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How Regional and National Firms Are Changing the Legal LandscapeBy Brian J. Matter The Influx of Regional & National FirmsIn 2002, the Nevada Supreme Court changed its rules to allow out-of-state law firms to use their own names. Since then we have observed a flood of out-of-state firms setting up shop in Southern Nevada. Today there are at least 60 branch offices in Clark County, employing over 400 lawyers. Many offices are small, but the largest has nearly 60 lawyers and all seem to be growing rapidly. See table on pages 30-31. Among these firms, the influx of large regional and national firms has been surprising. Of the 60 branch offices, 23 are satellites of firms larger than any native Nevada firm. See the attached table. Most of these branches are made up of Nevada-grown lawyers. While the individual lawyers who populate these branches may be long time Nevada lawyers, their firms function very differently when they become part of large regional or national firms. Large regional and national firms are formidable competitors to the other firms in the market. Their increased ability to compete is changing the southern Nevada legal market. What Makes Regional & National Branch Offices a Challenge to Home Grown FirmsWage DisparitiesRegionals and nationals pay associates more than local firms. Associate pay in these firms starts higher and goes up faster than local firms. Their benefit packages are also richer and more comprehensive. This has been a recurring problem for local firms. The competition for top-tier associates is fierce among top level firms, and Nevada-based firms that want to hold onto their associates are under pressure to increase wages. In 2005, many of the larger local firms gave mid-year raises to associates to try and catch up. Again this year the national firms have given their associates large salary increases. Local firms are again under pressure. As a result, we are seeing Nevada-based firms giving mid-year raises to associates again this summer. While this will help in the short term, most of the out-of-state firms still pay less in Nevada than in their home markets. This means they can easily increase pay again, and again local firms will find themselves behind. Partner AttritionThe competition for associates is only one of the pressures home-grown firms are feeling. There is hardly a firm among the mid-sized and larger local firms that has not lost partners, and in some cases entire practice groups, to out-of-state firms. These departures create difficulties. Losing key partners and their supporting players results in a loss of clients and income. The jilted firm is almost always less profitable, and suffers a loss of prestige and confidence. Client AttritionAnother area of threat is client retention. As the regional and national branch offices have grown, their portion of the work being done in Nevada has grown as well. It is difficult to know how much work has actually been lost by local firms and gained by out-of-state firms. The total amount of legal work in southern Nevada continues to grow, and thus the work going to branch offices could be growing without a visible loss of work to home grown firms. But it is clear that every engagement taken on by one of the branch offices is an engagement that a locally-owned firm loses. Based on 400 lawyers, a conservative estimate would be that the total work being done collectively by the branch offices is $150,000,000 per year. Increased SpecializationA significant advantage among regionals and nationals is their breadth and depth which allows them to specialize at a level that is impossible for local firms. Super-specialization makes these firms highly desirable to sophisticated clients, and gives them the opportunity to charge very high rates. Larger firms also tend to work for larger clients. There is a strong correlation between law firm profitability and the size of a firm's engagements. "Big clients, big profits, small clients, small profits," has been a truism in law firm management for decades. Big firms with big clients are able to take on massive projects that are beyond the capabilities of smaller firms. With modern technology, these firms can also import work into the state to be done by local branches. This work can often be done at rates that are higher than can be charged locally, giving the branches an advantage in profitability that locals cannot match. This helps underwrite the higher compensation that they pay to their Nevada lawyers. AdvertisingRegionals and nationals also challenge local firms by relentless advertising. Their greater financial resources allow them to employ professional marketing staffs and large advertising budgets. All one needs to do is look at any local business publication to see their advertising at work. Leadership & Management StructuresProbably the most important way that large regional and national firms have an advantage over home grown firms pertains to their leadership and management. Large firms' leadership and management is more centralized, and this makes it easier for them to be focused and goal-oriented. They are committed to growth, and they are used to stiff competition. By comparison, local firms are smaller, more democratic, and inclusive in their decision-making. The partners in smaller firms know one another, and they expect their opinions and desires to have an effect on firm policy. This belief coupled with the desire among management to keep everyone happy makes it difficult to stay focused on the firm's overall strategic objectives. It is difficult to fire a volley when you can't get all of the arrows pointed in the same direction. Local Firms Are Not DefenselessWhile regional and national firms have many advantages, home grown firms are not defenseless. There are many firms in Nevada that have had great success over many decades. Local name recognition, long-term client relationships, and a reputation for providing high quality and excellent value will always stand a firm in good stead. Focusing on being "a good place to work" is also a good tactic. Not everyone wants to work in a sweat shop, and some lawyers are willing to earn somewhat less to assure that they enjoy going to work every day. Also, local firms that focus their practices in areas in which the regionals and nationals do not want to compete (e.g., insurance defense, family law, collections, criminal law, personal injury, etc.) will be able to avoid competition. But, for those that want to play on the same playing field as the branch offices, operational changes may be necessary. Competing with Big FirmsAny firm that wants to to "take on" the regionals and nationals will need to make economic performance their primary goal. There are a myriad of things that a local firm can do to better compete.
