Inside Track: Challenges to the Profession: The 'New Normal' in a Post-Recession World:

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  • Challenges to the Profession: The 'New Normal' in a Post-Recession World

    Economic pressures, technology, regulation, and new lawyer training and development are major challenges to the legal profession, according to a State Bar report, which identifies new competitors in a global marketplace and new client expectations.
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    Challenges to the Profession: The June 6, 2012 – The State Bar of Wisconsin's effort to identify major post-recession challenges facing the legal profession will give lawyers a sense of the “new normal” and the changes necessary to keep pace with an increasingly competitive legal environment.

    That’s the goal of a State Bar Board of Governors committee that developed a report entitled, “The New Normal: The Challenges Facing the Legal Profession,” which identifies economic pressures, technology, regulation, and new lawyer training and development as the four major challenges facing the legal profession today.

    Legal futurists and commentators identified in the report agree that the legal profession will not return to pre-recession prosperity once the economy improves. In their view, the “new normal” will require attorneys to restructure how they deliver legal services.

    Using research acquired through an “environmental scan,” the report identifies new competitors in a global marketplace, new client expectations, the impacts of technology and regulation on the legal profession, and the challenges that new lawyers face as employment opportunities are scarcer than pre-recession years.

    “The golden era is gone, but this is not because the law itself is becoming less relevant,” wrote co-authors William Henderson and Rachel Zahorsky in an ABA Journal article last year. “Rather, the sea change reflects an urgent need for better and cheaper legal services that can keep pace with the demands of a rapidly globalizing world.”

    Assessing the Legal Landscape

    In an effort to assist lawyers, State Bar leaders will use the Challenges report to guide future initiatives and, starting in June of 2013, periodically review significant trends affecting the practice of law.

    “It should be considered an interactive work in progress,” said Washington D.C. attorney Mike Remington, a nonresident member of the Challenges to the Profession Committee (Challenges Committee) that developed the report. “The report simply captures the great sense of change and the huge issues that need to be addressed.”

    In 2010, then State Bar President Jim Boll (2010-11) appointed the Challenges Committee, comprised of 14 members of the State Bar Board of Governors.

    The Challenges Committee conducted its “environmental scan” to assess major changes to the legal profession, and to identify the top challenges facing Wisconsin lawyers.

    Delafield attorney Kim Haines, chair of the Challenges Committee, says she experienced challenges after losing a large part of her business and real estate practice during the recession.

    “I had to find other solutions to keep my solo practice running,” said Haines, who began taking appointments as guardians of the person and estate for individuals to supplement the gap.

    “The Challenges report gives lawyers an idea about what’s happening in the legal profession to help them navigate this new landscape,” Haines said. “Similarly, the report can frame future discussions about what is necessary to assist and guide attorneys in this state.”

    Environmental Scan of the Challenges Facing the Profession

    The State Bar’s Challenges to the Profession Committee, appointed by then State Bar President Jim Boll in 2010, completed an “environmental scan” to identify major challenges facing the legal profession, culminating in a final report.

    State Bar leaders will use the findings to drive future initiatives that help guide and assist members.

    During the scan, committee members analyzed internal and external factors influencing the practice of law in Wisconsin. For instance, they reviewed independent research conducted by other bar associations, legal educators, legal commentators and futurists, the general media, and also conducted personal interviews.

    The committee explored economic, demographic, political/legislative, social/cultural, competitive and technological factors.

    Committee Members

    • Chair: Kimberly Haines
    • Vice Chair: Kevin Klein
    • Other Members: Christine Rew Barden; Donna Jones; Lynn Laufenberg; Athenee Lucas; TJ Molinari; Michael Remington; John Schomisch; Robert Swain; Rebecca Webster; Nicholas Vivian; Jeffrey Zirgibel, Joyce Hastings (staff liaison).

    Strategic Plan Drives Responses, Such As New Lawyer Task Force

    The Challenges report has influenced the State Bar’s strategic plan, which serves as a concrete map for fulfilling the State Bar’s mission and making budget and operational decisions that deliver relevant member services.

    “With the insight of the Challenges report, we thought that was a ripe opportunity to incorporate some of the recommendations and concerns into the existing strategic plan,” said Hudson attorney Mike Waterman, chair of the State Bar’s Strategic Planning Committee.

    The strategic plan, amended in February 2012, now includes provisions to increase member awareness of information that can help them address ongoing professional challenges, and to assist lawyers with practicing in an increasingly competitive environment.

    “A big part of this effort was to bring about member awareness,” Remington said. “Lawyers can’t plan for the future without knowing what they are up against.”

    For instance, the report found that economic downturn and other factors have made it more difficult for new lawyers to gain practical experience. Law firms, historic training grounds, are hiring less. In addition, students are graduating with larger debt loads.

    In response, current State Bar President Jim Brennan created the Challenges to New Lawyers Task Force to examine the array of professional challenges facing young lawyers.

    The task force, which includes representative law school faculty members from both Marquette and U.W. law schools, will build on the Challenges report, surveys, anecdotal evidence, and other research to generate ideas. It will also hold a listening session for students this fall.

    “Right now, it’s extremely difficult to find a position in a law firm,” said Sherry Coley, co-chair of the task force and president of the State Bar’s Young Lawyers Division. “There’s a financial component to that problem. But there’s also the practical experience component.”

