Ever since the start of the financial crisis you haven’t had to look very far to find expert opinion pieces predicting the end of growth for law firms. The observer will tell you that this is because of the commoditisation of transactional services, the pressure of client expectations of price, staffing and delivery, new entrants in the market, cyclical downturns in the economy, challenging career paths, anti-social hours and so on.
But I consider this an overly pessimistic view based not so much on predictions of the future as on the fallout from the financial crisis. The legal profession continues to be a dynamic industry offering interesting and rewarding opportunities, particularly for younger lawyers.
If you were considering a career in the law and did your due diligence, you might wonder what you were letting yourself in for. Popular examples include Bruce MacEwen’s 2013 book Growth Is Dead: Now What?: Law firms on the brink, Richard Susskind’s 2010 book The End of Lawyers?: Rethinking the nature of legal services and Steven J Harper’s 2013 book The Lawyer Bubble: A Profession in crisis, to name just three.
These gloomy prognoses capture the zeitgeist. However, I would argue that the problem lies not so much in the future as the past.
Much of the extraordinary growth at the top end of the legal industry in the period leading up to the financial crisis came from growing demand for debt origination and repackaging. Each CDO, CLO, SIV and so on involved wholesale repackaging of hundreds of millions of dollars of mortgages and other loans.
Despite the astronomic numbers involved, margins were tiny, leading to pricing pressure and commoditisation. This, in turn, led to impossible client expectations and limited potential for growth in these areas. Indeed it remains hard to see growth here, even now, after six years of attrition.
And that may well be a good thing. There is little more tragic than to see squadrons of exceptionally gifted young people with fabulous degrees working inhuman hours in order to churn out standard form documents in the small hours of the night.
So don’t worry about the prophets of doom. They make their predictions on the assumptions that the problems they identify apply to the whole of the legal profession and that the problems must continue in future.
While they’re right that global law firms will be challenged to generate further top-line revenue growth in a saturated market, it doesn’t follow that there isn’t an exciting legal career for a young lawyer to embrace.
Flexible, strategic and focused practices today offer exciting legal careers and opportunities. Away from the commoditised transactional practices, there is far more high-value advisory work, litigation and corporate transactional work in London today than there was 20 years ago. This work is more interesting than the commoditised work – more challenging, more satisfying and more rewarding.
James Roome is London co-head at Akin Gump Strauss Hauer & Feld
For more comment from industry leaders – see Nigel Boardman arguing that English law needs reform