One of the most difficult but effective measures is to "align the stars." This involves looking dispassionately at the practices within the firm to identify those that are highly successful and profitable, and those that are marginal or weak. For years, consultants have preached that to maximize financial performance firms must "ratchet themselves up the value curve" by growing their strong and profitable practices and shrinking the weak and unprofitable ones. This is difficult for several reasons. The human cost is high because some of firm's partners will need to be redirected to new work or invited to seek their fortune elsewhere. This is also difficult because a practice that produces a lot of revenues is not guaranteed to be profitable. Profit per engagement is the ratio between revenue produced and the value of time and cost invested to produce it. It is easy to be misled when a client pays a lot. That is because firms sometimes ignore the cost of discounts, markdowns, money spent on client development, and the cost of delayed collections. Undertaking fundamental changes like these is always difficult in a firm in which everyone knows everyone else, and there is a sense of community. But, shying away from hard choices will not pay dividends for a firm that has made economic performance its first priority. Without a rigorous approach, such firms will find that their overall profitability will lag, they will fall behind financially, and become increasingly susceptible to raids from outside. If You Can't Fight Them, Join ThemSome firms have already decided that it is more advantageous to join a regional or national firm rather than fight them. All who are practicing in Nevada have observed Quirk and Tratos, Schreck Brignone and Beckley Singleton become branches of out-of-state firms. Beckley Singleton's merger into Lewis and Roca, effective on August 1, 2007, has produced one of the largest law offices in Clark County. Whereas just a few years ago the branch offices in Nevada were considered to be niche players, and no threat to the established local firms, now these branches are growing as large as some of the largest home grown firms. They are no longer niche players. If this trend continues over the next several years, there will be many more local firms opting to merge. One cannot help but wonder whether there may come a day when the in-state firms are a rarity. The local legal landscape is changing. Whether the result will be a legal market that is dominated by strong, independent local firms, or a group of regional and national branch offices, primarily depends on whether the local firms can respond effectively to the increased competition. The local legal market is "at the tipping point." Brian J. Matter is the Executive Director at Jones Vargas. Mr. Matter has B.S. and an M.S. degrees, and 20 years experience in legal administration in firms ranging from 25 to 350 lawyers. He currently serves as an officer in the Las Vegas Chapter of the Association of Legal Administrators. What Can a Paralegal Do For You?By Clarissa M. Cota Many successful and profitable law practices have discovered the benefits of qualified paralegals. Lawyers have been able to dedicate their time to higher level legal work at higher billing rates while their paralegals perform other substantive legal tasks. With proper supervision and delegation, a well-qualified paralegal can play an important role in the efficient delivery of legal services to the client. What is a Paralegal?The American Bar Association defines a legal assistant or paralegal as a person, qualified by education, training or work experience who is employed or retained by a lawyer, law office, corporation, governmental agency or other entity and who performs specifically delegated substantive legal work for which a lawyer is responsible. (ABA House of Delegates, 1997). The titles "paralegal" and "legal assistant" are generally synonymous. The ABA first endorsed the use of paralegals in 1967. The State Bar of Nevada established the Legal Assistants Division in 1994. The purpose of the Division of Legal Assistants is to enhance legal assistants' participation in the administration of justice, professional responsibility and public service in cooperation with the State Bar of Nevada. Paralegals perform substantive legal work that would otherwise be done by attorneys. Although many paralegals serve hybrid functions and will routinely perform both clerical and substantive legal tasks, clerical work is not substantive legal work and may not be billed. While a well-qualified paralegal may perform many of the