Co-contributor Mike’s father-in-law Tom Basehart keeps his eye in the news on articles of interest for the blog. So, with our thanks to him, here are some gems culled from the recent clippings.
Malpractice Trends: Up.
As reported in a February 6, 2012 article in The Wall Street Journal, several legal malpractice insurers say there have been increases in malpractice claims in 2011. A poll of six leading insurers in 2011 found that four of them reported increases of 6% to 20% in claims, according to Ames & Gough Insurance and Risk Management. Not only was the frequency up, but the claim severity was up in the reports.
Law Firm Mergers; Profits Per Partner in Major U.S. Firms: Up.
Jennifer Smith, in an article in The Wall Street Journal, reports that law firm mergers are up, with at least 60 mergers occurring in the U.S. and abroad in 2011, the highest level since 2008 and a 54% increase since 2010, according to legal-industry consulting firm Altman Weil Inc. (Unfortunately, the Dewey law firm looks like it will not merge and is in liquidation mode, as numerous news reports chronicle.)
According to a survey by Hoffman Alvary (a consulting firm), profits per partner increased in 2011 at a 70% clip for the 52 major U.S. firms surveyed. The gains averaged 4.4%.
Wild and Crazy Guys: Alternative Billing Arrangements.
An April 9, 2012 article from The Wall Street Journal informs us that alternative billing arrangements (nonhourly; budgeted/full or hybrid contingency cases) are catching on, at least in large law firms. The percentage of revenue from these arrangements is expected to hit 13.4% of revenues for large firms in 2012, nearly double what is was in 2008 according to a Citi Private Bank survey of managing partners from 40 U.S. firms. In a 2011 U.S. general counsel survey by Fulbright & Jaworski of 405 companies, 61% of U.S. general counsel said they used alternative fee arrangements, up from 48% in 2009. GlaxoSmithKline PLC’s general counsel confirms that 63% of the more than $100 million spent by the company each year on outside law firms involves alternative billing arrangements, compared with 3% back in 2008--saving the company tens of millions of dollars.