For my first column of 2010, I'm indulging my inner Nostradamus and forecasting legal department hiring behavior for 2020. My predications start with a logical extension of how my corporate clients made hiring choices in the 2000 to 2010 decade that is now in the books.
In 2000, 70 percent of the attorneys I placed with law departments came out of law firms and without prior inside counsel experience. In 2009, 100 percent of the attorneys I placed came from other legal departments. Reasons include the availability of talent from troubled companies and a move away from using search firms to fill junior level in-house positions. Even so, the cultural dichotomy between law firm and corporate employers clearly widened during the past ten years. Partners and senior associates from law firms became far less marketable for inside counsel positions at all levels.
Whereas law firm attorneys are viewed as advocates and subject matter experts, inside counsel take on the roles of advisor, compliance cop, vendor manager and business partner. The skills, industry experience and political savvy required for success in-house are so specific that a law firm resum? is simply considered unqualified.
The common prediction among my competitors is that law firm pedigree will rule again, once supply and demand stability returns within the in-house bar. I disagree. If the supply of good candidates with inside counsel experience dries up, law departments will choose to groom talent. As discussed at greater length here last month, I predict that law departments will routinely hire straight out of law school in 2020.
Chief legal officers and chief financial officers keep getting better at analyzing legal spend, concluding that it makes sense to lower the overall percentage of budget going to outside counsel. Most companies spend from 40 to 60 percent of their legal budgets on law firms. Although the percentage will never go down to zero, it's reasonable to predict that smart leaders can drive law firm use into the 20 to 30 percent range. The ramifications for hiring in 2020 are huge.
Fixed fees, discounts and other vendor management trends will only go so far toward lowering the percent of budget spent on law firms. Only one strategic option exists that can dramatically alter the percentage: Do more work in-house. This is why I believe that law departments will grow dramatically during the next 10 years, and I predict that in 2020 the size of the in-house bar will be triple current numbers.
Another way to do more work in-house is to use flexible on-site resources. Contract attorney options are already growing beyond junior-level document review services. Several staffing firms employ experienced in-house attorneys on their payroll, and these advisors are used for higher end projects and daily needs. Examples: www.outsidegc.com, www.everscounsel.com and www.axiomlegal.com. I predict that in 2020 staffing firms will employ 20 percent of attorneys working in-house. Many of these inside counsel will be experienced counselors acting as general counsel for small or early stage growth companies.
For individual lawyers, 2020 will offer a more interesting playing field, as corporate employers emphasize experience and business skills over name brand law firm pedigree. For law departments, mid-level management roles will evolve to include mentoring of junior attorneys. For law firms, great trial lawyers and a handful of true subject matter experts will command high rates and prosper. Competition for the 20 to 30 percent of work going to law firms will drive many out of business. Successful law firms will embrace virtual office environments and entrepreneurialism, attracting self-confident rainmakers who crave independence over the team-oriented politics of a corporate employer. For law schools, troubling entry-level placement trends will continue. Unable to rely on law firms to achieve 90 percent placement numbers, law schools will engage in the missionary work of convincing more companies to hire new graduates. Starting salaries will adjust to make such hiring attractive.
Information technology will continue to drive out inefficiencies in legal services delivery. Legal spend will not outpace GDP growth, as it did for the past decade. So unless law school enrollment declines, I'm afraid that a gross oversupply of attorneys is inevitable throughout the next decade. In summary, I predict that the jobs available in 2020 will be more enjoyable and interesting, emphasizing people skills over technical skills. However, the competition for those jobs will be unprecedented.