Hello, I'm Jeffrey Lowe. I'm the Global Practice Leader of Major, Lindsey & Africa's Partner Practice Group and the Managing Partner of the Washington, D.C. office. And I'm here today to talk about BigLaw 2017: A Look Ahead.
Today we're going to talk about a number of issues affecting the legal industry in 2017. The global demand for legal services, Brexit, the Trump administration, the gender pay gap, lateral partner hiring, on-shoring, cybersecurity, and a host of other issues that are sure to be important in the year to come.
The global demand for legal services is strong although the supply-side continues to evolve. You have third-party entrants entering the market. You have clients are increasingly building out their legal departments. All whom are competing with BigLaw for the kinds of projects that firms used to do over the last decade or two. This puts increasing pressure on firms to find other avenues of revenue.
Lateral partner hiring remains critically important to growth. Law firms essentially have three options: They can teach their existing partners how to be better business generators; they can merge or they can hire laterally. And we think it's clear that hiring laterally is by far the most expedient options, and really can be the easiest option of the three.
The key to successful lateral hiring is integration. You can't simply hire people throw them in the office and expect them to perform the way they did at their prior firm. They need to understand the firm. They need to understand the partners and their clients. Our Lateral Partner Satisfaction Survey that we published in 2014 has shown us once again that those firms that are better that at integrating partners have much higher success rates with their lateral partner hiring.
The gender pay gap continues to be a vexing issue for both BigLaw and every other industry. In our 2016 Partner Compensation survey we saw that women lagged behind men by 44 percent in terms of average compensation. That's down only slightly from the 47 percent that we recorded in 2014. The question is: why do women lag so far behind men in compensation? Are men getting more business than women, or are they simply better at getting more credit for business than women?This decision received a lot of coverage this year and we expect 2017 will continue to see increased focus on the gender pay gap issue
I think the hottest practice area in 2016 was cybersecurity, and we think that will continue to be the hottest practice area in 2017. Much like Y2K over 15 years ago, this is an area that has seen increased focus by firms and clients and those who were smart enough to get into this area of the law are finding themselves in very high demand.
Alternative staffing models continue to be very important to the legal industry. Whether you call them project attorneys, staff attorneys or contract attorneys, law firms have seen that having a very flexible workforce can be a huge advantage. Also the people who are filling those roles tend to find very high degrees of job satisfaction, often in cities that are much less expensive to live in than some of the major metropolitan areas. This on-shoring of legal services has been tremendously effective for BigLaw over the last 10 or 15 years and we believe that trend will continue.
Merger continues to be quite strong although there weren't as many large mergers last year's in the prior years. We did see a number of firms acquiring boutiques - maybe 20 or fewer lawyers. We think that trend is going to continue in 2017.
Firms will continue to have smaller equity partner classes. That trend has been going on for 20 or 30 years now and we don't see any sign of it changing. It's simply not enough to be a great lawyer anymore. To make partner, certainly to make equity partner, firms need to see that you're going to be able to help to make the pie bigger.
Law firms have become increasingly comfortable with their revised utilization of real estate. They're considering locations outside of central business districts and, like their clients, they're finding that it's ok for their employees to work from home and not be so concerned about facetime. It's not a question of where the work gets done, but how the work gets done.
There's been a lot of talk over the last few years about how motivated Millennials are, and our experience has been that they are every bit as motivated as every other generation that has come before them. I think they're just more knowledgeable than previous generations about what opportunities there are out for them. So we remain very bullish about the Millennial workforce, and we think there are a significant number of them just like every other generation who really do want to make partner at BigLaw.
We think the increased professionalization of law firms will continue. Last year we talked about the hiring of chief pricing officers who were helping law firms evaluate the use of alternative fee agreements. We think law firms will continue to hire more business professionals. You see it now with professional salespeople, MBAs and other experts coming into the management ranks at BigLaw firms.
2016 was a very interesting year for law firms. We think 2017 will be even more interesting. BigLaw's future seems far less uncertain and it did several years ago, but we think the road ahead is still far from clear.