Is the Windy City legal market heading leeward?

Any sailors out there would appreciate the pun. Those of you who are not, leeward is away from the wind, and in 2013, many top Chicago firms like the rest of the legal market, were getting by without as much wind in their sails.

I again am copying an article for your review today by Steven Strahler because for some reason I was not allowed to share it directly from the source.

DLA Piper U.S. LLP and Baker & McKenzie LLP retained their one-two ranking on American Lawyer magazine’s list of the nation’s biggest law firms by revenue. Chicago-based Kirkland & Ellis LLP, holding at No. 5, once again was the top firm in the city, as measured by profit per partner.

The results, based on 2013 data, show the tough economic conditions confronting much of the legal industry.
Revenue for DLA Piper, which has deep Chicago roots, was essentially flat at $2.48 billion, while Chicago-based Baker & McKenzie’s rose 4.7 percent, to $2.42 billion.
While still spectacular, Kirkland’s average profit per partner, at $3.28 million, barely increased from 2012.
Revenue on average for the 100 top-grossing law firms in America rose 5.4 percent and profit per partner just 0.2 percent, the magazine said. Revenue per lawyer was off slightly.
Other Chicago-based movers on the list all lost ground when ranked by revenue:
• Sidley Austin LLP dropped to ninth from eighth.
• Mayer Brown LLP went from 16th to 18th.
• Winston & Strawn LLP fell to 39th from 34th.
• Jenner & Block LLP landed at 87th from 75th.
Jenner had the second-largest decline — 7.8 percent — in revenue per lawyer of any firm on the list of 100.
Revenue rankings for three other Chicago law firms were unchanged: McDermott Will & Emery LLP (29th), Seyfarth Shaw LLP (60th) and Katten Muchin & Rosenman LLP (62nd).
A representative of Mayer Brown declined to comment; the other firms had no immediate comment.
Jenner previously blamed federal budget cuts and a government shutdown for two consecutive years of flat or declining performance.
American Lawyer said 20 firms dubbed “super-rich,” including Kirkland, were pulling away from the pack, while six international firms, such as DLA Piper and Baker & McKenzie, with separate profit centers, were falling behind on key metrics.
Nevertheless, Kirkland’s revenue gain of 4.1 percent last year trailed the top 100 average.

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What Do Firms Look For When Hiring New Lawyers?

I was forwarded this nice piecabout use written by Keith Lee, and it presents an interesting review of Neil Hamilton’s recent work on Legal Employers Hiring Practices.

For some reason I am unable to share it, so I have copied it below, and here is a link to the article.

This morning I saw on the Legal Skills Prof Blog that a new paper was released on SSRN by Professor Neil W. Hamilton entitled Changing Markets Create Opportunities: Emphasizing the Competencies Legal Employers Use in Hiring New Lawyers (Including Professional Formation/Professionalism). I thought it sounded interesting and gave it a read.From the abstract:

To guide legal educators and law students in responding to challenging markets both for entry-level employment and for applications to law schools, this article analyzes empirical research on the competencies that legal employers, the profession itself, and clients are looking for in a new lawyer. The article advances the proposition that law schools can build on an existing strength of helping each student develop knowledge of doctrinal law, legal analysis, legal research, legal writing and oral advocacy to do better at helping each student develop additional important competencies (and have evidence of those competencies) that legal employers, the profession, and clients and value, particularly the professional formation (professionalism) competencies.

The article also helps each student understand the importance of developing transferable skills (or competencies) that equip the student to respond over a career to changing markets for legal services. An overall theme for both legal educators and law students is to view these changing markets as opportunities to grow in new directions and thus to differentiate from competitors.

Translation: I surveyed a bunch of lawyers and asked them what they were looking for when hiring new associates. I also looked at surveys other people did on the same topic. This paper goes over what I found.

I’m going to list out all of the survey data first, then offer brief commentary at the end.

Here are the results of Hamilton’s surveys:

Survey of 14 Largest Firms In Minnesota

14 minnesota firms

Survey of 23 Smalls Firms (2-9 lawyers) in Minnesota

23 minnesota firms

Survey of 18 County Attorneys in Minnesota

18 County Attorneys

Survey of Legal Aid Offices In Minnesota

Minnesota Legal Aid

Average Ratings Across All Four Above Surveys

hamilton survey total

National Conference of Bar Examiners Survey of New Lawyers with 1-3 Years Experience

The survey asked what skills, abilities, and knowledge domains are significant to the newly licensed lawyer. On a scale from “1” as “minimally significant” to “4” as “extremely significant.”

So this is what new lawyers think they need, which is different from what employers want.

NCBE

Federation of Law Societies of Canada Survey of New Lawyers

[Asked new lawyers to]…rate both the frequency with which each lawyer performed or used a competency and the lawyer’s perception of the severity of the consequences if the lawyer did not possess each competency.

canada lawyer survey

2013 Harvard Law School Survey of 124 Attorneys at Large Law Firms

Respondents also rated the importance for associates of a list of seven knowledge bases and skills (with “1” being “not at all useful” and “5” being “extremely useful”).

harvard survey

Essential Skills For New Lawyers

Just to save you the trouble from having to scroll back up, here is the average of Hamilton’s surveys again:

Screen shot 2014-04-21 at 2.56.51 PM

What’s interesting to me about this list is that only two competencies are really “Hard” law school skills:

  • Analytical ability
  • Effective written/oral communication skills

You can learn the following skills over time if you join a firm that helps its associates develop as lawyers:

  • Dedication to clients
  • Commitment to values
  • Builds strong team relationships

But #1, #2, and #4 are just flat out you-have-it-or-you-don’t:

  • Integrity
  • Good judgement
  • Initiative

So is it really a wonder that so many practicing lawyers repeatedly talk about ethics?

Big firm partners advocate for the same things.

Judges and lawyers with over twenty years of experience all said the same thing when asked what is necessary to succeed as a new lawyer – integrity and relationships.

It really always comes back around to trust. Just as clients want to know they can trust a lawyer when they retain them, firms want to know that they can trust the new lawyers they hire. There is no law school class for that. There is no experiential initiative that can cover that ground. Either you are a principled person, worthy of another’s trust, or you are not.

Something to think on next time you are walking into an interview.

Could Aereo mean a boon for lawfirm business?

If the US Supreme Court rules in favor of the streaming internet TV service Aereo, tv broadcasters are claiming that they would lose hundreds of millions of dollars in subscriber fees and that it would “threaten the very fundamentals of broadcast television.”

In a piece today by Katelyn Plentz at ALM, it is observed that  an outcome in favor of the startup could generate significant business for law firms.

“It would mean this business model is a legitimate one,” said Wayne Johnsen, a Wiley Rein partner who represents cable providers and broadcasters. “You would have to then have broadcasters assess what it means for them. Obviously, you’ll have all of those companies looking for legal advice given the court’s decision,” he said.

Moreover, the article notes that a major reorganization of broadcasting is to occur next summer, with the Federal Communications Commission planning to auction airwaves.
If the court decision serves to devalue the broadcaster’s pieces of spectrum, those companies may want to sell the airwaves at auction thereby opening  up billions of dollars in sales to wireless companies. To put this into perspective, in 2008 the FCC spectrum auction raised almost $20 billion from participants including AT&T Inc., Verizon Wireless and Google Inc.

The high court is likely to rule by June.