The Big Law firms that are thriving are carving out lucrative niches in industries where the demand for legal services is still strong and growing. Those industries include gaming, technology, biotechnology, and pharmaceuticals. The explosion of entrepreneurship, particularly in technology and biotech, has also sparked a demand for patent lawyers who can help companies protect their intellectual property.
Regina Pisa, chairman of Goodwin Procter in Boston, with more than 770 lawyers in seven U.S. cities, says the appetite for initial public offerings in technology and life sciences has also been robust, further boosting the demand for legal services. Pisa says the total fee revenue for Goodwin Procter's technology and life sciences practices has increased 75 percent over the past five years, and the combined client base for the two specialty practices has grown 20 percent over the past year alone. This past spring, in response to legal industry pressures, Goodwin Procter's management team took a second look at a strategic plan the firm adopted in 2002, when it first identified the industries that would provide the greatest opportunities for growth, she says. "The relative priority of some practices has shifted, but technology and life sciences have risen higher on our list," Pisa says.
Some firms have also singled out health care as an opportunity, particularly with the new Affordable Care Act starting to roll out in 2014. As health reform increases the focus on efficiency in health care, more and more hospitals are joining accountable care organizations (ACOs), which are networks of health providers that receive flat "bundled" payments from insurers.
Karen Lovitch, leader of the health law practice at 450-lawyer Mintz Levin in Washington, D.C., says her firm has put together a team of lawyers specializing in clinically integrated networks and health care antitrust issues to help in the formation of ACOs. Lovitch says that Mintz Levin has also seen increasing demand for lawyers to handle Medicare and Medicaid false claims cases, as well as disclosures required under new federal legislation mandating that life sciences companies disclose paid relationships with physicians.
To build Mintz Levin's reputation in health care, the firm churns out blog posts and publications on hot topics in health law, and it regularly plans webinars for clients and potential clients. "Growth isn't just about headcount," Lovitch says. "Growth is about branding yourself and letting people know about your expertise."
Among the most notable changes within Big Law is the rise to prominence of professionals who lack a law degree. The need for firms to master the skills of the business world — marketing, budgeting, and the like — has prompted many firms to hire managers who are not lawyers. For example, in August, Detroit-based Dykema announced that it had hired Richard Holdrup as its new chief financial officer. Holdrup is a Harvard MBA who worked in the consumer products industry prior to entering the legal profession in 2002.
Holdrup says his goal is to devise new strategies for boosting 331-lawyer Dykema's revenues and market share by winning business from other firms. "The demand for legal services is fairly flat year to year, so you have the same number of firms competing for a pie of work that isn't growing," Holdrup says. "Firms have to compete on technological capabilities. They have to compete on pricing, and for that, they need some level of financial analysis. It's no longer enough to go out to lunch with someone you went to school with — you have to provide a strong bench of talent in a cost-effective way."
Although many large law firms report they're adding fewer associates each year than they did during the boom, the hiring outlook in the legal industry isn't all that gloomy. More than 30 percent of law firms surveyed in June by Robert Half Legal, a staffing firm in Menlo Park, Calif., said they expected to add positions in the second half of 2013. The top three drivers for the uptick in hiring were predicted to be a rise in general litigation, corporate matters, and health care-related cases.