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Why is everyone trying so hard to paint a rosy face on the prospects for the legal industry in 2011?  I’m not talking about putting lipstick on a pig here.  We’re talking about total misdirection.  You draw the reader in with a headline of hope; you show that there’s been a short-term 0.5% bump in legal business, and then you crush his or her dreams with the long-term reality:

Headline #1:

Legal Industry Shows Signs of a Rebound — With a Caveat

Their Tease:

"Law firm profits and lawyer productivity rebounded in 2010."

(That sounds amazing – until you realize it’s code for “We fired a lot of lawyers.  Now, we’re more profitable because we’ve trimmed the fat, and more productive because we’ve each had to pick up the hours of the lawyers fired.”)

Their Reality Check:

  • Expense cuts have gone about as far as they can, so firms now need to focus on how to increase top-line revenue.
  • Unfortunately, demand for legal services remains soft, and that is unlikely to change any time soon.
  • The only way firms can grow their revenue is at someone else’s expense.
  • In their study of leading law firms, respondents described a market where demand is low and competition is high, particularly because low-cost service providers have entered the market. This has led to ongoing pricing pressure from clients.

Headline # 2:

"Some indications of law firms starting to recover."

Their Tease:

"A modest increase in law firm revenue in one U.S. city."

Their Reality Check:

  • Facing rate pressure from clients along with an overall decline in demand, firms are outsourcing work to contract lawyers or even to a burgeoning law-firm services industry in India.
  • Firms are relying increasingly on sophisticated data-mining software for simple discovery tasks that lawyers once handled.
  • A belief that clients are getting far more careful about how they spend their money – many doing this by taking work in-house.

Aren’t those just the “feel-good stories” of the year?

I finally saw a “tell it like it is” headline this month:

Legal Sector Lost 2,900 Jobs in February

The Reality:

The United States economy may be showing signs of improvement, but in at least one way the legal sector is not enjoying the fruits of that recovery: the industry shed 2,900 jobs in February, according to the monthly employment report from the Bureau of Labor Statistics.

This news may be brutal and scary, but at least it’s honest.  Memo to the press:  Don’t try to get our hopes up with your optimistic headlines — until you actually have something about which to be optimistic.

Mike O'Horo

If you mean to compete, really compete, for the kind of business you want, you'd better invest in training for the skills you'll need.