Written by: Andrew Maloney

Many firms will see a decline in profitability by year’s end, as they head into a 2023 with a “high” likelihood of recession and a higher cost structure due to inflation, a new report concludes.

Confronting those challenges, some law firms may take a number of measures within the upcoming months to increase efficiencies and maximize profits, including adjusting leverage, investing in highly-skilled staff such as pricing specialists, reducing office space, outsourcing more and targeting strategic growth instead of opportunistic growth, said analysts at Citi’s Global Wealth at Work Law Firm Group and Hildebrandt Consulting in the report.

Additionally, hiring may shift, as the market will likely favor firms with a tilt toward practices such as litigation or bankruptcy and restructuring, according to the group’s 2023 Client Advisory, published Wednesday.

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Written by: Andrew Maloney

For years, the richest law firms have been getting even richer, increasing the profit gap between themselves and others and forcing smaller law firms to join forces or wither on the vine. But 2022 is a reminder that segmentation isn’t a one-way street, as clients become more cost-conscious and certain kinds of work and practices move down-market.

According to the latest Law Firm Financial Index from Thomson Reuters, law firms beyond the Am Law 200 (defined as midsize firms in the report) saw an increase in overall demand during the third quarter, relative to the same time last year, while Am Law 100 and Second Hundred firms saw declines.

For those smaller firms, demand in labor and employment (up 2%) and litigation (up about 1.5%) specifically picked up.

The analysts wrote that those demand trends were “exacerbated by increasingly mobile legal demand in the market, with evidence of smaller firms seeing greater success both overall and in certain practices, suggesting that clients are now more willing to shop around.”

An earlier report this year from Thomson Reuters noted that 2015 was the last year in which the average midsize law firm outperformed the average Am Law 100 firm in terms of demand growth. That’s the case in 2022, in spite of the drag created by increasing overhead and rising associate compensation.

But demand shifts between segments isn’t evidence that the gap between bigger and smaller firms is narrowing or that segmentation isn’t occurring, said Jim Jones, a former managing partner of Arnold & Porter and now senior director of Ethics and the Legal Profession at Georgetown University Law Center.

Indeed, he said he thinks it’s mounting evidence of segmentation.

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Written by: Ayanna Alexander

Veteran women attorneys are jettisoning Big Law in favor of in-house jobs at a higher rate, an accelerating trend that hits top law firms at a time when they’re fighting to improve their diversity.

In 2021, only 35% of women who left one of the top 200 law firms in the US joined another Big Law firm, according to data from legal consultancy Leopard Solutions. Through the first nine months of 2022, that number has shrunk to 28%. Moving to in-house positions remains the most popular second choice for women who say that gives them more control over their careers.

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By: Paul Caron

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Written by: Zach Warren

According to a McKinsey & Co. survey, about 47% of workers had some sort of hybrid arrangement pre-pandemic, with the opportunity to work from home often limited to those in management positions. Post-pandemic, that shot up to about 80% of workers with a hybrid arrangement, consisting of workers across the job type spectrum.

However, flexible working hasn’t necessarily meant equitable work arrangements all around. A separate Deloitte study noted that while women want to work remotely at about a 10% higher rate than men, 60% of women felt they missed important meetings or lacked exposure to senior leadership. What’s more, 50% of women said that they had experienced microaggressions working remotely, and women reported feeling more burnout now than even at the height of COVID restrictions.

So how are legal organizations handling these dual realities, particularly for caregivers and those with additional responsibilities at home? The “A New Way of Working: Supporting Library Professionals in Remote and Hybrid Workplaces” session at the American Association of Law Libraries (AALL) Conference provided some tips for law firms and legal organizations to make sure that remote workers aren’t being left behind.

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Written by: Karen Sloan

The expected confirmation of Ketanji Brown Jackson to the U.S. Supreme Court could prompt a greater number of diverse students — particularly Black women — to pursue a law degree, legal educators predicted this week.

