The Changing Face Of The Legal Industry

Friday, September 1, 2006 - 00:00

Charles A. Volkert, Esq.
Robert Half Legal

Demographic and business trends present new challenges for legal departments, but the shifts also provide new opportunities for in-house counsel to distinguish themselves and enhance their relevancy.

Today, business is anything but usual in the legal profession. Demographic and industry trends - including some of the most significant shifts in the makeup of the legal workforce to occur in the last 50 years - are prompting significant changes in the way corporate legal departments serve internal clients, and assemble and manage the legal resources they need. By keeping a close watch on these changes and taking note of what the most progressive legal departments are doing in response, in-house counsel can enhance the value they bring to their organizations.

Demographic Trends Reshaping The Workforce

Current demographic shifts in the overall population and the resulting changes in the composition of the legal workforce are presenting new challenges as well as opportunities for law offices. To meet employee recruitment and retention goals, corporate legal departments must adapt their staffing and management practices to fit new employee profiles. Law offices that do not recognize and respond to the needs and priorities of the new workforce risk losing their best performers and could have difficulty replacing them.

Generational Shifts and Differences. Greater longevity and people retiring at a later age has resulted in four generations of professionals working side by side - a first in the modern white-collar business environment. These generations are often categorized as Traditionalists, Baby Boomers, Generation X and Generation Y. While stereotyping the beliefs of any group can result in erroneous conclusions, many demographers, sociologists and other experts point out that, in the workplace, each generation tends to hold very different perspectives on topics ranging from teamwork and business strategy to communication style and desired benefits. Awareness of these traits can play a large role in the effectiveness of an organization's employee recruitment and retention efforts.

Women and the law. Since the 1980s, women have been entering law school in steadily increasing numbers. In 2004, according to an American Bar Association report, women received 51 percent of the juris doctorate degrees awarded. Even with their greater numbers, however, women do not have a commensurate presence at the partnership level in law firms and in the general counsel's office in legal departments. In some cases, the perceived lack of advancement opportunities has led to attrition. In addition, many women professionals (as well as others) are leaving the workforce for family or work-life balance reasons.

Skills Shortages. The industry is facing a shortage of highly skilled, experienced legal candidates, especially in high-growth practice areas such as real estate, intellectual property, compliance and litigation. The shortage is due primarily to growing demand in these areas combined with the effects of the demographic trends just outlined. Business expansion, more complex projects and stepped-up expectations from senior management are also fueling demand for a larger number of professionals with high skill levels, further diminishing the supply of these individuals. To cope, many law offices are stepping up retention efforts, but competition for the best legal practitioners remains stiff among law firms and legal departments as both seek to address growth needs.

When it comes to recruitment and retention, it's clear that corporate legal departments cannot rely on old models. Given the growing diversity of the legal workforce, a one-size-fits-all approach to recruitment and retention simply will not work. Today's candidates for associate positions, for example, are drawn to law offices that offer ongoing training, formal mentoring, advancement opportunities and flexible scheduling that leverages mobile technologies. Senior associates and attorneys are more likely to remain with departments offering various career paths that allow for not only upward movement to partner or management, but also lateral or even downward movement in recognition of some attorneys' desire for alternatives to the traditional career progression.

To attract the industry's top talent, many employers are refining and expanding their recruitment strategies, from reevaluating compensation and benefits packages and enhancing corporate culture to expanding training and advancement opportunities.

To attract the most diverse and highly skilled candidates, departments are using a combination of technology and traditional recruiting methods. For some, the corporate website is the primary recruiting tool. Because benefits and company culture are major recruitment drivers, company websites that offer a wealth of information about culture, career paths, training, rewards, work-life balance and diversity tend to be most effective in attracting candidates. To further diversify the roster of candidates, law offices are using creative recruiting initiatives that specifically target women and minority attorneys and law students.

In-house lawyers value opportunities for career advancement, but given the steep pyramid structure of most legal departments, possibilities are often limited - especially for women. To address such concerns and counter high attrition rates among female attorneys - many of whom are working mothers - some departments have instituted a variety of programs targeted specifically at women. These include women-focused career programs and an effort to make it easier for women to negotiate part-time arrangements that meet their individual needs, yet do not carry the career-killing stigma traditionally associated with these arrangements. To address this issue for all employees, some departments make a focused effort to identify their attorneys' professional ambitions and in some cases, offer lateral moves to nonlegal positions within the company. The most progressive departments also have invested heavily in individual attorney development, leadership training and coaching/mentoring programs. Departments lacking the resources to run full-scale development programs can still provide educational and training opportunities through the use of technology such as webcasts that are convenient and inexpensive ways to deliver training.

Increasingly, lawyers regard flexible scheduling as a necessity. Though most corporate legal professionals have traditionally had the edge over their law-firm counterparts with regard to work-life balance, this is still an area of growing interest among a variety of corporate practitioners and now cuts across genders and generations. For example, both Gen-X women and men under the age of 41 rank flexibility as one of the top 10 factors affecting their decision to remain with an employer. Even junior associates, recent law school graduates and the youngest Gen Y-ers who may not have entered the workforce yet, are thinking differently about how they want to live their lives. According to a study of high school students conducted by the Families and Work Institute, 59 percent of high school boys say they would want to reduce their work hours when they have children. To promote long-term retention goals, more companies are finding ways to offer part-time and flexible scheduling.

