This article is an interview I conducted with Jeffrey Paulsen, Principal of
Paulsen Law Firm PLLC, Bloomfield Hills, Michigan. It is presented as a series of articles to be presented in this forum.
We touched on just a few different issues and perhaps in the future Jeff will agree to visit again. Here is another part of the discussion:
Gerry: the impact of the economic downturn is well known and employment in both countries has been dramatically affected. Major industries have been forced to retrench in order to survive and in some cases without government handouts would close. Do you see similar impact on professional practices? How has the economy impacted the legal profession?
Jeff: Gerry, thank you for this question. Without a doubt, the latest economic downturn has had an enormous short term economic and likely long term structural impact on the legal profession. Many law firms are based upon an out-dated business model that consists of high overhead costs, high hourly billing rates, minimum billable hour requirements, and incentives and a culture based upon revenue generation as opposed to client-centric services. Because of the high cost overhead structure of offices, high paid associates and staff, sports and country club perks, when the economy and tight credit conditions prohibited many companies from growth oriented activities and into a survival mode, the business generation and revenue stream of many law firms were severely impacted. In order to save the law firms, lawyers and staff were laid off in record numbers. Today, there are many unemployed or underemployed lawyers and unfortunately many of these lawyers never considered being an entrepreneur and were never given training on how to be an entrepreneur. Just like the large automotive companies, the large law firms consisted of highly educated and well qualified individuals that no longer had the entrepreneurial spirit that built both industries. Personally, I believe the legal industry has changed forever. Coupling business leaders concerns for cost control, with an understanding that there are well qualified and very experienced lawyers that can provide the same services as their traditional business model law firms, but at a fraction of the cost because of lower overhead structures; the lack of minimum billable hour requirements and the real willingness to look for Win-Win creative compensation relationships with clients; and a belief that a lawyer can put the interests of their clients first and still make a nice living; leads me to the conclusion that the old out-dated traditional legal business model is on its way out. While there will continue to be a need for the large behemoth law firms with multiple offices (i.e. very high cost overhead structures) for certain legal matters, the bulk of the legal needs and legal opportunities will exist for lawyers that believe that it is time for the legal industry to get aligned with business reality.
Thanks, Jeff for your participation. I’m sure the readers will enjoy your insights and I look forward to a future visit with you. Gerry, my pleasure and it is great to have reconnected with you after all these years. While my insights are personal, I have had the opportunity to think about and be involved in the legal industry for over 25 years as an in house corporate lawyer, a large law firm partner, and now a small law firm entrepreneur. It is an exciting time for businesses in both Canada and the U.S., and for the legal industry. I believe the best opportunities are yet to come.