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Law firm forecast sees declining profits

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Declining profits could be on the dockets of many law firms again this year.

New Jersey legal consultancy Hildebrandt International expects profit-per-partner, a measuring stick of firm success, to decline 5 to 15 percent.

If the forecast released earlier this month proves accurate, it would mark the second consecutive year in which the average profit for law firms has fallen, a dubious distinction almost unheard of in the legal profession. Profits ranged from between flat and minus 10 percent in 2008, Hildebrandt said. Companies battered by the reeling economy are scaling back on legal counsel, unless of course they need bankruptcy advice. To compensate, firms are taking such drastic measures as reducing bonuses, freezing associate salaries, postponing new initiatives, instituting layoffs, and weeding out unprofitable partners.

Mike Williams, managing partner of Indianapolis mid-size firm Krieg DeVault LLP, thinks the mega firms that have locations in the "money centers" - Chicago and coastal cities - are hurting the most.

Krieg DeVault has weathered the storm relatively unscathed, Williams said, although at least a handful of local rivals have trimmed support staff to cut costs.

"There's no question that with the downturn in the economy, some of the legal services that clients have used law firms for, it's not happening now," Williams said.

Real estate, financing, and merger-and-acquisition activity is particularly slow. Conversely, the deepening recession is generating more lawsuits driven by massive layoffs.

The Hildebrandt report said the gloomy conditions provide law firms a chance to adjust their business models to appeal more to clients, including offering them alternative billing options.

The billable hour is as outdated as the law library, advocates for alternative billing say. The more hours billed, the more money a firm makes, which could encourage inefficiency, they say.

The option that could challenge the billable hour is a fixed-fee structure that gives clients a more accurate upfront estimate for the cost of services, allowing them to better budget for the expense.

A contracting economy arguably is fanning the argument for fixed fees, said Bob Birge of Law Firm Marketing Network, who has supported the fixed-fee model for years. Yet, firms have been reluctant to abandon billable hours because they've driven profits.

"Things have been good," he said. "Why shake it up when everybody's been making money?"

If billing correctly, firms can maintain profits while keeping clients satisfied, Birge said. If a fee for a real-estate transaction typically ranges between $5,000 and $10,000, for instance, a firm might charge $7,000.

But, Birge added, "Because nobody else does it, no one does it."

Indeed, the Hildebrandt report said some firms would have a difficult time making changes it recommended.

"We've gone through a period where everyone got used to growth and expansion," said James Jones, a vice president of Hildebrandt, in a statement. "People haven't really had to look at doing more with less."

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  1. Falk said “At this point, at this minute, we’ll savor this particular victory.” “It certainly is a historic week on this front,” Cockrum said. “What a delight ... “Happy Independence Day to the women of the state of Indiana,” WOW. So we broke with England for the right to "off" our preborn progeny at will, and allow the processing plant doing the dirty deeds (dirt cheap) to profit on the marketing of those "products of conception." I was completely maleducated on our nation's founding, it would seem. (But I know the ACLU is hard at work to remedy that, too.)

  2. congratulations on such balanced journalism; I also love how fetus disposal affects women's health protection, as covered by Roe...

  3. It truly sickens me every time a case is compared to mine. The Indiana Supreme Court upheld my convictions based on a finding of “hidden threats.” The term “hidden threat” never appeared until the opinion in Brewington so I had no way of knowing I was on trial for making hidden threats because Dearborn County Prosecutor F Aaron Negangard argued the First Amendment didn't protect lies. Negangard convened a grand jury to investigate me for making “over the top” and “unsubstantiated” statements about court officials, not hidden threats of violence. My indictments and convictions were so vague, the Indiana Court of Appeals made no mention of hidden threats when they upheld my convictions. Despite my public defender’s closing arguments stating he was unsure of exactly what conduct the prosecution deemed to be unlawful, Rush found that my lawyer’s trial strategy waived my right to the fundamental error of being tried for criminal defamation because my lawyer employed a strategy that attempted to take advantage of Negangard's unconstitutional criminal defamation prosecution against me. Rush’s opinion stated the prosecution argued two grounds for conviction one constitutional and one not, however the constitutional true threat “argument” consistently of only a blanket reading of subsection 1 of the intimidation statute during closing arguments, making it impossible to build any kind of defense. Of course intent was impossible for my attorney to argue because my attorney, Rush County Chief Public Defender Bryan Barrett refused to meet with me prior to trial. The record is littered with examples of where I made my concerns known to the trial judge that I didn’t know the charges against me, I did not have access to evidence, all while my public defender refused to meet with me. Special Judge Brian Hill, from Rush Superior Court, refused to address the issue with my public defender and marched me to trial without access to evidence or an understanding of the indictments against me. Just recently the Indiana Public Access Counselor found that four over four years Judge Hill has erroneously denied access to the grand jury audio from my case, the most likely reason being the transcription of the grand jury proceedings omitted portions of the official audio record. The bottom line is any intimidation case involves an action or statement that is debatably a threat of physical violence. There were no such statements in my case. The Indiana Supreme Court took partial statements I made over a period of 41 months and literally connected them with dots… to give the appearance that the statements were made within the same timeframe and then claimed a person similarly situated would find the statements intimidating while intentionally leaving out surrounding contextual factors. Even holding the similarly situated test was to be used in my case, the prosecution argued that the only intent of my public writings was to subject the “victims” to ridicule and hatred so a similarly situated jury instruction wouldn't even have applied in my case. Chief Justice Rush wrote the opinion while Rush continued to sit on a committee with one of the alleged victims in my trial and one of the judges in my divorce, just as she'd done for the previous 7+ years. All of this information, including the recent PAC opinion against the Dearborn Superior Court II can be found on my blog www.danbrewington.blogspot.com.

  4. On a related note, I offered the ICLU my cases against the BLE repeatedly, and sought their amici aid repeatedly as well. Crickets. Usually not even a response. I am guessing they do not do allegations of anti-Christian bias? No matter how glaring? I have posted on other links the amicus brief that did get filed (search this ezine, e.g., Kansas attorney), read the Thomas More Society brief to note what the ACLU ran from like vampires from garlic. An Examiner pledged to advance diversity and inclusion came right out on the record and demanded that I choose Man's law or God's law. I wonder, had I been asked to swear off Allah ... what result then, ICLU? Had I been found of bad character and fitness for advocating sexual deviance, what result then ICLU? Had I been lifetime banned for posting left of center statements denigrating the US Constitution, what result ICLU? Hey, we all know don't we? Rather Biased.

  5. It was mentioned in the article that there have been numerous CLE events to train attorneys on e-filing. I would like someone to provide a list of those events, because I have not seen any such events in east central Indiana, and since Hamilton County is one of the counties where e-filing is mandatory, one would expect some instruction in this area. Come on, people, give some instruction, not just applause!

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