Monthly Archives: December 2011

Happy Holidays

Posted on December 23, 2011 by | Leave a comment

Our blog will return after January 2, 2012, as well as Hildebrandt Headlines.  All of us here at the Hildebrandt Institute extend our very best wishes for a happy holiday season.

→ Leave a comment

Posted in Uncategorized

Apple of Their Eyes

Posted on December 22, 2011 by | 3 Comments

Last month we wrote about the growing proliferation in law firms of tablet devices, especially the iPad, and how their adoption is being driven in large part by lawyer demand.  The latest Macs in Law Survey shows that Apple products, particularly the iPad and iPhone, are gaining momentum with lawyers over competing technologies such as RIM’s BlackBerry.  This survey, now in its second year, was conducted by Vancouver-based Themis Solutions Inc., the developer of Clio, a cloud-based practice management system designed for solo practitioners and small firms.  Survey results were based on responses from 763 legal professionals and law students, 76% of whom were lawyers at firms with 10 attorneys or less. 

So why the preference for all things Apple?  Almost half the respondents chose Apple hardware because they felt the “technology was more reliable and secure.”  Over one-third mentioned usability.  And with specific regard to the iPad, 52% of respondents report using an iPad in their law office in 2011, a big bump up from 26% in the 2010 survey.  And for those contemplating buying an iPad for their law office, 70% are considering a purchase next year, compared to 40% in 2010.

In terms of mobile devices, the iPhone is clearly the winner, chosen by 61% of respondents, followed by Android-based devices at 21% and the BlackBerry at 11%.  And users for the most part are pretty happy with their current choices – 77% do not plan on switching mobile devices next year.

And while only 10% of respondents stated that familiarity with Apple/Mac products due to home use was a reason to choose it for the workplace, over three-quarters of law students plan on choosing a Mac platform for their office when they graduate.  This suggests a very bright future for Apple hardware and devices in the legal industry.

The Hildebrandt Institute will be exploring technology issues at its annual CIO forum in New York on April 18, 2012. If you are interested in attending or participating in the forum, please contact us at hildebrandtinstitute@thomsonreuters.com.

Posted by Marianne Purzycki

→ 3 Comments

Posted in Market Trends

Tagged , , ,

Modest Rate Increases Predicted For 2012

Posted on December 21, 2011 by | Leave a comment

The National Law Journal released its annual billing rate survey this week and for the third year in a row, billing rates showed modest increases.  For the 62 firms in the NLJ 250 ranking that provided billing rate data, the average firm-wide hourly billing rate, which combines partner and associate rates, increased by 4.4% during 2011 from $390 to $407. That increase followed on a 2.7% increase in 2010 and a 2.5% increase in 2009, all much lower than the routine six to eight percent increases seen in the pre-recession years when a seller’s market was being driven by high demand for law firm services.

While firms may have been reluctant to increase rates too much in the early years of the economic downturn, as clients’ prospects have improved somewhat this past year, firms have felt freer to boost rates.  However, in today’s buyer’s market, clients are still pressing for more control over pricing and staffing decisions, which continues to put a ceiling on rate hikes.

The Hildebrandt Institute’s Peer Monitor Index (PMI) tells a similar story, indicating that rates firmed up slightly for the third quarter of 2011, rising 3.5% compared with the same period a year ago.  “The story hasn’t changed a whole lot in the past year,” Peer Monitor director Mark Medice told the NLJ.  “And I suspect that we’ll see a similar story in 2012, which is that rates will increase about 3 or 3.5 percent.”

The PMI report also points out that for the overall market, 2011 third quarter rate growth is the strongest rate performance in over a year.   However, one size does not fit all.  Peer data also suggests that while many firms are achieving better‐than‐average rate growth this year, other firms are not faring as well and are seeing flat or even slightly negative rate growth.  Some firms are being more strategic and are targeting key practice areas and attorneys that will bear rate increases, while leaving others alone, says Medice.

 Medice also believes that the rate increases reflect some shifting of work to more senior attorneys in response to the “first-year dilemma,” a topic that we’ve written about before.  “We’re starting to get some information that firms are taking a harder look at associates,” Medice said. “The use of first- and second-year associates has declined, and there’s a stronger mix of senior associates in the pool.”

 Under increasing client pressure for greater value and lower costs as well as fiercer competition for legal market share, according to Medice, “[the] question now becomes, ‘How do we grow revenue?’”  He added, “I think we’re on a relatively steady path to change in the pricing and relationship model, even though alternative fee arrangements are still only about 10 to 12 percent of business. I think we’ll see a lot of law firm mergers as well.”

