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Why Law Students’ Cluelessness About The Legal Market Could Consign Them To Paralegal Purgatory

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The other day I had a coffee with the guy who many of the top law firms bank with, Barclays head of professional services Tom Wood.

As we sipped our expensive cappuccinos, while inwardly thanking our lucky stars that we’d been born ten years later than the current cohort of graduates being spluttered out of universities into a barren job market, Wood made a really good point:

“It’s strange that law schools don’t teach students about the legal market,” he remarked.

“Because with the lack of jobs, and all the changes taking place with Alternative Business Structures (ABS), it would be really useful for them to know more than many do at present.”

It’s so true! Most law students’ knowledge of the rapidly changing legal market they hope to join is gleaned from the generalist musings of often-incompetent law school careers advisors, or the sort of PR-laden garbage churned out by many legal publications. They don’t need to know loads, just a few important basics. And the starting point is that right now there are basically four different types of law firm – and two of those are fast-heading for extinction…

The first category is the global elite – a group which encompasses the magic and silver circle firms (in other words, those in the top ten bracket of largest UK firms by revenue). While these firms have been hit a bit by the recession (trainee intake across the group is down by around 20% since 2007), they are still massively profitable. Get a TC with the likes of Linklaters or Hogan Lovells, survive the long hours and hard work, and you’re probably set for life.

Next is the corporate mid-market – by which I mean the UK law firms in the top 10-75 bracket by revenue. These firms are facing a major squeeze. Lots have already merged, more will undoubtedly follow. In the boom, when there was a shortage of lawyers to staff the endless deals, firms in this group picked up the overflow from the top ten, charged accordingly, and began paying their lawyers unprecedented amounts. Now, with workflows far lower – and likely to remain that way in an environment people are beginning to accept is a “new normal” – this business model is broken.

As a result, these firms face a choice: scale up (via a merger) and try to muscle in on the top ten, or specialise in an area, do it better than other firms, and become meaningful again. Unfortunately, far too many are paralysed by the sort of inertia that often befalls big institutions at critical moments. Many are probably already in terminal decline. So be careful which one you join.

Then there are the new entrants. Some of these, like Riverview Law, are targeting the high end of the market, differentiating themselves by offering better value billing, and smaller, more senior teams that blur the line between solicitor and barrister. Others, like Co-op Legal Services, are going after the sort of work traditionally done by small law firms, like family law, wills and personal injury. What these new entrants have in common is that most are run by non-lawyers under alternative business structures (ABSs) that are geared to aggressively maximise profit. This tends to mean fewer junior solicitor jobs – with most of the work done by either partners or paralegals.

The finally category, the high street law firm, is quite possibly toast in the ABS age. What stands out about this segment of the market is how old it’s getting. Many of these firms haven’t taken on any new blood in years, and seem content to fade away as their partners hit retirement age.

Put all this together and the bottom line is that it’s going to become harder to become a lawyer, and for those who make it, harder to keep being a lawyer. Accordingly, understanding the legal market, and developing the extra (often non-legal) skills that it demands, will really boost wannabes’ chances.

For the big firms, which have become increasingly international and high-tech, mastery of languages and computers will help. As The Economist explained last week in a piece about the sharp increase in demand for legal translation services on the back of the global litigation boom:

“The many law students wondering if the rotten legal job market will ever improve should take note. The twin forces of globalisation and technology may put many mediocre lawyers out of business. But those who master languages and computers may find themselves in demand.”

Among the mid-market firms which start to focus in on a niche, there’s going to be demand for graduates with deep knowledge of a particular field – say via a PhD or a stint working in the relevant industry before going to law school.

And for ABSs, there’ll be twin premiums on those with business acumen to come up with ways to make more money and people skills to manage the paralegals – a group that’s set to keep getting bigger and bigger.

Further reading:

‘Legal language: Services specialising in language and culture are in demand’ [The Economist]

The ‘Growth is Dead’ series [Adam Smith, Esq]

‘Law firms fear double-dip recession’ [The Guardian]

‘The rise of the paralegal’ [Junior Lawyers Division]

3 Comments

Gavin Ward

Great post Alex. Even if this blog could ping around some of the law school forums to get the message out to more law students! The ones staying tuned via social media channels will no doubt be more alert.

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caseb

The supply of Paralegals will eventually run dry. The market will readjust as many paralegals who see no hope of becoming solicitors or getting decent salaries to pay off their student loans will look at careers elsewhere and the number of people going into law will lessen. There is currently an artificially large supply of over-educated legal workers, working for a pittance, but this will not last indefinitely. When this starts to dry up (and especially when the economy improves) many of the new firms will have to offer TCs just to get newbies to do the donkey work. Either that or pay professional paralegals a lot more and make it a proper career, not such a blatant exploitation. Market forces – it swings one way then it swings back the other.

You left out one other important type of firm, the highly specialised niche firm. I myself have just started a TC with one such firm (V lucky, the firm is expanding rapidly).

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botzarelli

The number of law graduates is so high that even if it were to contract substantially there would still be plenty to work as paralegals.

There’s no reason to assume that the ABS firms will use lawyers in management posts rather than just as fee earners. As an Axiom lawyer, one of the attractions for me is that all of the non-fee-earning work is done by people who specialise in and are good at client care, lawyer management, business development etc. They are mainly qualified and experienced lawyers at the moment, but as the sector develops and such firms grow there’s no reason why those roles would not be ones which non-lawyers do and do well (as indeed Jeremy Hopkins demonstrates at Riverview).

The article is interesting though in that it could point towards the development of Law and Management degree courses which focus on preparation for roles in business management in the legal sector (while possibly retaining just enough core law to be qualifying law degrees – although there would be benefits in not doing this and instead focusing on the industries and work types that law firms address rather than the broad range of basic legal principles, eg by looking at the economics and business issues around say IP rights management and how that is serviced by in-house and external advisers rather than substantive IP law, contract management rather than contract, risk management and compliance rather than regulatory law etc).

This might need to wait until the niche for these business administration roles expands, but the skills and approaches would translate well to other professional services where these business models are much more established like management consultancy and accountancy. Would make for a very interesting 4 year sandwich course or MBA (Law).

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