The Nevada legal industry has been witness to a multitude of changes in recent years and has had the difficult job of protecting their clients in trying times. From a recession to a slow recovering economy and the integration of new technologies, attorneys in the Silver State have learned to be ready for anything. Recently, a group of Nevada attorneys met at the offices of First Security Bank to discuss the trends and challenges facing their industry.
Connie Brennan, publisher and CEO of Nevada Business Magazine, served as moderator for the event. These monthly roundtables are designed to bring together leaders to discuss issues relevant to their industries. Following is a condensed version of the roundtable discussion.
How has the economy changed the legal industry?
Mark Ricciardi: Both locally and across the country, companies of usually larger sizes, but even medium sizes, are doing requests for proposals (RFPs). Sometimes it’s your own clients asking you to submit a proposal to keep doing their work, treating legal services like any other commodity, outsourcing and looking for the lowest bidder. It’s due to the way the economy impacted most companies. They are forced to look at the bottom line and expense each line item, not just give a free pass to personal services like they did for many years.
Michael Bonner: Boards of directors instructed their executive teams to cut costs, and legal spend was just another item on the expense line they needed to cut. We’ve seen long-time corporate clients and newer corporate clients ask for proposals on either broad areas of practice or focused areas of specialty. It’s definitely been on the increase.
Samuel Schwartz: We’re seeing more requests for fixed fees for work. Or success-based requests to be created for compensation and asking how confident are we in our work and the things we can accomplish, and will we take some risk in the upside, which is a hard thing to judge. You often see clients go for the lowest common denominator and that’s just because the less sophisticated clients don’t know how to gauge the work. They only understand the result. They don’t know what goes into the product; they only see what happens at the end. Assuming they can get the same result from any lawyer, they just take the lowest fee.
Gregory Garman: Until fairly recently, lots of law firms were chasing the same type of work and promising the same sorts of services. As we’ve been forced to become more mature, better businesses in this economic environment, we’re diversifying what we do. There are large law firms at this table chasing transaction work on the lender side, and there are firms like ours that are looking to get borrowers, developers and different practice groups on the other side. That really is the biggest trend in the legal market as we move forward because it drives who our clients are, what our fees are going to look like, the types of staffing we have, the types of para-professionals we’re going to have outside of traditional hourly billers and where we go from here.
William Urga: More in-house counsel is being used. Where they draw the line is if it’s a major corporation or something that may go beyond what an in-house counsel could really do. They usually have half a dozen other things they’re being pulled across the board on all kinds of problems within the company, so they don’t really have the ability to tackle bigger, more complicated matters. I don’t see as much RFP, but what I see is they look at your billings to the point where they’re questioning everything you do.
Patrick Byrne: I haven’t necessarily noticed a growth in in-house legal partners. There’s a lot of talk about alternative billing, but it continues to be mostly talk. Unless you’re dealing with something that is, for example, loans where you can fairly well determine how much time you put into it.
Jeffrey Burr: The fixed fee only works in certain engagements but it seems to facilitate a greater relationship with the client. They’re not concerned every time they call you if they’re going to be billed for it. Obviously on the litigation side you can’t do something like that. Clients are not shy about paying a little extra, adding a premium in there, because they’re very anxious to know what the final number is going to be.
Alan Sklar: Whenever we have a fixed fee, there’s never a fight down the road. It cuts across the board, everybody is happy with a fixed fee. They will pay a little more than they anticipated it will cost if you can fix it. The problem is anytime there’s a second side whether it’s litigation or transaction, you just can’t predict what you’re going to get on the other side.
Barbara Buckley: In the last couple of months, Alan Lefebvre, the state bar president, has had a couple of intriguing columns in the Nevada Lawyer [Magazine] talking about trends and the recessions, and how private companies are looking at bills more closely. But there’s never been a bigger gap of people who are unable to afford the legal system whether it’s the middle class, lower income individuals, people starting out in small businesses, or just folks reeling back from the recession. The irony, [Alan] points out is while there’s more and more pressure being put on top large firms, at the same time it doesn’t equal the pressure that so many people are seeing being priced out of the legal system. So lawyers are needing more work because clients are looking more carefully at the bills, and yet there are so many people in need.
How has technology impacted the legal practice?
Ricciardi: In terms of computerized legal research, there’s been a change because we’ve got two major players – West Law and Lexis Nexis are battling each other for dominance. Where we used to be able to use both because they both have unique databases, we’re now met with a stonewall that basically says you’re a Lexis house or you’re a West Law house.
Daniel Hamilton: Technology has changed the world of law school admissions in surprising ways. Now admitted students can talk via the internet on the kinds of negotiations they’re having with law schools with respect to their tuition. A student admitted to UNLV will be in communication with someone who was admitted to Cal Western, UNLV and University of San Diego talking about the scholarship offers they’re getting at each. The whole website is devoted to the best deal you can get. It’s very school specific and it has definitely changed the game.