Business Trends Creating New Challenges

A variety of shifts in the business environment are also impacting the work of corporate counsel. In particular, the continuing demands of regulatory reforms (and their repercussions in non-public companies) and increased corporate globalization are prompting fundamental structural changes in legal departments.

Regulation's ongoing demands. Fallout from the Sarbanes-Oxley Act of 2002 and other legislation and regulation continues to challenge general counsel, chief legal officers and their staff. In fact, much of the growth in legal departments today relates to ethics and compliance. As new laws and regulatory programs continue to be introduced, the list of requirements and rules that businesses must satisfy becomes lengthier and more complex.

Ever-marching corporate globalization. As more companies enter foreign markets and compete on a global level, their legal departments must be ready to respond. In-house lawyers need to figure out ways to cost-effectively address the needs of foreign operations - not an easy task given the wide diversity in laws and culture in multiple countries.

These changes are resulting in increased workloads for legal departments and a search for top legal talent to help attorneys address growing challenges. The silver lining, however, is that these shifts provide new opportunities for in-house counsel to distinguish themselves and enhance their relevancy.

In addition to complying with the provisions of Sarbanes-Oxley, legal departments must cope with new interpretations of employment and immigration rules, complex Environmental Protection Agency regulations and Occupational Safety and Health Administration mandates. Experienced individuals are needed to manage compliance processes in a cost-effective manner as well as help resolve such issues as balancing lawyer-client confidentiality with the obligation to serve as whistleblowers. To effectively meet these challenges, general counsel and the chief legal officer must convince other members of the senior management team of the importance of ensuring adequate staffing levels in the legal department. Some companies have set up separate compliance departments rather than have the legal organization manage the function directly. Other changes include the creation of a chief compliance officer, who is charged with making sure that a company's compliance program remains in step with current regulations. In addition to regulatory demands, enhanced risk assessment efforts, the growing scope of discovery requests, and other projects also are requiring additional resources. Unfortunately, these needs are coming at a time of skills shortages in the industry. The situation has led many companies to depend increasingly on specialized legal staffing firms to create a cost-effective and timely mix of full-time and project professionals.

The structure of today's corporate legal departments has a direct effect on the ability of supervisory attorneys to manage operations and the quality of client service they can deliver. Many legal departments have found it easier to serve internal clients if staff attorneys are decentralized - that is, assigned to specific business units at a company's individual geographic offices rather than based in one office at corporate headquarters.

Other structural changes relate to departments' need to address their companies' growing global footprints. With more corporations establishing a multinational presence or engaging in cross-border business deals, their legal departments must develop innovative ways to serve the company and work with outside counsel around the globe. Some are extending the concept of team-based management in order to better serve offices in a variety of locations and jurisdictions. Improved mobile technology has come of age just in time, it seems, as voice mail, e-mail and PDAs (e.g., BlackBerrys) make it easier to communicate across multiple time zones.

Another way attorneys are streamlining operations and improving service levels is by better leveraging their use of outside counsel. This includes encouraging law firms to develop a broader perspective about how they advise the corporation and helping them gain a thorough understanding of the organization's business needs and goals. Once outside counsel become more adept at viewing legal problems within the larger context of the company's strategic plans, corporate attorneys will gain a valued partner in helping them identify, for senior management, problems and opportunities that are on the horizon.

All of these business developments have contributed to the expanding role of the general counsel. To effectively address the variety of issues legal departments are facing, today's GCs are finding they must increasingly be generalists. In a legal world of increased specialization, this is no easy task. But the GC must now wear many hats - legal advisor to the board of directors and CEO, savvy business strategist, knowledgeable interpreter of regulations and statutes, risk assessment expert, visionary and manager of outside counsel.

Looking Toward The Future

Clearly, these changes have raised the bar for corporate legal departments. To a large degree, success will be determined by how well they understand the implications of these shifts in the legal workforce and key business trends - and how they respond to them. But the route to the future is dynamic and unpredictable. The most successful organizations will be those that keep a close watch on emerging trends and intelligently build the strong teams they will need to step up to their companies' ever-growing expectations of the legal function.

Charles A. Volkert is executive director of Robert Half Legal, a leading staffing service specializing in the placement of attorneys, paralegals, legal administrators and other legal professionals with law firms and corporate legal departments.Based in Menlo Park, California, Robert Half Legal has offices in major cities throughout the United States and Canada. This article is based on Future Law Office: The Changing Face of the Legal Industry , the sixth in a series of white papers describing the major findings of Robert Half Legal's Future Law Office project. This ongoing research initiative examines key trends and developments in the legal profession. Full details are available at futurelawoffice.com or by calling (800) 870-8367.