TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Saturday, May 27, 2017

88% Of Law Firms Have 'Chronically Underperforming Lawyers': 'Decreasing Demand For Legal Services Is Endemic In The Profession'

ABA Journal, Law Firm Leaders Report Lawyer Oversupply and 'Chronically Underperforming Lawyers':

Fifty-two percent of law firm leaders responding to Altman Weil’s Law Firms in Transition Survey  said their equity partners are not sufficiently busy. Sixty-two percent said nonequity partners are not busy enough, and 25 percent said associates don’t have enough work. Eighty-eight percent of the leaders said they have “chronically underperforming lawyers” at their firms. When asked why, 82 percent identified weak business development skills and 59 percent said flat or declining market demand was part of the problem.

“Decreasing demand for legal services is endemic in the profession,” the survey said. “While reducing compensation may be an appropriate response to underperformance, it should not be mistaken for a remedial tool. Experience shows that the right response is to make a plan for improvement with a clear timeline, and to remove those lawyers who are not able to turn their performance around.”

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Comments

Obviously the solution is to pretend that it is still 1999 and ignore the issue. Pets.com will rescue the billings next quarter!

Posted by: Unemployed Northeastern | May 27, 2017 8:07:41 AM

Theres no institution that doesn't have this including law schools.

Posted by: Mike Livingston | May 27, 2017 10:07:13 PM

A better solution is to start measuring performance in profits per partner per hour worked. Life is much more pleasant at 1,500 billable hours per year, and life is still affordable. Longer hours lead to decreasing returns from the non-practice part of your life.
In the meantime, since lawyers are surprisingly bad at doing quantitative analysis, they wind up answering to managing partners whose rewards come from increasing the only measure they know, profits per partner.

Posted by: Dave Anderson | May 28, 2017 2:00:11 PM

It says much about how law firms think that "underperforming" doesn't mean lazy. It means not generating enough billable hours for the firm.

That may even mean ove-performing, pleasing a client by doing 10 hours of work in 8 when the firm would prefer that 10 hours be stretched out to 12.

I once knew a parole officer who understood lawyers well. When he had a court appearance for a personal dispute, he insisted that he'd only pay when his dispute was before the judge. For that waiting around time, he told the lawyer he'd have to bring work for other clients to keep himself busy.

Posted by: Michael W. Perry | May 29, 2017 4:13:21 AM

Maybe the smaller firms or independent lawyers that don't charge $500/hr are siphoning some of the business. Duh.

Posted by: moron | May 29, 2017 5:33:25 AM

Like every business (and yes law is a business) that grew wildly successful during the '50s and '60s, law is going to have to reinvent itself. Instead waiting for the daily misery dump by clients, lawyers are going to have to understand how they can help people, not just fix stupid mistakes. This will require innovative thinking. Nobody wanted an iPhone until Steve Jobs invented the iPhone. Instead of trafficking in fixing stupidity, the innovative lawyer will invent the legal equivalent of the iPhone.

Posted by: Dale Spradling | May 29, 2017 7:39:45 AM

Would the legal equivalent of the i-phone be a tax avoidance strategy? Lawyers and accounting firms are pretty good at inventing those.

Posted by: tax shelter | May 29, 2017 5:40:10 PM

I dunno. Personally, I'm reinventing myself as a concierge CPA similar to what MDVIP has done for doctors. The most fundamental move is reducing the number of clients. A GP, for example, may have 2,500 patients. A MDVIP may only have 500. Next up are fixed fee retainers, no more billable hours. Another move is to do everything online. So far, my clients and I both prefer the new format.

Posted by: Dale Spradling | May 30, 2017 5:17:43 AM