 Posted by Marianne Purzycki

→ Leave a comment

Posted in Insights

Tagged , , , ,

South Korea Quickly Attracting U.S. Firms

Posted on December 16, 2011 by | 5 Comments

For the third week in a row, a major American law firm has announced that it will open an office in South Korea next year.  Cleary Gottlieb Steen & Hamilton, Sheppard Mullin Richter & Hampton, and Simpson Thacher & Bartlett, have all announced that they intend to open offices in Seoul in 2012.  Pent up demand, which has been building since the U.S. and South Korea agreed to a free trade agreement (FTA) in 2007, is now being satisfied, since both countries ratified the FTA this fall, opening the legal services market to U.S.-based firms. 

Earlier in the year, U.K. firms were granted permission to open offices in South Korea with the approval of the FTA between Europe and South Korea that was signed by the European Parliament in February.  Beginning in July, European Union-based law firms were permitted to open representative offices in South Korea to advise on foreign law. By July 2013, EU firms will have the right to fee share with Korean law firms and by July 2016, firms will be able to enter into partnerships and hire Korean lawyers.  While Allen & Overy, Clifford Chance and Linklaters are all active with Korea work, only Clifford Chance has announced (in February) its intention to open in Seoul. 

Foreign firms must first get approval from the Korean Ministry of Justice before setting up an office and must then register with the Korean Bar Association, in a process that takes approximately three months.

Beginning in January, U.S. firms will be allowed to file applications to open representative offices. In a multi-stage process, the firms are initially permitted to advise on U.S. law, public international law and international arbitration.  In 2014, they will be able to enter cooperative agreements with local firms on work that combines elements of international and local counsel.  In 2017, U.S. firms will be able to hire local lawyers and merge with local firms.

Immediately after the US-Korea FTA was approved in late November by the Korean Parliament, Cleary Gottlieb, with one of the leading Korea practices among international firms, was the first U.S. firm to announce its intention to open an office in Seoul in the first half of 2012.  The firm will initially relocate two Hong Kong-based partners to Seoul for the launch plus a number of Korean-speaking associates.  The firm plans to move most of its 17-lawyer Korea team from Hong Kong in the next two to four years.

Sheppard Mullin announced last week that it would open an office in Seoul in the first quarter of 2012.  Partner Seth (Byoung Soo) Kim, chair of the firm’s Korea practice and currently based in the firm’s New York and Los Angeles offices, will relocate back to Seoul to head the office.  Samsung, Hyundai Motor, and Korea Development Bank are among the firm’s many Korean clients.

Simpson Thacher,  which like Cleary has a large share of the Korean market, announced plans this week to open an office in Seoul “as soon as practicable in 2012.”  Partner Youngjin Sohn will relocate to Seoul, together with several associates from the firm’s Hong Kong office, where the firm’s 10-lawyer Korea team is currently located. The firm represented Goldman Sachs, Morgan Stanley and BoA Merrill Lynch in connection with Samsung Life Insurance’s $4.4 billion IPO, the largest ever IPO by a Korean company. 

Other U.S. firms that are considering launching offices in South Korea include Paul Hastings, McDermott Will & Emery, and Ropes & Gray. 

Posted by Marianne Purzycki

→ 5 Comments

Posted in Insights

Tagged , , ,

Survey Reports Majority Would Report Wrongdoing

Posted on December 16, 2011 by | Leave a comment

In an interesting follow-on to a piece that we wrote last week on whistleblowers, a new Ethics & Action Survey commissioned by plaintiff litigation firm Labaton Sucharow reports that 34% of survey respondents are aware of misconduct in the workplace and 78% would report the wrongdoing if it could be done “anonymously, without retaliation, and result in a monetary award.”  Conducted by ORC International between November 17-20, the survey questioned 1,000 Americans. 

As we mentioned in our post last week, the new whistleblower provisions in the Dodd-Frank act provide strong protection to employees who report the fraud directly to the SEC and provide monetary awards to eligible individuals of up to 30% of the money collected in an enforcement action in which over $1,000,000 in sanctions is ordered.

And while it was only in August that these new provisions kicked in, the SEC quickly recorded an impressive number of tips (well over 300) in just seven short weeks.  So while the Survey reported that an overwhelming majority (79%) would encourage a loved one to report wrongdoing, other findings reveal differences among gender, income, educational levels, and regions of the country.

  • Women were only slightly more inclined than men to encourage a loved one to come forward (82% versus 75%). 
  • In terms of income, while 49% of respondents with annual household income between $75,000-$100,000 reported that they had knowledge of, or had observed misconduct, the percentage dropped to 29% for those respondents with a household income above $100,000. 
  • While 29% of high school graduates had knowledge of wrongdoing, that figure rose to 42% for those with some level of college education.
  • Of respondents living in the Northeastern US, 29% have observed or have direct knowledge of misconduct in their workplace while in the Western US, the number increases to 37%.   In US metro areas, the number is 32% compared to 41% of respondents living in non-metro areas.

Posted by Marianne Purzycki

→ Leave a comment

Posted in Insights

Tagged ,