Monthly Archives: January 2012

Law Firms Close Out 2011 on a Down Note

Posted on January 27, 2012 by | 1 Comment

While 2011 began on an optimistic note for law firms, the same cannot be said for how the year ended – on a “decidedly low note” according to December data from the Hildebrandt Institute’s Peer Monitor.  Hitting a 12-month low, productivity fell 4.8%. Demand fell 2.2% — its biggest drop since July, capping a downward trend that steadily deteriorated over the last four months of the year.  And AmLaw 100 firms shouldered much of this downside as the result of sluggish transactional practices and robust growth in lawyer headcount which contributed to a sharp drop in productivity in this segment of the market.

But when looking at all segments of the market and the year as a whole, the picture is a little more nuanced. The year ended with worked rates up 3.0%, demand up 1.0%, headcount up 1.4% and productivity down 0.5% compared with 2010.  However, most of these metrics were trending negatively into year-end.

As for practices, Litigation grew in 10 of the 12 months and Patent work and IP Litigation were particularly strong across all segments. IP Litigation was the best performing practice in 2011, up 6.2% for the year and 1.6% in December.  Labor and Employment was also up, gaining 1.7% in December and 3.0% in 2011. However, transactional practices such as Capital Markets, General Corporate work and M&A were hard hit, falling for a fourth consecutive month in December.

Realization rates resumed their long-term downward trend, resulting in a new historic low for collections. The drop in the second half of the year was the largest seen in over two years, reducing real rate growth for 2011 to a weak 1.6%.

Lawyer headcount grew in 2011, rising every month to finish the year up 1.4%.  However, the increase in headcount outpaced demand growth, causing productivity to turn negative in the last four months of the year.  As a result, productivity fell 0.5% for the year as a whole.

The outlook for 2012 is cautious, with firms needing to carefully balance capacity against an uncertain demand picture.

Posted by Marianne Purzycki

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IP Litigation Looks Bright

Posted on January 26, 2012 by | 7 Comments

Tomorrow we will be reporting on data from Peer Monitor’s Q4 2011 Peer Monitor Index (PMI), and the picture is dim.  Productivity and demand both fell to 12-month lows, due in large part to sluggish demand for transactional work and increases in lawyer headcounts.  But there is a bright spot.  Despite negative trends in both the legal market and the broader economy, intellectual property is actually seeing significant growth.  Demand for IP litigation was up 6.2% for 2011, including a 1.6% increase in December.

Within the AmLaw 100 and AmLaw 200 segments, the numbers are even more interesting. AmLaw 100 firms saw the biggest boost in IP litigation in 2011, with a strong 6.9% increase.  The AmLaw 100 also saw gains in IP patent work, which was up 6.2% in 2011.  Meanwhile, the AmLaw 200’s IP litigation numbers were more stagnant – up just .8% for the year.  At the same time, the AmLaw 200 posted impressive gains in IP patent work, with a 7% increase over all of 2011 (including a 6.2% increase in December.

What’s driving IP litigation and patent work up when so many other legal sectors are seeing declines?  The rising stakes of competitive technologies are one factor.  In a recent article on the biggest IP litigation wins of 2011, Corporate Counsel cites the struggle between two technology powerhouses for helping to fuel the fire:

Another recession-proof phenomenon is Apple Inc., known lately for must-have mobile gadgets—and now, apparently, for employing legions of IP lawyers in its battle to take down Google Inc.’s Android operating system.

These sorts of battles of equals are changing the patent landscape, raising the stakes and thus the amount of money companies are willing to invest in IP litigation.  Brian Busey of Morrison Foerster, whose clients include Toshiba and Sharp, explains in a new article in Inside Counsel:

A couple of years ago, we were fending off trolls, but now it seems like we’re doing global warfare for competitors… Trolls haven’t gone away, but now at the same time companies have to manage larger litigation involving competitors, and it’s gone global.

It’s been a boon for IP litigation departments across the board.  Companies must now combat IP threats at multiple levels, from the patent trolls that result in multiple, nearly identical cases in several jurisdictions, to high stakes patent lawsuits against market equals.  And as Inside Counsel points out, IP litigation has indeed “gone global,” with the International Trade Commission initiating a record number of new investigations in 2011.  The result is more opportunities for more firms, a rarity in our current economic environment.

Posted by Emily Fisher

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First UK Law Firm Acquired by Listed Company

Posted on January 24, 2012 by | 2 Comments

The Lawyer is reporting today on the first UK law firm to be acquired by a listed company, the first such transaction of its kind under the new Legal Services Act which allows companies to invest in law firms.  Liverpool personal injury firm Silverbeck Rymer is set to be acquired by AIM-listed Quindell Portfolio for £19.31 million, subject to the approval of the Solicitors’ Regulation Authority, a process that is expected to take a number of months.

