Definitely Mabey

Building an entrance strategy

An idea, like a ghost . . . must be spoken to a little before it will explain itself.
— Charles Dickens

Stephen Mabey Author

Three dominant themes that appear to be surfacing in much of what I have read lately about the legal industry are:

  • the demographics of legal practitioners;
  • the lack of alternative exit strategies for many small firms; and
  • the narrowing of the “funnel” to partnership in many larger firms driven in part by the uncertainty over the long-term impact on the economic shift the industry is experiencing.

So I thought I would do a little research (I know not always a good thing to be confused by the facts) and while easier said than done, I eventually got pointed towards some reasonably current statistics from the 2009 Law Society of Upper Canada annual report. I have reasoned that in this one aspect of the legal profession, these statistics are representative of the entire Canadian profession, if not at the low end:

Statistic 2009 (%)
2008 (%)
2007 (%)
Percentage of lawyers age 50 and above 41.4
40.5
39.7
Percentage of law firms that are solo practitioners 77.8
N/A N/A
Percentage of law firms that are 2 to 10 lawyers 19.9
N/A N/A
Average number of lawyers/paralegals in those law firms of 2 to 10 lawyers 3.3 N/A N/A

While touching on alternative strategies, a lot of what is being written about exit strategies is “how to wind up your practice,” which is obviously important to understand and critical to get right but may be the same as a ready, fire, aim strategy. While more about an entrance strategy, Rachel Rodgers in her blog has started down a path that, well-trodden in the past, has seemed to been overgrown with mental weeds and bramble of late and that is the need to rekindle entrepreneurism.

But I digress, so onto the point of the narrowing of the “funnel.” On this theme I fall back on research done by the two pillars of general law firm consulting — Hildebrandt Baker Robbins and Altman Weil Inc. The former in its 2011 Client Advisory advised that a recent Citi Leaders Council survey of 48 large firms canvassed “only 17 per cent of respondents expected to increase the size of their first year associate classes in 2011” (it is U.S. data but don’t fall into the trap of thinking that it is not relevant to the Canadian profession).

Altman Weil in its recent webinar on “Post-Recession Strategies for Law Firms” had a bullet that put it even more bluntly: “Strong demand for new associates will not soon return.”

Both firms have repeatedly commented on the next wave of “de-equitizing” of partners because of, in part, the real drop in productivity levels and, in part, the need to maintain artificial benchmarks likes profits per partner. This, combined with the longer road to partnership for those young lawyers interested in such a journey, can cause one to initially see only the negative aspects about entering the legal profession.

While someone could do a whole column on law schools and their lack of synchronicity with the legal industry, I would simply point out that while the funnel has been narrowing for a couple of years, there seems to be little or no decrease in the number of debt-ridden law school degrees being granted by these institutes of higher learning.

There is a growing awareness and acknowledgment that income from your RRSP combined with whatever government pensions are around won’t provide the 70-per-cent income-replacement rate often recommended by retirement planners. Pick your rationale why just an RRSP won’t provide for the retirement you worked so hard to earn:


The rest of this article is available in Stephen Mabey's new Book

Book Cover - Leading and Managing a Sustainable Law Firm - Tactics & Strategies for a Rapidly Changing Profession by Stephen Mabey

Available for purchase on BookBaby.

 

 

 

And remember until next month

"Authority without wisdom is like a heavy axe without an edge, fitter to bruise than polish.”

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First Published in Canadian Lawyer February 2011. Copyright © Applied Strategies Inc.

Legal Strategy Consultant