Legal Week has now properly started, marked by the traditional ‘State of the Industry’ report – and if there is one key takeaway this year it’s: less is more. Artificial Lawyer looks at some of the main points raised by Patrick Fuller, chief legal data guru at ALM Intelligence, and Heather Nevitt from Corporate Counsel (pictured).
- Less Normality Means More Money: The pandemic put huge new pressures on corporates, which in turn meant that they had no choice but to look to external advisers, massively driving up demand.
- Less Equity Partners Means Even More Money: The number of equity partners as a proportion of each firm in the AmLaw 200 has decreased substantially in the last 20 years. On average, less than 25% of lawyers were equity partners in 2021. So, less people to eat the lovely big cake, and there is now a bigger cake as well. Moreover, the number of salaried or non-equity partners (AKA associates who have stayed for a long time) has been growing rapidly. Fuller noted that at the current trajectory salaried partners will eventually outnumber the equity partners. And again, that means more money for the equity partners, i.e. more people in the leverage, less people taking the profit share.
- Less costs and less travel – with law firm partners stuck at home and not jetting around the planet there was less costs and less to take them away from good old-fashioned billing. So, again, more money.
- Less offices means more money – they also found that law firms that operated multiple smaller offices made less money. The reason is obvious: a small office is still an office with all the costs it brings. Firms that trimmed their spread and kept their offices large enough to gain economies of scale………you guessed it…..made more money.
- And there was also a trimming of lawyers at the start of the pandemic, which cut costs, while those who remained had to work even harder – leading to burnout and mental health issues – but…..it made………..yes, you guessed it again.
- Oh….and legal tech…….? Well, the key point was that inhouse teams are still struggling to get budget and change behaviours to drive innovation. So, not too much new on that one.
One other question is whether Legal Week is as well attended as back in early 2020? The short answer is it feels a little bit less crowded, but only by a very little. We’ll have to see the final numbers later in the week. Overall though there are plenty of parties and events, the bar at the Hilton Hotel in Midtown is heaving from lunchtime onwards, and people seem energised and keen to embrace in-person life again.
Thanks to Patrick and Heather for showing so much in such a short time.
How all of this impacts legal tech and innovation more broadly will be explored shortly in a following article by Artificial Lawyer.