Brand extension company Quindell, which provides consulting, software and outsourcing services to key sectors including finance, insurance, health and legal, is combining with Silverbeck Rymer to provide “a joint outsourcing offering to the UK insurance claim market, in particular the area of personal injury.”  According to a statement by Quindell, Silverbeck Rymer is already providing a significant volume of business to Quindell’s insurance outsourcing operations.  Jim Rymer, Chairman of Silverbeck Rymer said:

We see significant benefits in being part of the enlarged group. Quindell has a rapidly growing presence in the insurance space and we firmly believe in its non-conflict approach to working with insurers. Its positioning as thought leader and belief in improving margins whilst lowering costs for the industry sits well with our philosophies of working alongside insurers to help combat fraud and other areas of cost escalation, whilst being an active promoter of fairness and protector of consumer rights and championing industry change.

Posted by Marianne Purzycki

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Africa: The Next Frontier for Law Firms?

Posted on January 20, 2012 by | 2 Comments

Long seen by many outsiders as a continent with little hope of economic growth, Africa has experienced high overall growth rates for the last five years, a trend that seems likely to continue for the foreseeable future. According to data published in The Economist, while large income disparities persist (both between and within countries), at least a dozen African countries have seen their GDP grow by more than 6% annually for six or more years. Meanwhile, inflation rates and foreign debts have significantly declined across the continent. All these factors have led to a recent influx of major international law firms ready to take advantage of the opportunities for business that accompany economic growth anywhere. 

Law Firm Expansion in Africa          

As one might expect, many of the law firms seeking to expand their presence in Africa are headquartered in the continent’s former colonial rulers. Lusophone (Portuguese-speaking) countries like Angola and Mozambique largely attract Portuguese firms.  Canadian firm Heenan Blaikie is developing a presence in Francophone Africa, via its recently opened office in Paris, which is part of the firm’s long-term plan to expand its international practice objectives, particularly in Africa. The UK’s Norton Rose significantly expanded its presence on the continent last year when it combined with South Africa’s Deneys Reitz giving the firm offices in Cape Town, Durban, Johannesburg and an associate office in Dar es Salaam.  In September, the firm launched a new Casablanca office.

UK firms Allen & Overy and Clifford Chance see Morocco as a key platform in their firms’ strategies for Africa.  Allen & Overy launched an office last September in Casablanca and Clifford Chance has announced that the firm intends to open a new office there, the firm’s first in Africa even though it has been active on the continent for over 30 years.        

Challenges

But while opportunities for major firms abound, they must be strategic in deciding where to set up shop and what industries to focus on. Not all African nations are growing at the same rate, and it would be a mistake to see the continent as economically monolithic; the legal expertise needed in Tanzania’s growing telecommunications industry may not work for a firm helping to develop another country’s natural resources.

Natural resources, especially oil, are still among the primary drivers of foreign investment in Africa. This is especially true of countries that have attracted attention and money from China, which is hungry for oil to fuel its own rapidly growing economy.  China is Africa’s largest trading partner, a major lender and a big investor in infrastructure projects.  Recently, India and Brazil have also emerged as significant investors on the continent.

As African economies grow, they also begin to diversify. Of the top twenty deals done on the continent in 2010, only five were in the energy and resources sector, according to data from mergermarket that was published in a recent issue of Legal Business (subscription required).  Ethiopia, which has experienced one of Africa’s highest GDP growth rates, was expected to grow 7.5% in 2011 “without a drop of oil to export,” as The Economist notes.

Outlook

As investors continue to pour into Africa, a once despairing continent appears poised to take off.  The world’s biggest law firms clearly have many opportunities ahead of them in the region, should Africa be a market that fits a firm’s global strategy.  And if the answer is yes, Legal Business advises law firms to “[M]ove quickly. . .[t]he second stage of the race for Africa has begun.”

 Posted by Marianne Purzycki

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Give Me One Reason

Posted on January 20, 2012 by | Leave a comment

This week, the Hildebrandt Institute and West LegalEdCenter are hosting the 19th annual Marketing Partners Forum in Miami, Florida.  While the topics include everything from branding strategy to staffing models, one concept is resonating with many speakers and attendees – competitive advantage.

