In-house ACCess : In-house ACCess: Association of Corporate Counsel : ACC : The In-house Counsel Bar Association

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What do retired in-house counsel do?  Well one thing is that we read all those news notes on the bottom right-hand corner of the screen on the Bloomberg Channel. One that caught my eye this morning concerned the 2010 forecast for law firms.

ACC Value Challenge or not, it appears that law firms are going to be seeing a more gloomy economic picture this coming year according to the head of Citibank’s Law Firm Group in New York. The title of the article states that law firm revenues in 2010 can fall as much as 10% over last year and the article goes on to state that after laying off junior lawyers and staff last year firms will be looking to reduce even equity partners.

What is even more surprising is that more lawyers were laid off in the third quarter than the second quarter.

So what does this mean for in-house counsel?

First, your bargaining position on price has dramatically improved and is likely to do so through 2010, perhaps beyond.

Second, the big firms with high fixed costs—you know downtown paneled offices, lots of art on the walls and big paper book libraries—should be most willing to accept work at big discounts. Disregard survey claims about price increases—watch the layoffs.  My former employer had high fixed costs and I learned there in bad times you were glad to take unprofitable business because any contribution to fixed costs was welcome.

Third, and ironically, this is not going to be all good news for in-house counsel, since stressed firms will be offering companies a less costly and variable cost alternative to the fixed costs of employed counsel. Apparently, in-house counsel are bringing work inside—that is great, during my career I was “Mr. Do It All In House,” but remember you are still a fixed cost so you are going to have to do it a lot better, not just cheaper. This is not perhaps what we had in mind when we coined the term value billing, but it is today’s reality.

Fourth, all those unemployed private law firm lawyers will be out there looking for work—and you know what oversupply does to salaries. Some of those unemployed law firm lawyers may start their own practice and could be good alternatives to firms who try to raise rates—remember those laid off lawyers were likely the ones who actually did your work.

Looks like those green shoots and rosy (less bad) employment numbers of a few days ago just do not apply to the legal profession.