The Impact of the Recession Upon the Legal Profession

All of what has been posted is broadly correct - but I would hesitate to describe this as a 'train wreck' of a profession. It's a speed-bump -a VERY big one, granted. Big enough to ruin your suspension, and loosen a few teeth maybe - but not to put you off driving.

Insurance has indeed gone up very significantly. There is a survey of solicitors' insurance costs being carried out by a solicitor in Mayo. I expect the results will be published in due course, or will otherwise make their way into the public domain. Insurance costs for solicitors are undoubtedly going to be higher - but I don't see this as a problem. So long as your competitors all face the same costs, high insurance does not place you at a competitive disadvantage. Sooner or later, the increased costs will be reflected in higher legal charges. So - a painful adjustment certainly, but not a structural problem;

Conveyancing has for years been the mainstay of the profession. Certainly, I have been very heavily reliant upon conveyancing income over the past fifteen years. However, we need to bear in mind that it is not the drop in property prices (per se) which has hammered the profession. Rather, it is the enormous drop in the number of transactions. Even if property prices stay where they are now (indeed even if they go lower) the legal profession is probably not as badly off as the builders and architects. We just need the market to stabilise, so that people start trading up, trading down, selling off their inherited house(s) etc., as would normally happen in a stable property market.

After the ridiculous overhang of unsold housing is cleared, the 'froth' of perhaps 50,000 new house sales per annum will be gone for good. But that is, after all, only 8-10 (approx) transactions per solicitor per annum - hardly enough to bankrupt the profession (though of course it is not evenly spread and equates to more than 50 transactions per annum for some solicitors, who are finding the adjustment very painful. I speak as one of them)

I recall speaking with an older and more prosperous colleague earlier this year and he told me that they had reduced their monthly drawings twice and that they were now only taking money when it was there. I was mightily relieved (my thoughts being 'it's not just me then'). It is very tough - but I think that the profession will come through this relatively unscathed (over perhaps a five year timeframe). The people who will suffer most are :

1. The recently qualified (and up to perhaps 5 years qualified) solicitors (such as Robskiola) who - having been laid off - may find it impossible to re-enter the legal profession and will have to make some stark choices about pursuing other careers. (by the way Robskiola - nobody in the profession got seriously wealthy out of conveyancing work; many dabbled in property themselves, but that is a whole other story)

2. The small practitioner nearing retirement who perhaps thought he\she could sell the practice to fund that retirement. Banks will be very reluctant to lend money to buy a legal practice and prospective purchasers will be very thin on the ground. So, old geezers and geezerettes will probably have to keep going well past 65. This was common in the profession in the past and will become common again.
 
Regarding the question as to whether we have too many lawyers:

The US figure is one for every 265 people. This is the highest per-capita population of lawyers in the world, I think. No idea if this is the figure for lawyers in practice. US has a strong trend for lawyers to go into industry (in much the way that accountants do here in Ireland)

The UK figure (from Wiki-answers ) is one lawyer for every 401 people. UK is a reasonable comparator esp. as we also have a financial services centre.

The UK figure would equate to 10,723 lawyers in Ireland (assuming population of circa 4.3million).

In 2008 there were 8,231 practising solicitors and a total of 9,115 members of the Law Society (solicitors not in practice do not need take out a practicing cert, but may retain membership of the Law Society).

Taking into account the numbers at the Bar, it seems clear that we probably do have an excess of lawyers - but not by any means a huge excess. Natural shrinkage will resolve this over a few years.

The inability to absorb the newly qualified solicitors is a bigger issue in my opinion.
 
MOB, please allow me to ask you, as seasoned member of the profession, what's your perspective on us younger members opening their own firms? You note that stark choices need to be made. I agree with you completely. My decision has been to go ahead and open my own practice in my local community. The way I see it, is that the majority of problems for firms are their operating costs. The business plan I've formulated has costs at a very low rate, not more than €300 per week, including both PI and Practising Certificate. Keep the costs low and provided you can pull in a few files over the months to keep you going, hopefully I can break even in the first year, then I can position myself for when the upswing happens. The level of competition in my hometown is five other firms, with about 13 total solicitors. If you don't mind me asking, what would you say to someone like me thinking of taking this venture?

My own thoughts on this matter are that with
1. Hard work
2. Good People skills
3. Strong advertising
4. Good customer service
5. Keeping Costs low and
6. A bit of common sense
The whole thing just might work.
 
Robskiola, I hope that works out for you. I really do. But for the profession, I am afraid that your plan is not the way forward. The reality is that you cannot possibly keep your overhead to €15k per annum and still offer a full service. So you will have to cherry-pick and unless you can establish yourself in an uncommon niche, you will be getting business mostly by heavy price competition. It's a race to the bottom.

Lots of people doing what you propose will ultimately contribute to the increased stratification of the profession and to the creation of a sort of underclass within the profession.

Certainly, what you propose is very similar to the way that many solicitors start out - but they usually have an expectation of expanding and into a properly-staffed full service law firm before too long. If you don't have that intention I would certainly have second thoughts about going ahead.
 
Robskiola said:
My own thoughts on this matter are that with
1. Hard work
2. Good People skills
3. Strong advertising
4. Good customer service
5. Keeping Costs low and
6. A bit of common sense
The whole thing just might work.
Click to expand...

These are qualities/skillsets important for any service, not just law. However, if there is reduced demand for the service against an increased number of service providers, one could also conclude that these qualities are better applied in other markets.

