May 23, 2018
Uneven Start to the 1st Quarter 2018
The first quarter saw uneven demand in the legal industry, according to a new report from Thomson Reuters. In the first quarter, the Peer Monitor Index report said, Am Law 100 firms saw rising demand for the sixth consecutive quarter, up 0.4%, although less than a year ago when demand jumped 2.1%. The second hundred and midsize firms saw demand down -0.3% and -1.2%, respectively. The poor showing for the second hundred and midsize firms brought down the average for all firms -0.5%, which is the first negative first quarter showing for demand since 2013, according to the report.
The rates charged by Am Law 100 firms were very strong, jumping 4.5% for the quarter versus a 3.7% increase the first quarter of 2017. The Am Law second hundred had rate growth of 2.7%, which was about the same as a year ago, and midsize firms saw rates increase 2.8%, which was also similar to the increase a year ago.
The growth of expenses slowed somewhat during the quarter versus a year ago. Direct expenses were up 2.7%, which was down from 3.4% in the first quarter 2017. Meanwhile, indirect expenses were up 2.2% versus 2.8% in Q1 2017, making it one of the lowest growth rates in the last four years, according to the report.
"While there's still plenty left to 2018, the first quarter often sets the tone for the entire year. It can provide a cushion of billable work that can help sustain firms through the slower months of the year. Conversely, a slow start to the year historically can be difficult to make up," noted the report.
Thoughts on Alternative Pricing
Thomson Reuters recently published an interview conducted by consultant Nancey Watson, president of NL Watson Consulting, with Stuart Dodds, director of Global Pricing and Legal Project Management for Baker McKenzie, where they discussed current law firm pricing strategies and the role of pricing professionals. Here are three interesting takeaways from the interview:
ABA Moves Closer to Approving The GRE
The American Bar Association made another proposal to approve the use of the Graduate Record Exam (GRE) in lieu of the Law School Admission Test (LSAT), reported Law.com. The ABA's law school accrediting arm, the ABA Council of the Section of Legal Education and Admissions to the Bar, approved the change recently. Now, the ABA's House of Delegates must adopt the proposal. According to the article, if passed by the House of Delegates, law schools nationwide will more easily use the GRE and other tests to evaluate and accept students.
The proposal could be presented to the House of Delegates for final approval in August at the earliest, noted the article. Even with the change, law schools will still be expected to maintain high standards for admissions. The article quoted Kellye Testy, the president of the Law School Admission Council, "The schools are still going to have to show that any test they use is valid and reliable."
After an Interview, What Not to Do
In a recent article for the Ladders.com, writer Jane Burnett discusses four things you shouldn't do after an interview:
The first quarter saw uneven demand in the legal industry, according to a new report from Thomson Reuters. In the first quarter, the Peer Monitor Index report said, Am Law 100 firms saw rising demand for the sixth consecutive quarter, up 0.4%, although less than a year ago when demand jumped 2.1%. The second hundred and midsize firms saw demand down -0.3% and -1.2%, respectively. The poor showing for the second hundred and midsize firms brought down the average for all firms -0.5%, which is the first negative first quarter showing for demand since 2013, according to the report.
The rates charged by Am Law 100 firms were very strong, jumping 4.5% for the quarter versus a 3.7% increase the first quarter of 2017. The Am Law second hundred had rate growth of 2.7%, which was about the same as a year ago, and midsize firms saw rates increase 2.8%, which was also similar to the increase a year ago.
The growth of expenses slowed somewhat during the quarter versus a year ago. Direct expenses were up 2.7%, which was down from 3.4% in the first quarter 2017. Meanwhile, indirect expenses were up 2.2% versus 2.8% in Q1 2017, making it one of the lowest growth rates in the last four years, according to the report.
"While there's still plenty left to 2018, the first quarter often sets the tone for the entire year. It can provide a cushion of billable work that can help sustain firms through the slower months of the year. Conversely, a slow start to the year historically can be difficult to make up," noted the report.
