January is sometimes referred to as "Divorce Month" in the legal world. That isn't to say it has the highest rates of divorce filings, but rather, it's the time when couples examine (or reexamine) divorce options. As the law firm Goldberg Jones writes, "In some instances, people put off acting on a decision they already made, waiting to get past the stress and chaos of the holidays…In other cases, holidays may be the proverbial straw that broke the camel’s back. All the additional anxiety and activity put increased pressure on a marriage."
THIS WEEK:
- In lieu of rising billing rates, clients seem to be changing the game
- Women pass a major milestone in the legal field
- Meta announces changes to how minors use its platforms
✨ REVOLUTION
The Effects Of Rising Billing Rates
It's a moment some have seen coming for awhile: rising rates by Big Law combined with a decentralization of legal talent (be it to platforms like LawTrades or to more in-house lawyers), and suddenly you have a situation for legal arbitrage.
Let's back up. In the 2024 Report on the State of the Legal Market, published by Thomson Reuters this week, is the finding that "many law firms have seen their ability to collect on those increasing rates falter, and clients have become more aggressive about trying to tier work to lower-cost firms." In other words, as Cecilia Ziniti, former Amazon in-house counsel posted to X, "The legal market predictably responds to sky high big law rates + AI + in-house lawyers being closer to the business. What a time to be a lawyer!"
And she's not alone. Back in April, Alex Su wrote in Off The Record that "Biglaw’s excessive focus on profits per equity partner (PPEP) will create a big opportunity for low cost providers in the near future." He added that "The problem though, is that when you raise prices, demand goes down. Because not everyone wants to pay more! They’ll either find another firm, or look for another way to get things done." And, guess what: they have!
AI has rushed in to take on many smaller, more rote legal tasks, and will continue to grow its share of that work. Meanwhile, what Su calls "low-cost providers", or regional firms, ex-Big Law attorneys striking out on their own, or contract lawyers working through platforms like Lawtrades, "are going gangbusters right now." This in turn has led to the growth of legal operations. "Legal ops focuses on process issues so in-house lawyers can focus on what they do best," notes Su. "That means advising on change management, updating processes, implementing technology, or finding new ways to get work done. They’re uniquely positioned because they can take a bird’s eye view of how legal work is done, and bring a more neutral view on risk and change."
Declining Profits
As the Reuters report notes, billing rates at major firms rose between 6-8% in 2023, and is on track to do the same in 2024. But just because "clients have been taking their work elsewhere…Big Law firms just don’t necessarily feel it."
THE VERDICT:
It's about time the legal industry underwent some serious changes. It appears the shift in tech and economic forces are doing what they do best—bringing about structural upheaval.
🙋‍♀️ REPRESENTATION
Women Now Make Up The Majority of Legal Associates
An important milestone has been reached in the legal world: women now make a majority of all associates at US law firms. So says the National Association of Law Placement, which has been tracking the data for 32 years.
As for the partner level? The report finds that women only make up 27.76% of all partners, even though that represents growth over previous years. People of color make up a smaller percentage of US law firms, though, again, still saw growth. 30.15% of associates are people of color, and they comprise 12.01% of partners.
The attrition of women between associate and partner levels is longstanding and notorious, and clearly remains an obstacle. "Most law firm partner metrics include credit for originating work…and often also for maintaining and growing an existing client relationship…Any period of leave is going to impact that," Sarah Chilton, a partner with UK firm CM Murray, told the Financial Times. She added that firms need to take those periods of leave into account, rather than judge "against a blanket set of objectives."
In 1991, when the NALP began tracking the data, women made up "38% of law firm associates," explained Nikia L. Gray, the group's Executive Director, in a press release. "It took another thirty-two years for women to achieve equal, and just slightly greater, representation among associates – 153 years in total. Real change is slow, hard, and imperceptible, but it does happen.”
One area of noteworthy decline is the diversity in summer associates, which dropped by 0.75% and was the first reversal in gains since 2017. The decline was mostly due to a drop in Black and multiracial summer associates, the report clarified.
Representation does not mean pay equity, however, as the Financial Times detailed. In 2022, female partners at Latham & Watkins earned 24 cents less an hour than their male counterparts, while at Allen & Overy the gender pay gap was 18.6 percent.
A DEI Backlash
Most large firms began strong Diversity Equity and Inclusion (DEI) campaigns in 2020, following the police-killing of George Floyd that same year.
However, those DEI initiatives have been under intense backlash recently. As Bloomberg Law notes, "firms received letters from congressional leaders and state attorneys general threatening potential legal action over their DEI initiatives. Some firms, including Perkins Coie, faced lawsuits attacking their associate-recruiting diversity programs."
The ending of affirmative action has also troubled many who want to see greater diversity at US firms. Not only would it impact the diversity of matriculating students at the nation's law schools, Dennis Quinio, diversity chief at Allen & Overy, told Bloomberg Law, but "would make it even more difficult to bring diversity into law firms and the legal profession."
THE VERDICT:
It's true that the gains made by women and other marginalized groups have been slow and hard-fought, yet it's a major milestone moment for the industry. That being said, the backlash to change is sizeable, and the obstacles to continued momentum are real. Firms and recruiters should take it upon themselves to ensure their DEI measures are robust.
📱 SOCIAL MEDIA
Meta Restricts How Teens Access Content
Increasing evidence shows that teens who consume high levels of social media also exhibit higher rates of self-harm, mental health crisis, eating disorder, and feelings of social isolation. The connection has put Meta under pressure to act, and the company faces multiple lawsuits and even bipartisan legislation to change how minors use their platforms.
Now, the company has announced new policies to restrict even further what teens see and have access to across Meta. “We will start to hide more types of content for teens on Instagram and Facebook, in line with expert guidance,” a company statement reads. “We’re automatically placing all teens into the most restrictive content control settings” and limiting search terms on Instagram. The actual details of the new policy weren't clarified much more.
But how effective will these new changes be? "You do not need parental permission to sign up for a social media account," Jean Twenge, a psychology professor at San Diego State, told NPR. "You check a box saying that you're 13, or you choose a different birth year and, boom, you're on." It's an obvious flaw, and one that underscores the challenges Meta faces in trying to keep minors on its platforms safe. Though some critics accuse the tech giant of playing a cat-and-mouse game between regulating its service and profiting off its users.
In 2021, a company whistleblower testified before the Senate Commerce subcommittee that “I saw that Facebook repeatedly encountered conflicts between its own profits and our safety." The whistleblower, Frances Haugen, added that “Facebook consistently resolved those conflicts in favor of its own profits. The result has been a system that amplifies division, extremism and polarization — and undermining societies around the world.”
States Suit
In October, 40 states' Attorneys General sued Meta, accusing it of tactics that "exploit and manipulate" children with features they call "dopamine-manipulating". As NPR notes, Meta used Section 230—the federal law on website liability enacted in 1996—as its main defense. Use of the law has been met with mixed reaction in courts in recent years because of the sweeping protections it provides tech firms.
"I think that it's a very close call as to whether Meta would succeed with a Section 230 defense," Jeff Kosseff, a cybersecurity law professor at the US Naval Academy, told NPR. "Courts are increasingly willing to conclude that Section 230 is not a defense in lawsuits arising from claims about product design, though the line is not always clear."
THE VERDICT:
It feels like we've been here before: Meta says it will change its ways, and we just have to believe them. But the shifting cultural attitude towards Silicon Valley and Big Tech is on our side this time. With heavy-hitting lawsuits and legislation, Meta might be telling the truth this time.
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