In my last post, Attorneys Suitable for Everyday Use, I wrote about the growing prevalence of contract attorneys at U.S. law firms. It's my position that the use of such temp workers is part of a larger trend at major U.S. firms. That is, it appears to me that law firm employment at all levels--including equity partner, non-equity partner/of counsel, and associate positions--is becoming less financially lucrative than it has been for the past two decades.
An article in the February 5, 2008, ABA Journal backs this view up. The article reports that at the law firm of Greenberg Traurig, equity partner compensation is being frozen for the time being. In one sense, this is nothing new: as part owners of the firm, equity partners reap the rewards of huge profits when they occur, but they bear the risk of shortfalls. On the other hand, the fact that clients are increasingly conscious of legal costs means firms are increasingly constrained in terms of raising billing rates or billing their clients for more hours. The fact that mid-sized regional firms can increasingly compete with national firms in many areas of practice (e.g., corporate M&A, major projects, litigation, even international trade law) puts further downward pressure on fees. And as I said in my previous post, one way to reduce costs (and thus maintain profit margins) is to use cheaper lawyers. Enter the contract attorney.
This ABA Journal article is just one piece of evidence, and it can be dangerous to reason from the specific (Greenberg Traurig's decision) to the general (the legal market at large). But this piece of evidence does support my view that the times they are a-changing. And it is my belief that similar decisions are being made at other U.S. law firms--they're just not making headlines.