Record-Breaking Revenue, Outside Counsel Guidelines, & DEI Efforts
The 1st half of 2021 was very busy for law firms, according to a recent survey by the Legal Specialty Group at Wells Fargo. The pandemic’s onset in Q2 2020 set a lower baseline for year-over-year comparisons; yet still revenue, demand, rates, & productivity grew by impressive margins (Law Firms Have Seen Big Revenue, Profit Gains in 2021, Even as Compensation Costs Rise, Dylan Jackson, 8/24/21, American Lawyer). Wells Fargo Managing Director Joseph Mendola referred to the results as the strongest he had seen in his 30-year career (BigLaw’s Blowout Year Piling Hours on Associates, Survey Shows, Roy Strom, 8/24/21, Bloomberg). According to the survey, associates are on pace to bill an average of 1,817 hours, up from 1,652 in 2020. With litigation still affected by court closures, the increase in hours billed has landed disproportionately on associates in transactional practices. Job posting data reflect this, as firms seek laterals both to stymie attrition of burnt-out associates and to maximize revenue in a hot market (Will M&A Slow Down? Maybe, But That Won’t Stop Firms From Hiring Corporate Associates, Patrick Smith, 8/24/21, American Lawyer).
Down with OCG?
The burdens of Outside Counsel Guidelines (“OCGs”) are getting more coverage in the press, as firms navigate complying and pushing back (Trendspotter: Outside Counsel Guidelines Are Straining Law Firm-Client Relationships, Zack Needles, 9/1/21, Law.com). According to a survey of law firm leaders by Aderant, only 32% of managing partners believed that a majority of firm lawyers were aware of the terms in outside counsel guidelines for their matters (Law Firms Are 'Buckling' Under Legal Department Compliance Guidelines, Survey Finds, Hugo Guzman, 8/17/21, Corporate Counsel). Volume may be to blame, as over 50% of respondents reported receiving between 10-50 OCGs from Jan. 2020 to Mar. 2021, with 35% receiving over 50. Not following OCGs can lead to billing disputes, resulting in collection delays; and ignorance of the terms can lead to bigger issues like unanticipated client conflicts (Carefully Consider Outside Counsel Guidelines, Shari Klevens & Alanna Clair, 5/7/21, The Recorder) (noting that “the definition of who the ‘client’ is in a set of outside counsel guidelines could be expansive, including not only the direct corporate client but also related entities”).
DEI Efforts
Diversity Lab's Mansfield Rule program grew from an initial 42 firms in 2017, to 118 large law firms in 2020 (For the First Time, All of Mansfield Program’s Law Firms Achieve Certification, Dylan Jackson, 9/13/21, Corporate Counsel). The Mansfield Rule measures whether law firms have affirmatively considered at least 30% women, lawyers of color, LGBTQ+ lawyers, and lawyers with disabilities for leadership and governance roles, equity partner promotions, formal client pitch opportunities, and senior lateral positions. To achieve Mansfield Plus status in the most recent iteration, firms also had to ensure that 30% of the lawyers staffed on matters resulting from formal pitch meetings were from historically underrepresented groups. Mansfield has caught on with mid-size firms as well; over 70 firms have signed-up to participate in Diversity Lab’s second iteration of its mid-size program.
The Mansfield Rule for Workflow app is currently being piloted by two large law firms (New Mansfield Program Targets Law Firm Work Assignments and Their Inherent Biases, Lizzy McLellan, 7/27/21, American Lawyer). Its goal is to combat implicit bias in work assignment allocation, like “‘recency bias’…. the idea that the person a partner saw most recently—in the elevator, at the top of their inbox or perhaps outside of work—is the one who is most likely to get tapped for that partner’s next project”, and “‘the birds of a feather phenomenon,’ referring to the idea that people tend to gravitate toward others who are like them.”
The app allows associates to select what experience and skills they would hope to gain and to select whether they are busy, not busy, or somewhere in between. Partners forming teams can tap associates from underrepresented groups to meet the 30% threshold for Mansfield. The app will also help firm leadership identify associates who are only working for 1 partner (or partners who are only working with some associates), in an effort to expose associates to more partners.
An increasing number of firms are utilizing machine learning, AI, and behavioral psychology as part of their recruiting process (How Big Law Firms Are Using AI to Cut Down on Hiring Biases, Dylan Jackson, 8/4/21, American Lawyer). According to providers, these tools have allowed their law firm clients to increase the diversity of their candidate pools, by recruiting from a broader array of law schools. Thompson Hine, which has been utilizing behavioral psychology in its interviewing since 2017, reports that it has tripled the number of African-American attorneys at the firm.
