The Legal Industry's Second Chance to Get It Right

Nancy B. Rapoport, Joseph R. Tiano Jr.

Originally posted on Scholarly Commons @ UNLV Boyd Law

We're living in challenging times as societies throughout the world continue to fight a war against the COVID-19 pandemic. With the dreadful health crisis having now been compounded by the utter economic and political turmoil that we're experiencing, it's no surprise that pessimism abounds. Since March of 2020, most articles about the legal industry's future have been bleak,' reporting on current industry troubles and forecasting more challenges for years to come. Decreases in partner draws, compensation cuts for non-partner personnel, headcount adjustments, and similar "retrenchment" measures are grabbing the headlines. Even in the most widely circulated and well respected publications, legal industry pundits are rashly recycling post-2008 Great Recession thinking with obsolete analyses, forecasts, rhetoric, and recommendations for legal departments and law firms. The state of the legal market, in their view, has not been strong and remains in peril.

We have a contrary view on the state of the legal market. The legal industry's doom and gloom pundits have gotten it wrong. By mistakenly conflating the characteristics of the 2008 Great Recession with COVID-19 pandemic economics, those pundits have misapprehended the severity of the legal industry's near-term challenges and espoused irrationally pessimistic forecasts regarding its longer term outlook. Consequently, most recent legal industry publications, media reports, and webinars are offering inapposite advice and recommendations to industry leaders.

We think that, over the next twelve months, the 400 largest U.S. law firms (i.e., "BigLaw") and the legal departments of BigLaw's largest clients will dust themselves off after some initial retrenchment, quickly stabilize, and start showing positive trends. Over the longer term, BigLaw (at least that part of BigLaw that made sensible internal economic decisions over the past several years) should gain positive momentum. Legal industry leaders should be bullish about their industry's economic future. The remainder of this essay will discuss why the doom and gloom perspective is misguided and why we think that the legal industry has caught a lucky break. It has a second chance to shape how legal services will be bought, sold, delivered, and economically evaluated in the future.

THE GREAT RECESSION OF 2008 VS. COVID-19 PANDEMIC ECONOMICS

As we said in our Above the Law post, we'll let the actual economists parse a comparison of the Great Recession and our current situation. That said, we need to make a few overly simplified remarks on how the two economic crisis affected the legal industry. We make these remarks in response to misguidance offered by those doom and gloom industry pundits. The Great Recession of 2008 and the COVID19 economic crisis, as discrete economic catastrophes, have as many dis-similarities as similarities. Due to the dissimilarities, legal industry pundits shouldn't blindly rely on lessons learned from the 2008 Great Recession.