Do we really need so many lawyers? Barrister boom and bust: Legal fees are falling, pay is stagnant and jobs for law grads are harder to come by
Each year, just before Christmas, a cross-section of Toronto’s legal establishment gathers for what might be the only truly indispensible event on its calendar. “Beef Night” is as old as the venerable Lawyers Club—est. 1922—and its name has hooves in the literal and figurative worlds. Fuelled by free beer, and by suppressed frustration, members rise during this banquet of prime rib to air “beefs” about the alternative dimension they inhabit. It might be the parsimony of the attorney general of the day. Or it might be the chafing effect of shabbily tailored robes.
But in recent years, the evening has taken on a different hue, says John McLellan, a past president of the Lawyers Club, one reflecting a profession that feels increasingly under siege. “It’s become a good pressure valve,” says the commercial lawyer from Mississauga, Ont. “There’s a fair bit of commiserating. A lot of these beefs are actually touching on raw nerves.” Lighthearted collegiality still prevails, McLellan adds, but it increasingly feels like nostalgia for the days when lawyers felt lucky to do what they do, and an escape from modern reality. “I think there’s a form of therapy in laughing at ourselves.”
Commiserating? Therapy? What, an average Canadian might ask, could some of the best paid and educated professionals in our midst possibly have to worry about?
A lot, it turns out. Earlier this year, the annual fee and compensation surveys published by Canadian Lawyer magazine confirmed the growing fear that the profession has never truly recovered from the economic downturn of 2008. For the third straight year, median income of a first-year associate actually declined, hitting $66,000, or 13 per cent below the level in 2010. Signs were equally worrisome at the cigar-and-Courvoisier end of the field. Fewer than four in 10 partners surveyed were pulling down more than $250,000 per year, compared to nearly six in 10 in recession-ravaged 2009, while the super-well-off—those pulling down $450,000 or more—were also shrinking in number. They constituted just 12 per cent of partners in 2012, compared to 22.3 per cent in 2009.
These numbers are unlikely to elicit much public sympathy: On the pity hierarchy, lawyers fall somewhere below people who get sick after eating Cronut burgers. But the new indicators are the latest in a slew that have recently cast the legal community into a bout of existential dread. In June, the Canadian Bar Association published a report as part of its ongoing “Legal Futures Initiative” outlining a tempest of social, economic and technological forces shaking up the profession, from do-it-yourself clients to software that performs tasks previously done by lawyers poring over books. South of the border, where many a hotshot Canadian law graduate once found work, law schools are laying off faculty and slashing enrolment—in some cases, by more than half—as young American lawyers struggle to find jobs.
This is all occurring against a backdrop of what the bar association report describes as “potential excess capacity”—a polite term for the potential glut created over the last 13 years, when the professsion grew at five times the rate of the Canadian population. With more than 90,000 lawyers now licensed, it seems a matter of time before the laws of supply and demand take over. Increasingly, the report notes, “economic power has shifted to the consumer and client side, with buyers demanding more say on what lawyers do, how they do it and how much they charge for it.” The authors herald an era of opportunity for firms and corporate legal departments to reinvent themselves, noting examples of individuals and firms “who have chosen to lead change, rather than just to react or ignore it.” But they carefully skirt the question the metrics might raise to anyone outside the profession: Do we really need all these lawyers?
Maybe we shouldn’t complain. The proliferation of lawyers is, after all, a byproduct of good economic fortune. Back in the late 1990s, when the tech bubble was considered mere froth and the housing market was just gathering steam, firms couldn’t seem to get enough sharp grads to meet the demand for their services. On Bay Street, mergers and acquisitions drove growth, but the demand for workaday advocates—tax lawyers, real estate specialists—remained strong across the country and, by 2011, according to a Harvard Law School study, Canada had 2.8 licensed lawyers per 1,000 people. That’s well below the 3.6 per 1,000 in the U.S., but it’s above the ratio in the Germany, the United Kingdom and Australia (not all those lawyers, it should be noted, practise).
By nature, and by necessity, the legal industry has resisted the sort of cost pressures that limit the size of the workforce in other sectors. Martin Felsky, an expert of the use of technology in law who works for Borden Ladner Gervais LLP in Toronto, recalls his astonishment when, as a law student in the 1980s, he saw how much of the sector’s business was still done on paper. Part of that was born of legitimate concerns about clients’ expectations of privacy and security. But a lot of it stemmed from habit. Lawyers tend to be word people, notes Felsky, and while they embraced practical tools such as cellphones and docketing software, they were slow to implement technology in their bread-and-butter work of research, discovery and document management. “Lawyers work on precedent,” he explains. “Turning everything upside down by introducing technology is risky, and they’re nothing if not risk-averse.”
The result, adds Felsky, is a kind of pent-up demand for efficiency that is only starting to reshape the sector: “We’re on the threshold of a very big change.” Case in point: the growing use of so-called “e-discovery” services to identify relevant documents in civil and commercial cases. In the old days, at the onset of a major suit, big firms might have dispatched teams of lawyers armed with production orders to prowl the filing cabinets of companies and individuals involved. Today, many of the relevant documents would be held in databases, servers and email inboxes. To get them, firms can hire an outside contractor such as Commonwealth Legal, a Canada-wide company that uses software to crawl servers, hard drives and the web in search of material pertinent to the case.
