I heard economist, lawyer, and former U.S. labour secretary Robert Reich recently say we are most likely out of the recession and on the road to recovery. But he doubts whether the bounce will equal the fall.
His supposition was based on the idea consumers have too much debt and lack access to credit. He also pointed out the U.S. underemployment rate — the rate of people who do not have jobs, or are working and being paid at less than full capacity — is around 20 per cent.
Reich made the remarks at the Toronto Forum for Global Cities Conference in Toronto sponsored by Canadian law firm Fraser Milner Casgrain LLP.
He did say the successful areas, cities, provinces, countries, and what have you, will be the ones offering more incentives for business. Lower taxes, an energized work force, and cheaper business conditions will all play into whether a jurisdiction will be successful — basically areas that provide uncommon value.
Much of what he said was about consumer spending and government intervention. But I couldn’t help but equate his talk with what is happening in the legal world. It would be almost impossible to go to any in-house counsel conference or read any legal department trade magazine in the past year and not hear about spending less. We have paid special attention in our magazines to initiatives like value billing and what in-house lawyers are doing to control costs.
Most pundits, myself included, have pondered whether we have seen the end of the billable hour — at least in the corporate setting — or whether this is just a blip. The conversation is eerily similar to the one economists are having about consumer spending. Will spending go back up as the economy improves? Or will finding ways to do more with less continue?
In an answer typical of the legal world, I would say it depends. In researching the article “ACC Value Challenge at one year” on page 23, it was made clear the drop in spending on outside counsel didn’t begin with the economic plunge; it merely accelerated something that was already happening.
As legal departments become better managers of their money they will spend less on outside counsel. The rub, of course, is if the companies become more efficient and profitable in the process, they will have a greater need to spend on outside counsel. So the discussion in-house lawyers are having is help me, help my company to grow, and you’ll benefit from that growth.
That is how I understand value-billing initiatives. I doubt they’ll all work, and having a discussion with a profession that is naturally risk averse will not be easy.
But as Reich said about the new economy, places that offer uncommon value will do well.