The marketplace is witnessing a shift in the way legal services are delivered and organized, replacing a structure that has survived for decades: lawyers structured as partnerships, working from their own offices and delivering services face to face with, only fairly recently, a modest amount of technology support.

The story of "how we got here" is complex but some immediate triggers - or "accelerators" - have ignited deeper, tectonic shifts. This is not some short-term response to the global economic malaise but deeper and more structural and, therefore, more permanent.  The drivers are rooted in economic and societal changes that have affected every part of our world but have been slow to make their impact felt in the legal market.   Included are some of the basic trends from "The World is Flat," the advent of the internet, the globalization of services and access to powerful personal computing tools. But, we have barely begun to appreciate how they will transform the legal services sector of the business world.

Other trends in society have combined with these to create a combustible mixture for the law and wider professional services. Not enough time has been devoted to the game-changing shift in generational attitudes with regards to the deference to and respect accorded to the professions, the creation of "always-on" consumer expectations fuelled by new retail service experiences (especially but not exclusively online) and the empowerment of buyers with the information they need to assess and compare value for money.   Pioneering elements inside the world of law (in the US the ABA have neatly tagged many of these folk as "legal rebels") have been tracking and responding to these developments for many years, of course. But it has taken a very powerful shock to truly ignite these tentative sparks.

That powerful shock - the primary "accelerator" that has created this watershed shift - has been the deep and sustained economic crisis that has arrested the seemingly inexorable growth in demand for and profitability of law firms. According to Citi Private Bank LawWatch survey data the crisis has triggered the first net reduction in demand for legal services in recent memory (2008/2009).

A secondary accelerator has also been at work for the last five years as regulators in some jurisdictions (initially in Australia but most notably in the globally influential UK market) have announced and begun to enact legislation that will open up the legal market to external (non-lawyer) investment, ownership and competition.

These regulatory changes are a second fundamental accelerator of change for the entire global legal market, as they will influence activity and decisions far beyond the shores of the UK and Australia. However, the really interesting and significant fact here is that deregulation has stimulated the creation of a host of new business models in anticipation of enactment. The extended period since the UK government initiated the Clementi review into legal services and then passed the Legal Services Act 2007 has provided fertile ground for the development of new models. These have begun to emerge and operate in spite of the delay in getting to the ultimate "pay-off'"moment when the licensing of Alternative Business Structures (ABS) with external ownership begins, something we now expect in early 2012. 

Contact the Author, Chris Bull.

Most large law firms have far more lawyers than the availability of client work requires. This is, in part, driven by the law school hiring programs that require firms to predict their staffing needs almost two years in advance. But an equal culprit is the fear by most law firms of having a client come to their door with an engagement and not having the people to do the work. New business is so difficult to obtain that, for many lawyers, the fear of not being able to perform it in an acceptable manner causes the firm to err on the side of excess capacity.

No one benefits from over capacity. Typically, the partners become aware of the problem first. To keep themselves busy, they, effectively, reach down and take work off the plates of younger partners and senior associates. This causes the non-equity partners and senior associates to hoard work by not assigning work to mid-levels and juniors. Young lawyers must then either find "make work" to keep themselves busy or take work back from paralegals. The result is dissatisfied clients paying rates that are too high for the sophistication of the work performed, and dissatisfied associates who are not getting the experience-building work they crave. Eventually, a dissatisfaction level builds that causes associates, in whom the firm has a high investment, to move to another firm where they hope for better opportunities.

Unfortunately, firms become accustomed to overcapacity, particularly in the young associate ranks.  As a result, the first reaction of not having someone immediately available to perform work is to hire as rapidly as possible. Legal headhunters observe this routinely as law firms call them in a panic about the immediate need for a third year litigation associate. Then, a week later, the firm sits on the resumes of the candidates the recruiter sent over because the panic demand has passed.

The test of hiring comes in the answer to three questions:

1. How long term is demand for additional staffing? Is it in response to a specific deadline, a unique circumstance (maternity leave, back to back trials, etc.), or is there a systemic need for assistance?
2. How much assistance is required? Does it look like 2000 hours a year or is it more likely 150 hours one month and 15 the next?
3. Given the known volume of work and high probability of potential engagements, what will the additional lawyer be doing in three months? Six months? A year?

So, if it is a slam dunk for hiring, do it. If it's a close call, consider finding a capable lawyer who might be available on a periodic basis or part time. A number of firms are having great success with lawyers on a "mommy or daddy track" who want to continue practicing but not commit to a full time position. If there is a risk of not needing a person after the current crisis - tough it out.