    The Challenges report found that fewer jobs mean less training and development for new lawyers who may be forced to go solo or take contract work. The report encourages the State Bar to work with lawyers, law schools, and the Board of Bar Examiners to find solutions.

    Those solutions may include transitional training programs, accredited continuing legal education for practice and business management, and increased mentoring opportunities.

    “There are practical and business aspects of practicing law that you don’t learn in law school, and we are really hoping to find more ways to provide that training,” Coley said.

    Economic Pressures

    The report identifies several economic pressures that will force lawyers to reconsider how they bundle, value, and sell legal services to compete for clients seeking efficiency and lower costs.

    The recent economic downturn means potential and existing clients are more cost-conscious. An oversupply of lawyers in almost every state increases internal competition among lawyers, and external sources are forcing lawyers to adapt to new realities.

    For instance, outsourcing of routine legal services like document review is on the rise. Online entities such as LegalZoom attract consumers seeking legal documents, regardless of the risks in drafting legal documents without the support of lawyers to review them.

    In addition, clients have more access to legal information, including online rating systems that can impact a lawyer’s reputation and business prospects.

    “To survive, lawyers and firms are looking for competitive advantages. This may involve simply doing the same work for less than in the past,” the report states.

    Price reductions, alternative fee and billing arrangements, limited-scope representation, and other restructuring methods will be the “new normal,” according to the report.

    “In this age of technology and information, many clients want to complete some legal tasks themselves to reduce overall fees, or at least not pay for readily available information or documents traditionally drafted from scratch,” the report notes.

    The report suggests that lawyers must understand the market forces and trends that are driving competition, and have the tools to respond with competitive solutions.

    Technology and the Practice of Law

    Information technology and the availability of communication tools are transforming the practice of law, according to the report, because of new client expectations. But technology is also opening doors for lawyers to cut costs and deliver more efficient services.

    As more consumers use the Internet to conduct personal and professional business, the demand for legal services that incorporate online tools will increase, the report suggests.

    Already, lawyers are marketing their services and expertise through online blogs, client alerts, and social media tools. But some lawyers are also engaging in so-called eLawyering, using web-based tools to communicate and collaborate on projects with colleagues and clients.

    “Lawyers who resist this trend will find that their clients (and potential clients), routinely use the Internet to identify cost-effective legal resources and ways to solve their legal needs,” notes the report, which highlights an ABA eLawyering Task Force that follows this trend.

    There’s also a movement for greater public access to primary legal research materials, and software companies are seizing opportunities to make online legal documents available.

    “As online sites increase, pressure will grow for lawyers to change how they bill and staff legal controversies. The commoditized part of law practice may contract (or even disappear), outsourced overseas, or subject to alternative fee structures,” the report states.

    But new technology also gives attorneys new ways to cut costs. Paperless law offices, virtual law offices, and cloud computing are on the rise, according to the report, meaning lawyers can create new efficiencies to reduce overhead.

    The report suggests that lawyers will need the tools to evaluate and implement new technology strategies to meet client expectations and remain competitive.

    Regulation of the Legal Profession

    Changing economic factors, rapid technology, and globalization of the legal industry present both challenges and opportunities for lawyers, who will be subject to the ethical and regulatory mechanisms that respond to the changing legal environment.

    “As trends and changes emerge, so too will the rules that govern lawyers,” said State Bar Ethics Counsel Tim Pierce. “New opportunities will give rise to new pitfalls.”

    For instance, there’s a push to change multijurisdictional practice rules that would give lawyers more flexibility to practice across state lines. Some lawyers want relaxation of ethical rules on direct solicitation, noting the rise of social media tools to help them attract clients.

    “As lawyers seek more flexibility in the modern technological and commercial world, they face attempts to make them subject to broader regulation,” the report states.

    The ABA and other bar associations have made successful attempts to exclude lawyers from provisions of the Dodd-Frank Wall Street Reform, the Consumer Protection Act, and the Fair and Accurate Credit Transactions Act, provisions primarily aimed at financial institutions.

    In Wisconsin, lawyers continue to seek greater enforcement of rules that prohibit the unauthorized practice of law by nonlawyers, while others advocate allowing lawyers to partner with other professionals, such as accountants or engineers, for one-stop-shopping.

    “Such an approach would be difficult, if not impossible, under current ethical rules,” states the report, noting that nonlawyers are not bound by the rules applicable to lawyers.

    Other trends – outsourcing, nonlawyer equity investment in law firms (now allowed in the U.K. and Australia), and third-party litigation financing – may also impact American lawyers.

    “If British and Australian law firms adopt a public funding model, American law firms will find themselves in economic competition with firms holding the possibility of significantly greater resources supporting them,” the report states.

    So what does all this mean? It means lawyers must stay informed on changing ethical and regulatory obligations, says Pierce. The ABA may play a role in leading these changes.

    The ABA Ethics 20/20 Commission, which has examined the ethical and regulatory impacts of advancing technology and globalization on the legal profession the last three years, recently released proposals to change provisions of the Model Rules of Professional Conduct. Those proposals will be presented to the ABA House of Delegates in August.

    Additional Challenges

    In the Challenges report, the committee also identified additional challenges that may impact the future practice of law in Wisconsin, including changing demographics, diversity, lawyer satisfaction, and court system funding and deficits.