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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The billable hour is as outdated as the law library, advocates for alternative billing say.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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  3. All these sites putting up all the crap they do making Brent Look like A Monster like he's not a good person . First off th fight actually started not because of Brent but because of one of his friends then when the fight popped off his friend ran like a coward which left Brent to fend for himself .It IS NOT a crime to defend yourself 3 of them and 1 of him . just so happened he was a better fighter. I'm Brent s wife so I know him personally and up close . He's a very caring kind loving man . He's not abusive in any way . He is a loving father and really shouldn't be where he is not for self defense . Now because of one of his stupid friends trying to show off and turning out to be nothing but a coward and leaving Brent to be jumped by 3 men not only is Brent suffering but Me his wife , his kids abd step kidshis mom and brother his family is left to live without him abd suffering in more ways then one . that man was and still is my smile ....he's the one real thing I've ever had in my life .....f@#@ You Lafayette court system . Learn to do your jobs right he maybe should have gotten that year for misdemeanor battery but that s it . not one person can stand to me and tell me if u we're in a fight facing 3 men and u just by yourself u wouldn't fight back that you wouldn't do everything u could to walk away to ur family ur kids That's what Brent is guilty of trying to defend himself against 3 men he wanted to go home tohisfamily worse then they did he just happened to be a better fighter and he got the best of th others . what would you do ? Stand there lay there and be stomped and beaten or would u give it everything u got and fight back ? I'd of done the same only I'm so smallid of probably shot or stabbed or picked up something to use as a weapon . if it was me or them I'd do everything I could to make sure I was going to live that I would make it hone to see my kids and husband . I Love You Brent Anthony Forever & Always .....Soul 1 baby

  4. Good points, although this man did have a dog in the legal fight as that it was his mother on trial ... and he a dependent. As for parking spaces, handicap spots for pregnant women sure makes sense to me ... er, I mean pregnant men or women. (Please, I meant to include pregnant men the first time, not Room 101 again, please not Room 101 again. I love BB)

  5. I have no doubt that the ADA and related laws provide that many disabilities must be addressed. The question, however, is "by whom?" Many people get dealt bad cards by life. Some are deaf. Some are blind. Some are crippled. Why is it the business of the state to "collectivize" these problems and to force those who are NOT so afflicted to pay for those who are? The fact that this litigant was a mere spectator and not a party is chilling. What happens when somebody who speaks only East Bazurkistanish wants a translator so that he can "understand" the proceedings in a case in which he has NO interest? Do I and all other taxpayers have to cough up? It would seem so. ADA should be amended to provide a simple rule: "Your handicap, YOUR problem". This would apply particularly to handicapped parking spaces, where it seems that if the "handicap" is an ingrown toenail, the government comes rushing in to assist the poor downtrodden victim. I would grant wounded vets (IED victims come to mind in particular) a pass on this.. but others? Nope.

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