopt segmentation practices over the next twelve months, pressuring firms to adapt and encourage change.
GC and Partner Positions Still Lack Significant Female Presence
According to Corporate Counsel, women still find it challenging to secure positions as GC in large companies, and even more difficult to become partners in large law firms. While women today have greater opportunities to advance their careers as lawyers, they still represent a small percentage of leaders in the legal professional. Various reports provide that women continue to outnumber men in law school, and although their numbers have stalled somewhat over the past few years, the percentage of female graduates is around 50%.
Editor: Daniel L. Ambrosini
Managing Editor: Nicola Seaholm
Contributing Editors: Amanda Barry, Nathan Cleveland, Hakim Lakhdar, Pavan Mamidi, Mihaela Papa, Erik Ramanathan
Read the Previous Issue
Sign up to receive the Pulse by email.