RECESSION AND PARALEGALS
How to adapt in a changing market
By Luciana BA Case
San Diego Paralegal Association Member
Reprinted from the May-June 2008 San Diego Paralegal Association Newsletter

Economic slowdown, business growth decline, recession. Uncertainty.  This is the gloomy scenario forecasted on the daily news, but how exactly it will affect the legal market and the paralegal career? 

According to Hildebrandt International, a private consulting company that highlights the market trends, the legal sector has experienced sustained growth since 2001, which was the last year it faced a slowdown.  Indeed, law firms reported a 10.5 percent revenue growth and 3.6 percent demand growth (measured by total billable hours) in 2007.  This healthy performance is a direct result, however, of the remarkable results reported during the first half of 2007 only, as in the third quarter the scenario changed drastically mostly triggered by the sub-prime mortgage crisis, fear of a recession, and an overall slowing of economic activity.  

Historically, when the economy slows down, upturns in the litigation and bankruptcy sectors occur, because companies start to hurt financially and, consequently, do not apply their best practices towards clients, vendors and employees, which generate an increase of lawsuits. Nevertheless, the current downturn has not yet presented a surge in work related to the downturn itself enough to offset the deceleration, with finance, transactional, and litigation work all slowing down at the same time.

In 2001 there was a tremendous reaction from clients regarding firms’ rates and billing practices and this pattern is expected to reoccur in 2008. At that time, clients insisted on multiple-year rates or other types of discounts and in-house legal departments became more involved in the work performed by outside counsel. Thus, it is expected that the current slowdown will directly affect paralegals causing them to take on more responsibilities with the purpose of lowering litigation costs. 

During economic slowdowns it is imperative that paralegals shift their paradigms and be open to positions requiring blended skills, especially in smaller firms. 

Flexibility and creativity will also be important talents for those entering the profession or changing practice areas, as paralegal jobs in the nontraditional firm setting will flourish. Competition will intensify and education, certification and a variety of other skills will differentiate candidates. 

The legal profession is extremely resilient and the demand for legal services will certainly continue to grow, albeit perhaps at a slower pace.

Although in the last six years the legal market experienced an unprecedented two-digit growth on an annual basis, one digit growth is viewed as quite healthy in most industries, even though these figures may seem somewhat disappointing.