Lawyers Confidence Survey shows declining faith in the economy

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This is the latest installment of The Daily Record’s Maryland Lawyers Confidence Index, a confidential survey of private attorneys in the state sponsored by the Maryland State Bar Association that explores their views on the economic factors influencing their practices. If you’d like to participate in our next survey, please sign up. Also, dive deep into our data visualizations of the results of this survey.

Maryland attorneys feel less confident about the overall economy than they did in early 2019, according to the results of the latest Daily Record-MSBA Maryland Lawyers Confidence Survey. The third-quarter survey had 290 respondents, up from 258 in the second quarter but down from 354 in the first quarter of the year.

The number of lawyers who felt confident about the overall state of the economy declined from 58% in the second quarter to 42% in the third quarter.

“Firms are cognizant of the political climate and how that may impact the economy – they’re bracing for an economic downturn,” said Randi Lewis, a recruiter at Major, Lindsey & Africa, a worldwide attorney search firm with an office in Baltimore. Lewis said she drew her conclusion from conversations with partners and leaders in the area’s law firms.

The survey also showed a drop in the overall index of lawyers’ confidence (ranging from -100 to 100) to -1, down from 5 in the second quarter and 0 in the first quarter of 2019.

The overall index rating is based on a handful of questions that ask lawyers whether they think their firms will hire additional attorneys within the next three months; whether they foresee an increase in business that results in more billable hours; and whether their firms will invest in support staff, new technology, marketing and business development, and infrastructure.

Most respondents – 234 of 290 – have practiced for 10 or more years. Sixty-four percent, or 185 respondents, had 20-plus years’ experience.

Longer-tenured lawyers generally had less confidence that their firms would invest in attorneys, support staff, new technology, marketing and business development and infrastructure, while lawyers who began practicing more recently indicated their firms were likely to invest and expand, the data show.

Forty-eight percent of respondents with two to less than five years’ experience said their firms planned to hire additional lawyers in the next three months. Thirty-three percent of lawyers with 10 to less than 20 years’ experience answered the same, while just 17% of those with 20-plus years’ experience said their firms planned to hire soon.

Lewis said it was surprising that a majority of respondents thought it was unlikely that their firms would hire additional attorneys, saying she’s noticed “a lot of activity in the market” with needs “across the board” for new lawyers in a variety of practice areas.

Lewis said she’s observed that a lot of associates are scoping out the market with an eye toward moving on to other firms.

“I’m seeing that firms are hiring associates, but I will say there’s a greater supply of associates, particularly litigation associates, looking to leave their firm,” she said.

Billable hours, support staff

Forty-four percent of respondents with five to 10 years of practice said they anticipated their firms would see an increase in business and billable hours over the next three months, compared to 36% for lawyers with 20-plus years of practice.

As to hiring support staff, 41% of lawyers with five to less than 10 years of practice said their firms planned to hire more support staff in the next quarter, compared to 37% of attorneys with 10 to less than 20 years of practice and just 24% of attorneys practicing for 20-plus years.

Lewis said an increase in the use of new technology that makes firms more efficient — technologies that speed up tasks such as document proofing and creation — probably led to the drop in the number of survey respondents who said their firms were likely to add support staff.

“Because of changes in utilizing staff, firms have less need for support staff because of technology, and newer lawyers are very tech-savvy,” Lewis said. “There also a number of products on the market helping to streamline processes and make it easier and more cost-effective to work on deals.”

These products include programs that can automatically create new legal documents, as well as programs that use artificial intelligence to rapidly classify documents and identify due diligence issues, Lewis said.

Forty-four percent of all respondents said their firms planned to invest in new technology over the next three months, roughly on par with 45% in the second quarter and slightly higher than the first-quarter result, 41%.

Other investments

An increase in spending on marketing and business development was seen by 52% of respondents with five to less than 10 years’ experience, compared to 42% of respondents with 20-plus years of experience.

Regarding investment in infrastructure, 57% of respondents with between two and less than five years of practice said their firm anticipates an increase in infrastructure investment or expansion, compared to 16% of respondents with 10 to less than 20 years’ experience and 21% of lawyers with 20-plus years of experience.

Forty-one percent of lawyers who responded to the survey said “commoditization” of the legal profession would be one of the biggest changes over the next five years, a 10 percentage point jump over the response in the second quarter.

Commoditization can be defined as the mass production of legal services, which allows cost-conscious clients to pick and choose which lawyers or law firms will handle specific aspects of their cases.

“For some services, businesses and individuals are demanding flat fee or alternative fee arrangements that contribute to the commoditization of those services,” Lewis said.

Lewis added that a number of “boutique” firms — notably those that handle estates, trusts, employment law and family law — have opened nationwide and can charge less than locally based firms.

Other takeaways

• Most survey respondents — 29% — were from Montgomery County, followed by Baltimore city (18%) and Baltimore County and Anne Arundel County (13% each).
• Women’s participation in the confidence survey has increased each quarter this year as men’s participation has dropped, with the percentage of male respondents declining from 65% in the first quarter to 61% last quarter and to 60% in the third quarter. Thirty-seven percent of respondents in the third quarter were female. (Three percent, or 11 people, said they preferred not to answer.)

How the Maryland Lawyers Confidence Index was done

The confidential survey was emailed to The Daily Record’s master database of subscribers, who were asked if they were attorneys in private practice who did not work for a government agency or for a law school. Respondents who chose “yes” were taken to the survey, which had seven questions.

The survey was also sent to members of the Maryland State Bar Association, the survey’s sponsor. The survey was conducted by Best Companies Group, an experienced market and consumer research company in central Pennsylvania that is owned by The Daily Record’s parent company. The results were compiled by Best Companies.

An index score for each question and for the overall survey was calculated by taking the (total positive responses – negative responses)/total responses x 100.

Would you like to participate?

If you are an attorney in private practice in Maryland and would like to participate in the quarterly Maryland Lawyers Confidence Index survey, click here. Your name and your survey answers will be confidential.