Byrne: The most amazing thing is how our paper files have gone from enormous to almost nonexistent. Filing and maintaining our files are now being done predominately through electronic means. Additionally, the way we communicate has dramatically changed. In the old days you could send a letter out and you’d have a couple of days before you get a response back. Now we live in an instant world where you’ll have three to four communications in the course of an afternoon that might have taken a whole week or two weeks 15 years ago. The days of working eight hour days and closing up shop are over. You’re available no matter where you go. Clients expect you to be available, they expect you to answer the phone or get back to them. Technology has freed us up in many ways and enslaved us in many other ways.
Aviva Gordon: With the electronic communications there is a far greater concern now with respect to our obligations about maintaining confidentiality and how it is that we can truly make sure that we are protecting communications with clients. That is a tremendous concern as lawyers and for our clients.
Urga: Today, there is so much more information available immediately. We used to have to wait for the Supreme Court Advance Sheets to come out. Now you can get on there every Thursday and have someone reading the Supreme Court cases coming out of Nevada. That’s the biggest difference is the way research is done, and how fast things are done.
Schwartz: There are a few layers to break down here. The corporate clients are a bit more thoughtful about how they find their lawyers. The consumer is a far different animal when you talk about technology. They do almost all their research online. You’d be amazed at how people just pick their lawyers based on who has the best reviews online. On the communication side, you see a lot of the changes with email. We’ve been looking at it a little bit wrong. This is how to give certain clients access to their files remotely. Give them their own login and password so they can get to their own documents whenever they want. That way you don’t violate the attorney-client privilege but you don’t have to be making copies and having paper files.
Buckley: One of the things that we’re doing is researching across the country the best websites and the best form productions. Some of the technology that is now available allows you to answer a short questionnaire and then the forms self-populate. More and more of the middle class and low-income clients know how to work computers and figuring out how to impart legal information to that group is a trend that we’re seeing across the nation.
Burr: Using technology for marketing purposes allows us to really get a lot of data about the client such as occupation, wealth and, in our case, size of estate. It allows us the opportunity to send out information and market to our clients in a better way when changes to the law are made or some development occurs that might impact our clients.
How important are business development skills for attorneys?
Schwartz: It’s a question of whether they want to do that. Those ambitious young lawyers will find a way to market so it’s in your best interest to help them and make them feel like they’re a part of the operation. The ambitious young lawyers who don’t feel a part of the program will find some place to go where they think they are a part of the office. It’s driven by the individual first.
Brad Boodt: For a lot of law firms and lawyers, it doesn’t come naturally. It’s not what we go to law school for. You have a few who are just exceptional at it and they do very, very well. What a couple of these big firms are doing right now is making a real concentrated effort to teach these younger lawyers very early on.
Urga: The nature of the practice has changed, and the recession started it. Years ago we didn’t want associates going out and getting business because usually the kind of business they bring in is the kind you have to filter out anyway. It wasn’t economical. But in today’s world, somebody is going to have to go out and do it.
Boodt: We had a sophisticated business community here so we got a lot of really great work that might not have otherwise come to Las Vegas lawyers from out of state developers and entrepreneurs that had their law firms back in New York or Chicago. Those days are gone. It’s critical to start the young lawyers very early in learning business development.
Hamilton: Our core services department is now training people how to network from the start of law school. That is one of the skills that can be taught. It’s not just an art, it’s a science. Effective networking is really something that we try to train our students to do from the first day of law school.
Gordon: We’re a very, very small firm so if we don’t market, we don’t work. That’s the truth of it. It’s always an interesting balance having to deal with [the smaller cases] while simultaneously going after something that’s more substantial to be able to get sufficient quality work.
Garman: It is very lawyer specific and practice group specific. There are lawyers who are incredibly successful because they have a large number of clients that do commodity work, and then there are the big game hunters who have a few files a year they go after that spin off a great deal of work. They are remarkably different and how you achieve success under those various models is different.
Burr: Each attorney has an individual marketing plan based on their strengths and what they feel comfortable doing. We tailor them for each individual attorney and encourage them to do something to try and market the practice.
Are there stigmas associated with marketing?
Byrne: The bottom line is, if you’re a firm of any size you are going to be promoting your people and pushing your people to develop your business. It’s the only way that you’re going to be able to grow a practice.
Schwartz: There’s a serious disconnect between the way that lawyers view marketing of their peers and the way the consumer of the product use the marketing. It really depends on who’s your target audience and what do they respond to – is it the consumer or the corporate client? The consumer responds to things like commercials, billboards and Facebook, where the corporate client don’t want their lawyers so out there and visible.
