June 16, 2009

Marc Tracy, my guiding light (editorially speaking), wrote a post recently, "The Great Rearranging Hits Wall Street". He discussed the essential disappearance of the investment banking industry, and as a result, the “great rearranging" of the financial services industry, in which savvy entrepreneurs and smaller banks stand to gain.

Well, there’s another great rearranging going on, and it’s in “Big Law”. That’s the colloquial expression given to the 250 largest American law firms, with about 15 of them having more than 1000 lawyers. Or used to. Lawyers haven’t been immune from what’s been going on in the economy, and Big Law is attempting to adjust in a number of ways--ways that, again, look primed to benefit small business.

Marc touched on that also when he recently wrote about Skadden, Arps, Slate, Meagher & Flom LLP, among the biggest of the Big Laws, "Telling Employees To Take A Hike--For A Year". Skadden is offering to pay rising associates in the firm $80,000 to take a year off so that the firm doesn’t lose them to a rival law firm, which would be likely to happen even if they had to take a pay cut, but at the same time can save money by not paying overtime and perks.

But that’s just one way Big Law is reacting. The ABA Journal reports that for the first quarter of the year approximately 7,000 attorneys and staff have lost their jobs in addtion to cancelled summer programs, postponed first-year associate start-dates, and pay cuts across the board including partners. Not a pretty picture for the 43,000 imminent law-school graduates about to enter the legal job market.

Marc has pointed out on numerous occasions that recessions can actually prove a boon to innovation and to small businesses. And such is the case for the legal business.

We’re seeing stories about some of those graduating law students, "Unable to Find Jobs, Law Grads Hang Out a Shingle". And stories about "Wall Street Lawyers Dumped for Lower-Priced Boutiques". (A “boutique law firm” is a law firm of about 50 or less attorneys that specialize in only a few areas of the law). And even for the “larger” small firm (those with less than 300 lawyers), Larry Bodene on his Law Marketing Blog reports, "Big Corporations Hiring Smaller Law Firms".

So what does all of this mean for us small business owners? I can’t say it better than Seth Godin did in his brilliant blogpost, "Small is the New Big", which the recent recession seems, if anything, to have made only more right-on and prescient. And if all this seems pretty obvious to you, Seth wrote this in June, 2005.

Jerry Kalish is founder and President of National Benefit Services, Inc., a Chicago-based employee benefit consulting and administrative firm that serves private-held companies, publicly traded companies, and public sector employers. He blogs at The Retirement Plan Blog and can be reached at jerry@nationalbenefit.com.

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