same tasks as lawyers, they are explicitly prohibited from carrying on duties that are considered the practice of law such as giving legal advice, representing a client in court or establishing a fee or accepting a case on behalf of a client. (See, NRS 7.285 Unlawful practice of law.) Paralegals are currently not licensed as lawyers anywhere in the U.S, nor subject to any regulatory scheme in Nevada. Since paralegals are not regulated, the supervising attorney remains responsible for the paralegal's work product and conduct. Most entering paralegals have an associate's degree in paralegal studies or a bachelor's degree coupled with a certificate in paralegal studies. Formally trained paralegals are considered to have favorable employment opportunities as employers try to reduce the costs by hiring paralegals to perform tasks formerly carried out by lawyers. The traditional paralegal may be employed in a full or part-time basis or retained by an attorney on a case by case basis. What Can Paralegals Do?A paralegal may perform any function delegated by an attorney permitted by law, so long as the lawyer supervises the work. The types of tasks handled by a paralegal will vary according to practice area and capabilities of the paralegal. Generally, paralegals may perform, but are not limited to, the following functions:
National Association of Paralegals (NALA), Model Standards and Guidelines for Utilization of Legal Assistants-Paralegals, 2007. How Best to Utilize the Paralegal and be More ProfitableParalegal time can be billed out separately to the clients, and at lower rates. Because paralegals can be paid less than an attorney, yet handle many tasks (under an attorney's supervision) that would otherwise be performed by an attorney, the paralegal staff can be a profit center for a law practice. Using an example from the book, Paralegals, Profitability, and the Future of Your Law Practice, by Arthur G. Greene and Therese A. Cannon (ABA, Law Practice Management Section 2003), the tables at right reflect the cost of a lawyer working alone compared to the cost of a lawyer and paralegal working together on a case. According the IPMA 2005 Utilization Survey, the top two reasons why paralegals are not properly utilized are 1) attorneys are delegating paralegal work tasks to other attorneys or to law clerks and 2) attorneys do not know what paralegals can do for them. Therefore, when evaluating how to best utilize the paralegal, consider the tips provided by James Wilber, who wrote "Top Ten Tips for Effective Utilization of Paralegals," in the Report to Legal Management Journal (Altman Weil, Inc., January 2006). He advises:
Ethical Considerations When Employing a ParalegalLawyers are ultimately responsible for the work product of paralegals. The ABA Model Guidelines for the Utilization of Paralegal Service is an excellent document to review when employing paralegals to ensure that no ethical pitfalls occur. The Guidelines read as follows:
Although paralegals are not directly subject to any governmentally imposed rules of professional conduct, paralegals who are members of professional associations are required to follow the ethical codes of those associations, such as the NALA Guidelines, the National Federation of Paralegal Association (NFPA) Guidelines, the American Alliance of Paralegals, Inc. (AAPI) Code of Ethics, and the NALS Code of Ethics. How to Hire a Well-Qualified ParalegalParalegals are not licensed as lawyers are, nor subject to any other regulatory scheme in Nevada, so anyone walking in the law firm door may call themselves a paralegal. When interviewing and screening potential paralegal candidates, the interviewer must be very aware of the desired paralegal qualifications, paralegal educational programs, paralegal certifications and paralegal professional associations. Typically a law firm would want a person with excellent organizational skills, who is detail minded and able to multi-task. Good communication skills, both oral and written are essential. Also, a paralegal with a genuine interest in law and empathy with clients' problems will be a valuable member of the legal team. The available educational programs for paralegals vary considerably, from non-credit certificate programs, to associate's degrees, bachelor's degrees, master's degrees, and/or credit based certificates which may be undergraduate or post-degree certificates. These programs may or may not be approved or accredited by any authoritative organization. Generally, someone who has either a college degree in paralegal studies or a college degree plus a credit-based certificate in