In December 2011, the Hildebrandt Institute surveyed law firms about marketing and business development issues.  Seventy-seven firms participated, with a median size of 250 lawyers and seven offices.  The survey included a series of questions about competitive advantage, defined as the reason clients choose the firm over its competitors.  And in this morning’s presentation of preliminary survey results by Lisa Rohrer (formerly of the Hildebrandt Institute, now with Center for the Study of the Legal Profession at Georgetown University Law Center) and LawVision Group’s Silvia Coulter, it became clear that many firms face difficulties when it comes to identifying the qualities that give them a competitive edge.

A competitive advantage is something a firm offers that others can’t or don’t provide.  It should be specific, and unique.  But among the advantages most frequently identified by survey participants were value, service, and expertise.  These are all fairly ubiquitous themes in law firm marketing.  Virtually any law firm is going to argue that it offers expertise and excellent service.  And under current economic conditions, value isn’t a competitive advantage – it’s a baseline requirement.

In other words, many law firms are identifying “competitive advantages” that are neither competitive nor advantageous.  As both keynote speaker Mario Moussa (The Art of Woo) and guest speaker Cindy Gallup (IfWeRanTheWorld) later commented, this leaves firms vulnerable to competition from new market entrants and other innovators.  But by thinking critically about their strengths, firms can position themselves to take on these challengers.

Follow the action at the 2012 Marketing Partner Forum on Twitter: @hildeinst, #MPF12

Posted by Emily Fisher

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For Canadian M&A in 2012, Press Pause

Posted on January 18, 2012 by | Leave a comment

Law reporter Jeff Gray recently interviewed a number of Canada’s leading M&A lawyers to gauge the pulse of Canadian deal-making in 2012.  The pulse is not exactly pounding right now.  Uncertainty caused by the slow pace of the U.S. economic recovery and the sovereign debt crisis in Europe is causing clients to take a “wait-and-see” approach.  While law firms indicate that they will be busy with deals this year, they also acknowledge that, like last year – which started out strong in the first half – the atmosphere can change rapidly.  

Interest in Canadian energy and natural resource assets remains strong, however, and Chinese companies in particular are still on the hunt for acquisitions.  Shlomi Feiner, of Blake Cassels & Graydon LLP, interviewed for the article, felt that China would keep driving Canada’s M&A activity, but the pace could be slower than in the past few years.  Still, Feiner remains optimistic:

We have been busy but [there are] many different balls in the air between Europe, the U.S. recovery, what the Asian markets are doing, what the Asian economies are doing.  We’re obviously hopeful it will be a very busy year. But it’s hard to tell. As we’ve seen from last year, things can change very quickly.

Gray also notes that Chinese state-owned enterprises have become more assertive in recent years and are now looking to acquire whole (and often huge) companies, whereas in the past, Chinese buyers would have only sought minority stakes or small companies.  A good example is China’s Sinopec, which last fall agreed to buy Canadian oil and gas explorer Daylight Energy Ltd for US$2.1 billion, a deal that highlights China’s quest to secure the energy resources it needs to feed its booming economy.

Mining is another bright spot that is expected to be a strong source of deals. Neill May of Goodmans LLP reports that there is a “lot of talk in the business . . . about impending mining mergers.  Commodity prices are still relatively high and rising, giving the industry’s global titans big cash reserves.”

Yet, no one is expecting 2012 to be a banner year in M&A.  As Richard Clark at Stikeman Elliott LLP sees it, “I would say it’s going to be slow and steady, almost like the economy.  I’m certainly not expecting a boom year. … We’ll manage to do okay.”

Posted by Marianne Purzycki

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Lateral Moves a Major Trend in 2011

Posted on January 13, 2012 by | Leave a comment

Yesterday we discussed how changes in legal career trends are affecting law firm strategy.  This week, Peer Monitor data illustrates how those trends are affecting firms, particularly with regards to lateral hiring.  While the number of lawyers employed by firms has remained static, lateral hiring continues to create volatility in the market.

According to an overview of Peer’s data and the underlying trends by Thomson Reuters News & Insight’s Career Tracker, lateral moves early in 2011 were driven by a demand for corporate partners in light of economic optimism early in the year.  Energy practices also saw major lateral moves last year, particularly in Texas, Pennsylvania (where development of the Marcellus Shale has attracted the attention of law firms), and Washington, D.C.  Firms also relied heavily on lateral hiring as a means of establishing new offices, both domestically and abroad.

Posted by Emily Fisher

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The Future of Legal Careers

Posted on January 12, 2012 by | 1 Comment

In an article published online this week, Fast Company takes a look at “the career of the future.”  Anya Kamentz profiles a number of workers at varying stages of their careers, and examines how trends in employment are affecting today’s workforce.  Kamentz cites some interesting statistics.  U.S. workers’ median tenure in their current jobs is 4.4 years.  The average number of jobs an American man will hold in his lifetime is 11.4; for women the average is 10.7.  And for the individuals interviewed for the article, careers can span not only multiple companies but multiple industries.