Are attorneys in Nevada heavily involved in pro bono work?
Buckley: Here in Nevada about one-third of the attorneys do pro bono, about one-third will never do pro bono, the one-third we have left are lawyers who are too busy. Usually how we market pro bono is saying we have thousands of people waiting, but lawyers say they’re too busy. In 2014 we’re formally launching a new campaign called One Campaign, which originates out of Florida. The new message is going to be, “take one case in 2014.” Justices Hardesty and Douglas are spearheading it from the Nevada Supreme Court. We’re visiting every firm, saying it’s a great way to train your associates by giving them trial experience. We have some firms that are extraordinary. Gordon Silver was our 2013 large law firm of the year, Hutchison & Steffen and Lee Hernandez Law Firm tied for the most hours. But we have a huge un-met need – we have 60 children in foster care right now waiting for a voice, 60-70 domestic violence victims, victims of fraud, foreclosure. You name it, we have it.
Gordon: Our clients are aware of our involvement in community outreach programs in lots of way, and we use it as part of our marketing. Just the pure involvement with the organizations helps to generate business in and of itself. When we serve as board members for whatever organization it may be, we have both the benefit of feeding the nonprofit and our souls and also incur a lot of trust from the people we are working with there. They know we are committed to our community and providing service for our community.
Is staffing an issue?
Bonner: We have no trouble whatsoever finding very qualified candidates. Generally speaking, we haven’t had any trouble hanging onto lawyers although there are so many opportunities for young lawyers to move around. It’s one of the great things about being a lawyer. People leave for a variety of reasons: grass is always greener, or they see an opportunity to pursue a type of practice. Right now I think it’s still a buyer’s market for law firms and there’s a great talent selection. One of the interesting things about our profession right now is the amount of quality unemployed lawyers out there all over the United States. We went through four to five years of just anemic hiring and a lot of larger firms downsized so you’ve got a lot of people out in the market that are looking for opportunities to get back in now that the economy is starting to turn around.
Hamilton: The number one job for us is to make sure the Boyd student emerges with a good job and a chance for a very satisfying, good career. We have a terrific career services office that works with students from the first day of law school to well after they graduate. It’s no longer a case of placing them in a job and moving on to the next. We have to make sure our students remain competitive in the increasingly national legal market. We have a new associate dean for experiential learning and their whole mission is to make sure our lawyers hit the ground as close to practice ready as possible. We need to make sure our students compete for those positions in Las Vegas when they come up and that we make the case that the Boyd student is the one you want. They are tied to this community and they are already trained how to network and build these relationships and we are very proud of the students we produce. We will have to shrink, as most law schools will have to do. That will take off some of the immediate pressure to place 150 students every year. This remains our fundamental challenge for legal education broadly.
Byrne: There are far more qualified candidates than there are openings right now.
Kari Stephens: There’s an opportunity for young attorneys to become sole proprietors and open up their own practice. More so than there used to be just because of the virtual offices, they can start out small. They can also get involved in the Clark County Bar Association and other organizations to network and get referrals from other attorneys who have those cases that they don’t want to handle. The State Bar has started a solo or small practice section to address some of those issues.
Hamilton: One half of law school graduates across the country are going to one- or two-person law firms. Teaching them how to be able to hit the ground running and open up a shop very quickly right out of law school is really a challenge. We’re partnering with the State Bar to figure out ways we can better serve the roughly 40-50 percent of our class that’s going to go into small firms.
Ricciardi: We really want a diverse population of attorneys. Clients are very interested because one of the questions on the RFP is, tell us how diverse your attorney pool is and what diverse attorneys are you going to put on our cases. To recruit quality people of all different racial and ethnic backgrounds is still not easy. The last thing you want to do is hire an attorney based on a diverse background who’s not a quality attorney.
Urga: There’s also a change in what students think as new lawyers. They don’t think they have to spend 2000 hours working anymore. They’d rather work 1,400-1,500 hours and have more family time. Lawyers don’t work from nine to five. You have to work all night because you’re supposed to do the best for your client. A lot of people don’t want to do that anymore.
Garman: That also fits in with our generational make up. Mandatory retirement ages and things like that have gone a lot by the wayside so we’re seeing four full generations working together. Those are retainment issues that we have to deal with; different generations have different expectations of what the work environment is supposed to be like.
Buckley: On the pro bono side, we’re really targeting lawyers offering Continuing Legal Education (CLE). For example, ten of the best family law attorneys have volunteered to be mentors to the newer lawyers. We have a full password-protected pleading bank on our website to anyone who would take the pro bono case, so you get free CLE credit, you get a pleadings bank and you get an expert to mentor you. That helps a lot with their practice later.