paralegal courses would have the best foundation to work as a paralegal. Some paralegal educational programs have received approval from the ABA through its Standing Committee on Paralegals and Approval Commission. Although ABA approval is voluntary on the part of the paralegal institution, those programs that are ABA approved have undergone rigorous scrutiny of its curriculum, faculty, recruiting and admission practices, library and computer resources, student services and other aspects of the program. The American Association for Paralegal Education (AAfPE) is a professional organization of educators who have an interest in providing the legal community with quality programs. Membership by colleges and universities is not mandatory, but is an indication of how teachers and professors of that institution have responded to the establishment of programs with a curriculum that reflects the needs of the legal community. AAfPE believes that the paralegal profession requires training of sufficient length, sophistication, intensity, and quality to produce a functional entry-level paralegal. AAfPE, and five other major law-related associations, NFPA, NALA, IPMA, the Association of Legal Administrators (ALA) and the Standing Committee on Paralegals of the ABA, have set forth a minimum education necessary to prepare a person to succeed in an entry-level position in the paralegal field. All of these law-related organizations agreed that a paralegal program must include at least 18 semester units of paralegal coursework. There should be a total of 60 semester hours (or the equivalent) of total post-secondary study prior to graduation. Also, the paralegal program must be offered by an institution that is an institutional member of AAfPE or approved by the ABA or offered by an institution accredited by an agency recognized by the U.S. Department of Education. Some employers have found certification credentials useful when making hiring decisions. A "certified" paralegal is a one who has completed the voluntary certification process of a professional association by developing a specified level of professional competency. There are a number of certification examinations with unique designations for paralegals. The two most widely taken exams are also the two oldest: NALA's Certified Legal Assistant (CLA) or Certified Paralegal (CP) exam created in 1976, and the NFPA's Paralegal Advanced Competency Exam (PACE) created in 1994. NALA awards the designation of Certified Legal Assistant (CLA) or Certified Paralegal (CP) to persons who have met its requirements, which include passing a competency exam. Advanced specialty certification (CLAS) exams are also administered by NALA. NFPA awards the designation of Registered Paralegal (RP) to persons who have met its requirements, which include passing the PACE exam. More recently, NALS, the association for legal professionals created the Professional Paralegal (PP) designation and the AAIP developed the American Alliance Certified Paralegal (AACP) designation. All of these certifications require a certain level of formal education and/or legal experience. Once a paralegal is certified, there are mandatory continuing legal education requirements that must be met in order to retain the credential. Membership in local paralegal associations may also be a something to consider when hiring. Most of these organizations have monthly meetings which include an educational component. Paralegals learn more about certification and continuing legal education opportunities. Once a member, the paralegal must adhere to the ethical codes set forth by the organization. Overall, membership in paralegal associations is an excellent avenue for professional development and will go to show how invested the individual is to the profession. So, when searching for a quality entry-level paralegal, here are some of the questions that should be asked of the potential candidates about themselves:
Additional resources
Clarissa M. Cota, J.D. is a Professor and Director of the Paralegal Studies Program at the College of Southern Nevada (formerly CCSN). She teaches the Beginning and Advanced Legal Research courses and coordinates the paralegal internships. CSN offers an Associate of Applied Science degree and Post-Degree Certificate in Paralegal Studies. CSN is an institutional member of the American Association for Paralegal Education and accredited by the Northwest Commission of Universities and Community Colleges. |
© Originally published in COMMUNIQUÉ (August, Vol. 28, No. 8), the official journal of the Clark County Bar Association. All rights reserved.