Second case in point: the rising phenomenon of “offshoring” legal work to low-cost jurisdictions such as India, where well-educated, English-speaking lawyers will perform mundane work, such as drafting standard-form contracts, for about $25 per hour. That’s about one-eighth the rate of an associate in this country, and with the ability to transmit documents instantly and securely, it’s a wonder more firms and clients don’t take advantage of it (it’s much more common in the U.S.). The few overseas outsourcing companies working here deny they’re taking jobs away from Canadian lawyers. But there’s no denying the basic economics: “The cost of living in India is a fraction of what it is in other developed country jurisdictions,” Gavin Birer, founder of Legalwise Outsourcing Inc., told National, the house magazine of the Canadian Bar Association (CBA) in 2011. With 35 lawyers operating in two offices in Bangalore, Birer’s company has landed a number of blue-chip clients, including the consumer-credit reporting agency Equifax, while a growing list of law firms also avail themselves of his service. “If you’re not [outsourcing],” he asks, “are you truly giving value to your clients?”
The sanguine spin on this would be to describe it as the natural evolution of a sector that will always be relevant in a thriving democracy. For all their bad press, and for all the lame jokes, lawyers are, in some sense, avatars of civilization and the healthy enterprise that takes place within it. But it’s hard not to look upon recent developments as something broader—an end, perhaps, of public deference toward the industry’s business model. Not only are corporate clients demanding that firms justify their fees, and asking pointed questions about exactly how they do their work, regular folk are doing all they can to get justice without them. With laws, judgments and rules of procedure now available online, recent studies suggest as many as six out of 10 people in Ontario and B.C. are going it alone in family court, while almost as many are doing so in civil court.
The underlying economics are well-known: Everyone from provincial cabinet ministers to Beverley McLachlin, the chief justice of the Supreme Court, have lamented that average Canadians have been priced out of the market for legal services. (Surveys suggest lawyers with about 10 years of experience charge, on average, just over $300 per hour.) Less understood is the attitudinal shift behind it, including the perception that the justice system is a closed community, set up not to deliver justice but to serve the needs of lawyers. Last winter, that sentiment boiled over in Sarnia, Ont., when a group calling itself Canadians for Family Law Reform protested outside the city’s provincial courthouse, claiming lawyers were deliberately stoking animosity between parties in divorces in order to make more money. “I think most people think, at the start of a legal matter, ‘Oh I gotta get a lawyer,’ ” says Jim Canie, one of the protestors. “But if you can keep lawyers out of it, you’re better off. It’s a close-knit community and no one wants to do anything to change it.”
The question now is what the convergence of these changes means to the sector as a whole—whether, in short, lawyers are the next victims of the brave new digital world (behind travel agents and print journalists). So are lawyers doing things they don’t need to be doing? If so, could we do with fewer of them?
Fred Headon pauses a long time at the question. The newly elected president of the CBA has just finished painting an image of the law firm of the future, working from an unexpected model. “When I visit the dentist,” he says, “I’ve dealt, before I leave, with two or three people other than the dentist, each of whom is trained when to bring in the professional when need be.” Paralegals, mediators and e-discovery specialists could work together in the same way, says Headon, thus lowering client costs and speeding up the process. But that doesn’t mean the profession is about to take a haircut, he stresses. “People’s lives continue to get more complex. There will always be new and unforeseen ways that questions of fairness will arise. For that reason, there will always be a good demand for lawyers.”
Maybe, but pressure on the profession is steadily rising. A survey of 179 firms by Canadian Lawyer pegged the average price this year of a two-day civil action (not including trial) at $18,420, down from $24,318 in 2011, while clients appear to be getting fussy about the quality of service they receive. Lawyers with one year of experience are able to charge only 75 per cent of what a lawyer with five years of experience charges, compared to 81 per cent last year. And, once again, law graduates are having trouble finding work: Some 15 per cent in Ontario were unable to land articling positions coming out of university this year, while, anecdotally, a growing number of those who’ve been called to the bar say they’re settling for non-permanent positions.
These harbingers are commonly chalked up to the sluggish economy, with the assumption that new ways of doing business will right the ship. A report produced through the CBA Futures Initiative cites 14 innovative approaches, including a Montreal-based firm that farms out lawyers to serve as in-house counsel on a temporary basis, as well as a U.K.-based outfit that has dispensed with billable hours, providing legal services instead for flat fees (starting price of a divorce: $1,600).
Some commentators, however, warn against the focus on the bottom line, saying the response will further erode public faith in lawyers and the justice system. Philip Slayton is a retired lawyer and academic whose 2007 book Lawyers Gone Bad turned the profession on its ear by exposing cronyism and unethical practices widespread in the early 2000s (it was famously—or infamously—excerpted in Maclean’s under the cover line “Lawyers are rats”). The profession today is “changing itself in a way that is not to its advantage,” Slayton says, adding, “There used to be a sense among lawyers that there was more to the job than making money. You were part of the justice system in a democratic society. You had obligations to that society as a whole. Now, it’s increasingly come to be regarded by those in it as a business, like any other business. The emphasis is on profits and the bottom line.”
Whether that’s a bad thing is debatable. These days, clients seem more interested in lawyers they can afford than ones with a sense of noblesse oblige. And let’s face it: Some traditions are best consigned to history. Consider the standard-issue black satchels in which lawyers and judges carry their court robes. Legend has it they started in the 19th century as cash bags that barristers would thrust toward their clients to avoid the unseemly spectacle of taking money from the great unwashed. Hard to imagine today’s lawyers having any such qualms. But if they did, they’d best get over them quick. Some enterprising soul—inside or outside the profession—might sweep in to steal their business. That’s one lament no one wants to hear about on Beef Night.