State Capital Group - News & Publications

 

SCG Legal Newsletter
October 2017

 

Legal Industry Last Month Adds 900 Jobs

Legal industry employment rose slightly last month, with 900 jobs added over the prior month as the employment situation in the U.S. economy overall remained relatively flat, according to data released October 6th by the U.S. Department of Labor. In its monthly jobs report, the Labor Department’s Bureau of Labor Statistics reported that in September 1,128,600 were employed in the legal industry, which includes lawyers, paralegals, legal secretaries and other law-related occupations. September’s results mark a 900-job increase over the 1,127,700 employed in the legal industry in August. The August figure was revised upward by 1,400 jobs from the initial data the Labor Department issued last month. With September’s provisional increase, the legal industry has now seen two consecutive months of job growth. Since June 2013, legal industry employment has hovered between 1.12 and 1.13 million jobs, a range that puts employment in the industry about 50,000 jobs below its pre-recession peak in 2007.

 

Report Gives Legal Industry High Marks for Cybersecurity

The legal industry’s cybersecurity performance is in line with the top-performing finance industry, according to BitSight, a cybersecurity rating company. Much like calculating a credit score, BitSight used more than 20 categories to create a cybersecurity score for the financial, government, legal and retail industries. The survey found that the legal industry is doing a relatively good job of managing and preventing threats like botnet infections, spam, malware, ransomware and adware. The report notes that law firms are also keeping their computer operating systems current, which helps limit system vulnerabilities, and avoiding peer-to-peer file sharing and pirated software, which can create vulnerabilities in computer systems. The report found that the legal industry still has room for improvement, however. BitSight found that law firms were weakest when it came to applying SSL encryption to their websites. SSL encryption protects websites and its users from man-in-the-middle attacks in which communications between a user and a server are interrupted and information is stolen. The report points out that the legal industry has made improvements in its use of SSL, but still lags behind other industries they reviewed.

 

Law Firm Mergers Continue at Torrid Pace

Law firm mergers kept up their record pace in the third quarter of the year and are on track to eclipse a record set just two years ago, according to a recent report by legal search firm Fairfax Associates. There were 14 mergers in the third quarter for a total of 49 so far this year, which is five more than the total number Fairfax Associates tracked through three quarters in 2016 and eight more than the 10-year average of 41 through the first nine months of the year. The record for mergers set in a year, which was 91 in 2015, will be broken if there are 16 mergers in the fourth quarter, typically a busier time for completing tie-ups. The last time there were fewer than 16 mergers in a fourth quarter was 2010. Last year, there were 25 fourth-quarter mergers.

 

Study Finds Law Firms Need to Become More Efficient to Counter Big Four Threat

As PricewaterhouseCoopers prepares to launch a U.S. legal services business, a new study has warned that law firms need to become more efficient and develop alternative services in areas such as technology and process management in order to counter the growing threat posed by the Big Four accounting firms. The report by ALM Intelligence says that law firms should “prepare for a significant increase in competition,” especially if the Big Four begin targeting higher-value work. Deloitte, EY, KPMG and PwC have all invested heavily in legal services in recent years, and now collectively employ over 8,500 attorneys worldwide. A separate report by ALM Intelligence found that the Big Four’s formidable brand strength, client base and ability to offer multidisciplinary services has helped them take market share from traditional law firms. While the Big Four have historically focused on practices that complement their audit and tax advisory businesses, such as tax, labor and employment, and immigration, they are increasingly branching out into other areas, including mergers and acquisitions.

 

Study Finds Large Majority of Lawyers’ Time Spent Unproductively

A recent billing trends report by Clio, which is a Canadian company that provides cloud-based practice management for law firms, finds lawyers spend only 29% of each workday on billable time, which¬† is ¬†only 2.3 hours of billable time for each eight-hour workday. Based on data from more than 60,000 Clio users that include U.S. firms of all sizes, the report also found an 82% realization rate, which is the percentage of billable hours that are invoiced, and an 86% collection rate, which is the percent of billed work that is paid, which adds up to only 1.6 hours of billable time per workday. The study found that the largest share (48%) of lawyers’ time is spent on administrative tasks such as licensing and continuing education, office administration, generating and sending bills, configuring technology and collections. The balance of their time is reportedly spent on business development.

 

First-Year Associate Jobs Slated to Rise Slightly

The number of first-year associate jobs at law firms across the U.S. and Canada is set to rise slightly over the next 12 months, according to a new survey by legal staffing agency Robert Half Legal. More than a fifth of the 175 lawyers interviewed for the report said their firms intend to increase hiring of first-year associates next year. In a sign of overall confidence across the industry, two-thirds of lawyers said that their firms’ hiring plans for the next 12 months were unchanged, despite challenging market conditions, while just 7% of lawyers said their firm would decrease the number of openings for first-year associates. The results broadly coincide with those of a report released earlier this summer by Citi Private Bank, which found an overall rise in confidence among U.S. law firm leaders and a likelihood of increased associate hiring across the market.

 

 

 

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