• February 2, 2015
Photograph by Maura Teague

Photograph by Maura Teague of Change

(“Plus ça change, plus c’est la même chose” is French for “the more things change, the more they stay the same.”)

The Minneapolis St. Paul Business Journal came out with its top-twenty five Minnesota law firms ranked by the number of lawyers in its latest edition. The order of firm ranking stayed pretty much the same as last year, but the number of lawyers at the “Top 25,” all told, continues to shrink to a 10-year low.

Total lawyer numbers continue to fall from a high, in 2009, of 2,812 lawyers to a 10-year low of 2,588 lawyers. That is a difference of 224 lawyers and that is just about the current size of Dorsey & Whitney (246 lawyers, according to the MSP Journal). So it is as if the one of the largest Minneapolis-St. Paul law firms disappeared in the past 5 years.

Let’s say “los desaparecidos,” that is, the 224 now-gone large firm Minnesota lawyers, billed a pathetic 1,000 hours/year at an average rate of $150/hour (also pathetic by large firm standards) at the “Top 25.” Their absences would mean losses to “The Top 25” of $33,600,000 for a single year. Where did these lawyers go? Where did that money go?

Who has the time, the resources, or the incentives to answer these questions with actual data? No one.

Portrait of a Bloviator

Portrait of a Bloviator (the actor, Terry Thomas)

But since when did the absence of valid data ever stop lawyers (or politicians, journalists, poets, philosophers, plumbers, nurses, teachers, preachers etc.) from bloviating? Since never. So here is my analysis:

One of these ex-large law firm lawyers started his own solo law firm (me). And I have collected and kept for myself money that my large firm used to collect. But the solo/small large law firm refugees (including me) represent a very, very, very small factor in large firms’ reduced revenue. Large firm lawyers who strike out on their own like me do not normally take much if any business with them. A person who leaves a job as a Fedex executive does not make a dent in Fedex business when he opens up a bike messenger business. It is arguably a somewhat related business, of course, but it is no competition. Putting the autobiographical anecdote to the side, the point is that some significant number of los desaparecidos have gone from large law firms to small law firms or solo practice but plainly the “Top 25’s” lost millions did not follow them (with, maybe, an extremely rare exception or two, like George Soule‘s departure from Bowman & Brooke).

Far larger and far more ominous dollar drains on Minnesota’s “Top 25” are the non-Minnesota-based law firms that have opened offices in Minneapolis or St. Paul in recent years: Kutak Rock, Barnes & Thornburg, Littler, Hogan Lovells, Fish & Richardson, Ford Harrison, Jackson Lewis, Ogletree Deakins, Fulbright & Jaworski, DLA Piper, Stoel Rives, Dykema Gossett, Hinshaw & Culbertson, Cozen & O’Connor (and more?). Alien outposts of non-Minnesota-based law firms have grown and these large and powerful law firms have poached many of the top Minnesota “Top 25” law firm lawyers and their tens of millions of dollars worth of business.

Then, at the other extreme of the “Top 25’s” economic challenges, there are the first-generation rudimentary legal androids that now perform more or less mechanical legal work that used to bring in dollars to the “Top 25” (and also to the bottom 20,000 Minnesota lawyers): LegalZoom, Ringtail, kCura, and the like. They have taken a bite out of the large law firms’ business that was once funneled to the newer large firm lawyers, the ones whose relatively lower billing rates did not them rule out such low-margin low-value legal busywork like document review or tweaking form transactional documents.

And finally, a quick shout-out to overseas legal grunt-work outsourcing: बधाई हो! आप प्रति सप्ताह $ 5 के लिए दस्तावेजों की समीक्षा कर सकते हैं!. Large corporations are by-passing U.S. law firms for such work and getting some tasks performed at a fraction of the cost elsewhere. (Dorsey & Whitney is trying to hold onto or recapture this work by having its own in-house alternative.)

To conclude, Minnesota’s “Top 25” law firms are being devoured at the top end by national competition and at the bottom end by automatons, outsourcing, and maybe a handful of guerilla desaparecidos who get a few scraps of business here or there that would previously have been handled at the “Top 25.”

But will the basic structure of the Minnesota legal job market change in years to come? For the foreseeable future, will there always be this same list of “Top 25” Minnesota law firms, in roughly the same order, roughly the same sizes?

Great Aletsch Glacier, Largest Glacier in the Alps (Switzerland)

Great Aletsch Glacier, Largest Glacier in the Alps (Switzerland)

I am always happy to bloviate but I do have limits. I have no idea how the U.S. or Minnesota legal market will look in 10 or 20 years from now. But I will say this: the free market can be and often is a ruthless unforgiving arena. If Minnesota law firms, big, small, or miniscule, cannot compete, they will be toast. Not today. Not tomorrow. Maybe not this year nor next year. But market forces’ movements can be glacial — relentless and not easily diverted.

 

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