For the legal industry, all of this may sound like a distant reality.  The law is a more stable industry than technology or publishing (both of which feature heavily in the article).  Yet lawyers and law firms have certainly seen more volatility in the legal job market in the past few years.  In addition to layoffs and hiring freezes caused by the economic downturn, law firms are seeing an increase in lateral hiring.  And attrition is an issue as well, as even high-performing lawyers may seek greater flexibility or new challenges in-house or in the public sector.

Why should these trends worry firms?  For starters, the lateral movement of attorneys from one firm to another, combined with attrition, can make succession planning a real challenge.  As relationship partners near retirement or prepare to move into another role, firms may find it hard to find senior lawyers who can garner the same loyalty and trust from the client.

The time and expense required to train lawyers is a factor as well.  For firms that hire attorneys immediately after law school or clerkships, there is a considerable investment made in these young lawyers’ development.  And economic conditions have made clients more resistant towards footing the bill for this training.  By the time an attorney has progressed to the level of senior associate or partner, the loss of that lawyer to another firm, an in-house department, or even another career carries with it a loss on investment.

As law firms make long-term decisions about succession planning and talent development, they will need to consider how to manage a workforce that is more mobile than ever before.  But they can take a page from companies that are already dealing with the difficulties posed by shifting career models:

Even as individuals… are adapting to new career paradigms, so are large companies – but on a scale of tens of thousands of employees.  They have to hire people for jobs that don’t exist yet, spot the dynamic shifters while screening out the dilettantes, and clear paths for high performers so they can find enough variation within corporate confines.

For law firms, this might mean the expansion of alternative tracks, moving lawyers out of legal practice and into business development or marketing positions, and above all, staying flexible.

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The LinkedIn Lawyer

Posted on January 11, 2012 by | 3 Comments

 The use of social media by law firms continues to be a growing trend in the legal industry. But a recent Martindale-Hubbell survey reveals that trends in online networking vary by city, country and region, indicating that adoption of social media by law firms varies widely around the world.  The survey reports that usage overall was highest in English-speaking countries, and that firms in emerging markets are far less reliant on social media networks such as LinkedIn, Facebook and Twitter, preferring to focus on local language networks.  This could have profound implications for firms that are targeting those regions as part of their overall business development and marketing strategy.

The survey of 110 law firms around the world found that 77% of law firms are using one or more social media networks and that LinkedIn is the primary “non-sector-specific” platform.  In London, New York, Johannesburg and Toronto, for example, all or nearly all of the sampled firms have a LinkedIn presence. Yet firms vary in the degree to which they take advantage of the platform.  Many firms have only created a profile on LinkedIn and only a small percentage of firms are fully utilizing LinkedIn for activities such as client development and recruitment.  But LinkedIn is still the preferred platform for social networking — far fewer firms use Facebook, Twitter and YouTube.

Additional key regional findings include:

  • Usage in Western Europe varies greatly, with London and Amsterdam-based firms reporting high levels of social media usage in contrast to lower usage in Zurich, Paris and Moscow and no usage in Istanbul.
  • Sydney and New York had the highest number of legal bloggers and sample firms in these cities “embraced [blogging] with regular content updates that provide insights and analysis on changes in the areas of law.”
  • Usage among law firms in the Middle East and Asia Pacific, with the exception of Sydney, is very low. Firms in the Middle East and Asia-Pacific regions are more likely to use local popular social media such as Orkut in the Middle East, QQ in China, and Mixi in Japan. 
  • In Latin America, Eastern Europe and Africa, even though social media profile registration has taken hold, actual engagement is moderate to low.
  • Brazilian and Mexican law firms believe traditional marketing channels are the most effective and prefer them to social media.

Commissioned by LexisNexis Martindale-Hubbell, the research was conducted by public relations and communications firm Burson-Marsteller.  Five leading legal practices were evaluated in 22 major cities across seven world regions.

Posted by Marianne Purzycki

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Legal Sector Lost Almost 3,000 Jobs in 2011

Posted on January 10, 2012 by | Leave a comment

In news that should temper the “optimistic enough” outlook on legal hiring presented by the Robert Half Legal Hiring Survey that we discussed in this space last week, the Bureau of Labor Statistics has released new job numbers.  According to the Wall Street Journal, the economy added 200,000 jobs in December 2011, but the legal sector lost about 1,800.  From December 2010 to December 2011, the sector lost approximately 2,700.

Posted by Emily Fisher

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