I am not sure that broad per capita comparisons with UK is good indicator of market supply equilibrium. London is a world financial centre and commercial lawyers in London will be closing project financed deals all over the world. There are also TMT and other niche/boutique practices. The general legal practitioner is the dominant model in Ireland - it relies on income from conveyancing, litigation and probate. As pointed out the first two have significantly contracted. So, I would argue that we should have a lower per capita number of lawyers then we currently have.
 
Robskiola said:
The level of competition in my hometown is five other firms, with about 13 total solicitors.
Click to expand...

We cant evaluate if there are already too many solicitors in your town because you haven't told us the population of the town, and if the town has a lot of industry requiring legal services.

Someone worked out we have around 1 solicitor for every 480 people in the country........I hope the population of your town is greater than 6'500, or else there is already a disproportionately large number of solicitors there

If there is not a lot of industry in your town, there would probably need to be a much greater population than 6500 people there to justify another practice....

My advise is to not restrict yourself to your hometown, set up your business where there is a need.



Robskiola said:
My own thoughts on this matter are that with
1. Hard work
2. Good People skills
3. Strong advertising
4. Good customer service
5. Keeping Costs low and
6. A bit of common sense
The whole thing just might work.
Click to expand...

You have a good set of principles listed. You forgot to mention being very competitive on pricing......in the early years you may need to undercut the competition to get work.
 
My own thoughts on this matter are that with
1. Hard work
2. Good People skill
3. Strong advertising
4. Good customer service
5. Keeping Costs low and
6. A bit of common sense
The whole thing just might work
Click to expand...


Don't forget the most important aspect ... being the best at your job.


I have come across the most useless/incompetent solictors and I have also come across excellent solictors.

Marion
 
I find it very hard to have any sympathy for solicitors, because when I wanted to move house, again, the previous solicitor that had my file charged me €150 for releasing it. :mad: and I unemployed, not that he bothered to enquire.
 
Robskiola this is prior posting of mine from a different thread

"If it correct to assume that there is not enough work available to keep all Solicitors going, where will the casualties occur? Tier 1 firms have less commercial and corporate work available - particularly commercial conveyancing e.g. recent injunction application ?!? Tier 1 and 2 firms are moving or will move downstream for corporate work. Commodity, or practically any, conveyancing in lower tier firms is a distant memory. PIAB has all but stopped personal injury litigation. Commercial litigation is available but there is an uncertainty in getting paid. Employment law is busy but pays poorly and family law is very much dependant upon the property market. There are some other niche areas like pensions law which are no doubt busy but expertise are concentrated in a few firms. Probate is also somewhat dependant upon the health of the property (and stock) market.

All in all I would crudely guess that there is 40% over capacity in the Solicitors' profession. This will result in a combination of large scale redundancies, decreasing incomes for all but a very few and decreased pricing based on a simple demand and supply equasion.

The legal profession is heavily aligned with the health of the economy. The numbers in the profession far exceed the current and medium term requirement of the economy.

I can see very poor prospects for a great many Solicitors. "

I would suggest to you that the country is saturated with Solicitors. However I think that you could succeed at given your client orientated qualaties. However, as it would appear that you are adaptable, you should consider whether you would gain much greater recompense from another client focused enterprise.
 
Brendan said:
Likewise our property registration process should be changed so that people can buy and sell their property without legal assistance, if they want to.

Brendan
Click to expand...

Firstly, by "property registration process" do you mean registration of title to property? By "buying and selling property", do you mean conveyancing?

Registering title and conveyancing are not the same thing. Registration of title is done after the conveyancing process is complete and title passes, and is (subject to exceptions) reasonably straightforward. Conveyancing, on the other hand, is a complicated process, particularly conveyancing of Registry of Deeds properties (confusingly for the layperson called "unregistered" titles). Conveyancing requires knowledge of other areas of law, such as family law, probate, and tax. Ownership of land under Irish law is extremely complex, and in respect of any particular piece of land, ownership may be fragmented into numerous interests and sub-interests. This is not a system created by solicitors, and is something that those who repeatedly call for a simpler and cheaper system would do well to remember.

Secondly, and in spite of the above, there is nothing in our present legal system to stop an individual from doing their own conveyancing, if s/he so wishes. I agree with the dentist analogy used by a previous poster, and disagree with Purple's comment that building your own house would be a better analogy. There is more required than simply conforming to standards to complete a conveyance, including academic and legal training, technical expertise and professional competence.
 
I agree with Bazoo, it is better when legal stuff like conveyancing and registering title are done by people who have expertise and daily experience in the area......less chance of mistakes being made.

Equally it's better if all plumbing is done by plumbers, all electricity work done by electricians, if people are doing something everyday, they are more likely to get it right first time, more quickly and efficiently.

But, I don't agree with the dentist analogy !
I reckon given a laptop, the internet, and websites like AAM, I could find out everything I need to know to do my own conveyancing, it might take a bit of time and research.
But could I do a root canal filling with research from my own laptop ?...........not a chance. Not even the worlds biggest cowboy could do a root canal without getting formal and practical training, however most legal stuff is within the grasp of people who can read and understand english.

I think the legal industry has suffered a bit because of the internet. People can find out ways of saving on legal fees (like Brendan representing himself without a solicitor) by researching it themselves. Twenty years ago it would have been much more difficult because it was harder then to get information.
 
Robskioal, please can you email me at [email protected] re the PII quotes you have received as i am also interested in setting up my own practise
 
Well the die has been cast and I write to just to say the numbers have been crunched and projected and 'operation law firm' is underway. Deirdre,I would check out Aon; they are coming in at the cheapest.

I appreciate the constructive criticisms from above, especially from those who have been in this game for some time (MOB in particular). I'll let you know how the firm does in time.
 
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