Thoughts on Alternative Pricing
Thomson Reuters recently published an interview conducted by consultant Nancey Watson, president of NL Watson Consulting, with Stuart Dodds, director of Global Pricing and Legal Project Management for Baker McKenzie, where they discussed current law firm pricing strategies and the role of pricing professionals. Here are three interesting takeaways from the interview:
- Change Is Hard - Mr. Dodds notes, "The biggest challenge is around changing the behavior within a law firm. When speaking with my peers, this is always the first theme mentioned. This is especially true when trying to convince someone to adopt a fee approach that they are less comfortable or familiar with. In addition, as law firm pricing roles begin to build greater traction within their respective organizations, there is the more positive challenge of managing capacity with increasing demand and increasing sophistication of pricing requests."
- It's A Value Proposition - "There are a number of matters that most law firms do which help our clients conduct their day-to-day routine business, and consequently, clients are rightly looking for greater efficiency, cost control and appropriate value being delivered for these services. It is here primarily that I think we see the 'more for less' challenge being articulated. Similarly, for the more complex or strategic initiatives, clients are looking for a fee that appropriately reflects the value of the work being conducted. It is incumbent upon law firms to work with their clients to develop fee approaches to address these concerns," suggests Mr. Dodds.
- Set A High Bar For Professionals - Mr. Dodds observes, "I think the first key theme will be the increasing professionalization of the [job] function now that the value of the function is being better established. As more and more people undertake these roles from a wide variety of backgrounds (e.g., marketing, finance, operations, legal), the barriers to entry have been raised, especially if looking to join one of the bigger firms domestically, regionally or internationally. There are not only the expectations around either legal or business acumen (ideally both), but increasingly previous pertinent legal experience and accommodation pricing, procurement and negotiation qualifications, as firms look to accelerate their own efforts by having those who've seen and done it before - for some, multiple times. This is also reflected in some of the titles now beginning to emerge within the industry, for example, Chief Pricing Officer and Director of Client Value."
ABA Moves Closer to Approving The GRE
The American Bar Association made another proposal to approve the use of the Graduate Record Exam (GRE) in lieu of the Law School Admission Test (LSAT), reported Law.com. The ABA's law school accrediting arm, the ABA Council of the Section of Legal Education and Admissions to the Bar, approved the change recently. Now, the ABA's House of Delegates must adopt the proposal. According to the article, if passed by the House of Delegates, law schools nationwide will more easily use the GRE and other tests to evaluate and accept students.
The proposal could be presented to the House of Delegates for final approval in August at the earliest, noted the article. Even with the change, law schools will still be expected to maintain high standards for admissions. The article quoted Kellye Testy, the president of the Law School Admission Council, "The schools are still going to have to show that any test they use is valid and reliable."
After an Interview, What Not to Do
In a recent article for the Ladders.com, writer Jane Burnett discusses four things you shouldn't do after an interview:
- Don't Freak Out - Don't "drive yourself crazy" while waiting to hear back about the job, suggests Ms. Burnett. Job searches take awhile, between initial screens, phone interviews, face-to-face interviews and follow-up visits. In the early stages, it is best to let the process unfold without concentrating on it too much. If you make it to the final round of interviews for any given job, give yourself sometime (perhaps one week) to think about it non-stop. After a week, move on mentally. Go back to job-hunting business as usual.
- Don't Cross Social Media Boundaries - "Once you do this, there's no going back," notes Ms. Burnett. It is not a good idea to friend your interviewer on Facebook or elsewhere in social media. If you try to connect with an interviewer on Facebook, it tells the interviewer you don't know how to draw the line between employer and employee. And, you may not know how to interact appropriately with clients or subordinates in various business and social settings.
- Don't Drop The Ball During A Follow-up - Caroline Ceniza-Levine, co-founder of SixFigureStart, writes in Money that, "How you follow up after an interview is just as important as the interview, sometimes even more important, because it's the most recent impression of you." She continues, "One candidate, for a business development, role had multiple typos in his thank you note. He was incredibly polished for the live meeting but sloppy in the follow-up, and it caused the hiring group to question his attention to detail. Don't drop the ball at the very end." Ceniza-Levine later adds, "I've seen many candidates get closed out for one job only to get called in for something else by the same company or by the same person (who now is at a different company but remembers them fondly). Keep your quality high at every interaction."
- Don't Forget To Send A Thank You - Don't wait too long or forget to send a "thank you" response, suggests Ms. Burnett. Some people like to do it in writing, but with how quickly things move, it may be better to send an email right away or at least the next day. If you wait a few days or a week, you'll lose your opportunity to make a great impression.
