News

The End of Clients?

Richard Susskind’s book, The End of Lawyers?: Rethinking the Nature of Legal Services, has recently come out in paperback.  The book discusses how changes in technology are eroding, and will continue to change, the work available for lawyers. Today, though, I’m more concerned with the possibility of the end of clients – those of solo practitioners and small firms.

Despite the fact that the recession has been declared officially over, I continue to receive calls from lawyers, especially solo and small firm lawyers, who are having trouble maintaining their practices.  Almost uniformly, they report that their business has just fallen off and doesn’t seem to be showing any signs of returning.  I’ve been puzzling over these mysterious, disappearing clients. Were they going to other lawyers? Were they solving their problems without resort to the established legal system?  Is it simply that so many people have lost their jobs?  Last week the happenstance of finding two diametrically opposed news items at the same time gave me a clue to what I’m afraid is happening.

The first item was a press release from the New York State Bar Association stating that “A straw poll of 21 managing partners of New York law firms revealed guarded optimism about hiring trends and demand for legal services in 2011.”  According to the release, the poll was “taken at a meeting of managing partners at large, mid-sized and boutique law firms under the auspices of the Association’s Task Force on the Future of the Legal Profession.”  The second item was a story on NPR entitled Superrich Americans Driving Income Inequality, which reported on a 10 part series by Timothy Noah in Slate.

According to the Slate story (which is a fascinating read, by the way, and well worth the time it takes to get through it and the accompanying slide show), as of 2008 the top earning 1% of Americans controlled 18% of our country’s income, leaving the bottom 99% to share the remaining 82%, down from sharing 92% in 1973.  And the top .01% (those who make $1 million or more per year) have seen their share of total income quadruple since 1973, from 2% of total income to 8%.  Here in the United States we haven’t seen income inequality this great since the era immediately preceding the crash of 1929.  Those at the very bottom of the income ladder have, mostly, been running just to stay in place, and not in a very good place, and now they have been joined by many, many more people who would previously have been considered middle class.

The causes for the increase in income disparity set forth in the article are many and complexly intertwined, with the largest single cause seeming to be the current inability of our educational system to increase the number of better educated workers.  Fewer such workers drives up their compensation relative to the rest of the population.

Suddenly, I understood why so many solo and small firm lawyers are struggling.  And I don’t see those struggles ending any time soon.  The middle class clients these lawyers depend on no longer have either the property to plan for or fight over, or the wherewithal to pay for the planning or fighting, that they used to have.  If this trend of income disparity continues, many lawyers will either have to figure out ways to make a living providing legal services to the poor, or they will need to find other ways to re-purpose their legal training.

Who is your target client, and is he or she still out there?  If you are a solo or in a small firm, you should probably be asking yourself this question.