Some are merging to stay competitive. Consulting firm Hildebrandt calculated 53 law firm mergers in 2002, compared to 11 mergers in 1997. Others are collapsing under the pressure. Brobeck, Phleger & Harrison, a San Francisco firm that soared representing technology clients during the boom, ceased operations in January, laying off all 518 attorneys amid staggering debt and stalled merger talks.
But won't fewer law firms mean higher fees and less personalized service for small businesses? Far from being edged out, the legal profession's woes could be your gain, says Larraine Segil, a former attorney and co-founder of The Lared Group, a Los Angeles consulting company she founded with Emilio Fontana. Segil predicts attorneys will leave merged and troubled firms over the next two years to set up their own practices. "It's already happening," she says.
"It's an opportunity to find a senior person with a lot of experience who's willing to work with you."
But lawyers who once eagerly accepted equity in return for their services will now expect cash, says Jay M. Jaffe, president and CEO of Jaffe Associates Inc., a Bethesda, Maryland, company that helps law firms with business development, marketing and mergers. The good news is, law firms are dealing in a highly competitive marketplace where many of their services have become commodities. "There's a lot more room to bargain with lawyers than there ever was before," Jaffe says. It's a good time to comparison shop and seek nonlitigation services on a fixed-price basis so you can plan for annual expenses. "It's absolutely a buyer's market," Jaffe says. "And I don't see that changing for at least the next three years."