September 28, 2010 3:00 PM

Hildebrandt Consultant Explains Ominous Jobs Forecast

Posted by Brian Baxter

An analysis of the legal job market by a consultant at Hildebrandt Baker Robbins shows that nearly 27 percent of the 65,000 nonpartner positions at Am Law 200 firms could be cut or recategorized as lower-paying positions over the next five to seven years. According to Hildebrandt managing director Lisa Smith, roughly 17,500 jobs could disappear within that time frame.

Smith, who heads the consultancy's law firm strategy and structure practice group, was responsible for the anaylsis, which caused quite a stir in the legal blogosphere. While Hildebrandt is not preparing an official report on the future of the legal job market, Smith took some time Tuesday morning to talk to us about her findings, which can be accessed in full on Hildebrandt's blog.

"[T]hese were just some initial thoughts on what we see going on," Smith says. "And we're trying to pull together all these different forces that are out there and see how firms are responding to them."

Recent Hildebrandt reports have pointed to an uptick in large law firm mergers and flat demand this year for outside legal services. Both reports, Smith says, informed her decision to take a closer look at what's happening with jobs at large law firms going forward and how those positions might be affected by the increased use of legal process outsourcers, Six Sigma efficiency strategies, and hiring of nonpartnership track staff attorneys.

"If some of these trends we're seeing now continue, what are the implications of that overall?" Smith asks. "All of these shifts are replacing jobs, as opposed to just changing the mix as firms continue to grow."

Over the next two to three years, Smith expects flat demand for legal services. That and price pressures from corporate clients eventually will lead firms to adjust how they hire and compensate nonpartner employees, she says.

"I think what's easy to lose sight of is that this is not some evil plot schemed by law firm managing partners or partners generally," Smith says. "This ultimately starts with the overall economic activity that trickles down to what the clients need. And if there's less economic activity, clients won't need as much M&A work, and they're going to be much more price-sensitive on litigation and other work. That's what we're seeing drive some of these [job] changes at law firms."

As Smith sees it, what's happening in the legal industry is a microcosm of the overall economic picture.

"I think it's unrealistic for us to expect that the law business is going to be any different than any other business in terms of the changing need for talent," she adds. "Look at your business, media and journalism. The changes have been dramatic, and I think we're seeing this just come a little later to the legal field."

Hildebrandt itself is no exception to the changing economic landscape. As previously reported by The Am Law Daily, after Thomson Reuters cut 240 jobs from its North American legal businesses last year, the media giant merged its Hildebrandt International unit with sister tech consultancy Baker Robbins & Company to form Hildebrandt Baker Robbins.

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