The Legal Profession
The recession has exposed structural flaws in the business models of many law firms. The challenge: Amid a changing revenue stream, maintain compensation levels that keep partners happy and attract the best legal talent.
» More “alternative fee arrangements” are emerging between firms and corporate clients — agreed-upon lump sums for a body of work, or essentially, payment on anything other than an hourly basis. Hourly billing won’t disappear, but over time it’s becoming less dominant. Big firms with offices in more than one city, meanwhile, can use “blended rates” — combining the hourly rates from an attorney in a higher-cost city like New York with those from a lower-cost city like Orlando, for example, to hold down costs for clients.
» Firms must use technology to hold down the cost of legal services, but technology imposes costs [“Tech and the Law”]. At Miami-based Richman Greer, where some lawyers once had their own secretaries, the ratio is now one secretary for every three lawyers. The firm also is “spending more money on technology so we can be more efficient,” says Manuel Garcia-Linares, managing shareholder. “I’m trying to get rid of paper.”
Clients also expect firms to be technologically up to date, he says. “Our clients want us to have as cutting edge as possible.”
» Salaries for associates remain low. Garcia-Linares at Richman Greer and past president of the Florida Association of Managing Partners, says the financial pressure imposed on law firms by the recession has led to associate salaries dropping from “astronomically high” levels during the boom. He says he expects salaries for young lawyers and those coming out of law school will remain low for many years.
With the exception of managing partners, salaries for Florida lawyers fell sharply from their 2008-09 peak, reflecting the economic realties of the state as the recession moved into a limp recovery. Associate lawyers had the largest percentage decline.
Today, a managing partners’ job, says Alvarez, is to not only create value for clients, but also “deliver that for less but keep the margins the same so we can attract the same quality of lawyers. Whoever gets it right will be the survivors.”
Legal Salaries, median income
|Federal gov't attorney||100,000||100,000||84,000||78,000|
|Local gov't attorney||90,000||91,000||75,000||74,600|
|State gov't attorney||60,000||65,000||60,000||56,000|
Note: Annual income before taxes
Source: Florida Bar 2011 Membership Opinion Survey