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2011 Ends on Sour Note for Legal Services Industry

The month of December saw 200,000 jobs added in the United States but the industry of legal services suffered a loss of 1,800 jobs for the same month. These numbers were released by the United States Department of Labor last Friday.

“The ultimate cause is the attempt by management at major law firms to increase profitability of their law firm practice. The problem is over the course of last year, law firm revenues went up, on average, between 3 and 4 percent, which just about keeps up with the rate of inflation, but expenses went up approximately 9 percent,” Kowalski said.

The loss equates to 0.16 percent, and it is probably unsettling news for support staff and professionals in firms trying to reduce costs in 2012. Jerome Kowalski, the founder of the consulting company Kowalski & Associates, said that this really is not a surprise.

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“Over past three or four years, most firms have cut jobs on the professional side, starting with associates and even up to partners, to be as lean and trim as they can. So there’s not much more fat to slice away in most places,” he said.

Kowalski was originally estimating that 2,000 jobs would be lost in the legal services industry, saying that the actual numbers surprised him. Kowalski also said that the data shows there will be more cutbacks in general staff members and maybe even lawyers during 2012.

There is pressure to reduce spending from corporate clients and an increase in competition for legal products from outsourcing companies and from legal firms. These have left firms operating very cautiously.

The report released by the Department of Labor, the job data for December for the legal industry was 2,700 fewer than the numbers in December of 2010. As the 2011 year was closing, experts in the field were expecting a stale year for jobs in the industry.

“The overall general health of the economy, the overall business climate, is one of caution, and sometimes, fear,” Jim LaRosa, co-founder of JuriStaff Inc. said.

“If these hiring patterns continue, and if demand does not increase to keep pace, firms will likely face further declines in productivity, as well as increasing pressures on profitability,” the Peer Monitor Index from the Hildebrandt Institute said.

A rut developed in 2011′s third quarter within the legal industry when it came to a services demands. This rut occurred while expenses reached a high for the past two years for the industry. In the third quarter the rates for attorney hiring jumped by 2.4 percent, which was the highest rate for 2011. On the other hand, the numbers for hours-per-layer productivity rates declined by 1.4 percent.

Information researched from Law.com and the Am Law Daily.

2011 Ends on Sour Note for Legal Services Industry by

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