I think the word “unprecedented” may be the best way to sum up the past 10 years in the legal profession. It applies to every major trend and development that has affected law firms during this period: unprecedented demand for legal services; unprecedented law firm growth and increase in profitability; unprecedented competition for top talent; unprecedented compensation for first-year associates; and, finally, an unprecedented rapid decline in demand for what we commonly think of as “recession-resistant” legal services.
As we look back at the year 2000, we see that the past decade began with a mild recession, driven largely by the “tech bust,” but it did not have a widespread or lasting effect on the demand for legal services. Following this recession, we saw the demand for legal services increase dramatically, starting in late 2001. In fact, demand grew so quickly that there soon was an undersupply of lawyers. This sharp increase in demand triggered an era of what seemed to be (especially to clients) ever-escalating billing rates as lawyers enjoyed a strong seller’s market. Through 2007, both revenue and profit grew at near double-digit rates every year, a phenomenon that was unparalleled in the prior history of the legal profession.
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