Jackson, who would be the first Black women to sit on the high court, has won the support of three Republican senators and is poised to be confirmed as early as Thursday. Black women deans at three U.S. law schools described her rise as an inspiration to underrepresented groups in the profession.

“To see soon-to-be Justice Jackson sitting in her robe — the image of it is so powerful and meaningful,” said Rutgers law dean Kimberly Mutcherson, noting that many first-generation students have told her they never encountered a lawyer who looked like them until law school. “That can plant a little seed where a girl thinks, ‘Hmm, I wonder how you get there?’”

Racial diversity among law students has grown incrementally over the past 15 years but still lags behind the U.S. population. Non-white students earned 31% of the Juris Doctors awarded in 2020, up from 23% in 2007, according to law school non-profit AccessLex Institute. About 8% of this year’s first-year law students are Black, according to the American Bar Association, compared to more than 12% of the U.S. population. Fewer than 10% of federal judges are Black, ABA data show.

Written by: Andrew Maloney

In 2021, the operative question for the legal industry went from “whether” to “how much.”

If the previous year showed Big Law could survive and even thrive in the face of a global catastrophe such as the COVID-19 pandemic, 2021 was about how much further lawyers and firms could continue to push in spite of it.

On bonuses, remote work and profits, many firms did go above and beyond their surprisingly strong 2020 marks. They were more creative, more flexible and made more money in 2021.

The same can be said for lateral movement. Perhaps it’s no surprise that in a year that coined the phrase “Great Resignation” and in which “talent war” was the most popular term-of-art in Big Law, the number of moves in 2021 significantly outpaced those in 2020, according to industry observers and multiple data sources.

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Written by: Karen Sloan

Law firms brought on a historically diverse cohort of summer associates in 2021, according to new data from the National Association for Law Placement (NALP), outpacing diversity gains among more senior lawyers.

The proportion of summer associates of color climbed to 41% in 2021, up from 36% in 2020. That represents the largest year-over-year increase since NALP began tracking this data in 1993, it said.

Summer associates work at law firms after their first or second year of law school and are typically offered permanent associate jobs afterward.

Much of 2021's summer associate diversity gains were among women. The proportion who were women of color increased 3% to a quarter of all summer law students hired to work in the more than 500 law firm offices that reported figures to NALP.

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Written By: Andrew Maloney

Amid a “Great Resignation” and lingering uncertainty surrounding COVID-19, law firms had “one of the strongest years on record” in 2021, according to a new report.

The Citi Hildebrandt 2022 Client Advisory, published Thursday, found an average revenue increase of 14.7% and demand increase of 6.6% across all segments of the Am Law 200 and beyond, and with relatively tame expenses concluded net income and profits per equity partner could also reach heights not seen since before the global financial crisis in the late 2000s.

While the industry has sometimes focused on rates driving revenue, Gretta Rusanow, managing director and head of advisory services for the Citi Private Bank Law Firm Group, said the growth this year was more about demand.

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Written by: Dan Packel

Hunton Andrews Kurth managing partner Wally Martinez wasn’t the only leader of an Am Law 100 firm of Hispanic origin when he took the reins at predecessor firm Hunton & Williams in 2006. At that point in time, Cesar Alvarez was serving as CEO at Greenberg Traurig.

But after Alvarez stepped down in 2010, Martinez’s personal success stood out among a broader failing in the legal industry. Hispanics comprised 16% of the U.S. population in that year’s census, but only 1% of the top roles in the Am Law 100. The ranks of Latinx law firm leaders have ticked upward over the past two years. In 2020, Hogan Lovells installed Miguel Zaldivar as its CEO, and earlier this year Sidley Austin announced that partner Yvette Ostolaza will step in as the chair of the firm’s nine-person management committee in 2022.

The three leaders, who all share roots in Cuba, took the time to share their stories with The American Lawyer for Hispanic Heritage Month, which comes to an end Friday. They also addressed how Big Law can better provide leadership opportunities for diverse individuals.

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