Prior to COVID-19, the legal industry was going through significant changes. A growing number of clients sought to be more in control of their files and billing. Meanwhile, external lawyers increasingly provided legal coaching to their in-house counterparts, instead of on the record representation.
Indeed, Big Law has been downsizing for years, with many corporate clients growing their legal departments. The lucrative days of law in the 1980s seems to be over. Many lawyers have been offering flat fees and unbundled packages to attract clients.
Then COVID-19 came along and blindsided the legal industry. Government relief measures have become critical for many people, law firms and businesses to pay their bills. However, the government cannot afford to keep the economy on life support indefinitely. Lawyers are going to have a tough few years ahead of them.
A further squeeze on the legal market is that there are too many lawyers and not enough clients. Universities like Bond University in Australia doesn't require an LSAT. Many law students are going abroad to law school, and then returning to the U.S. and Canada to practice law.
Many of these students graduated in a few years, come back to North America, and complete their exams to get licensed. They eventually become sole practitioners and compete with lawyers that went to law school locally.
The straw that broke the lawyer's back
COVID-19 was the final straw for many law firms. With tight margins, staff on payroll, and rent in central areas, they could not afford to continue with their practice.
Since the coronavirus spread, lawyers and their firms – of all sizes – are increasingly desperate for leads. Managing partners are just trying to meet their payroll obligations and rent while waiting to see how long it will take the economy to recover.
As for the lawyers, it's easy to forget how hard they've worked to build their careers. They went to law school for three years, articled, and then passed the bar. And then the hardest part began: getting clients and building a practice. Many lawyers worked at this for years, only to see everything crash down in a matter of months. It's tragic.
Too many will find it impossible to carry on with their obligations under the current circumstances. A few lawyers I know have been applying for salaried positions that pay between $40,000-60,000. It's an honourable living, but there is something wrong with going to school for seven years to get the same pay that I received as a 19-year-old in the military.
I have seen little to no support for law firms. Many sole practitioners have earned too much pay to get the COVID-19 government monthly benefit and did not qualify for the business assistance program. In Canada, the only benefit they received is the $40,000 interest-free loan from the government.
Many of the small firms I know received these loans in April 2020. I can confirm many are losing around $10,000 a month right now. The loan will cover their losses for four months. Therefore, these law firms will run out of spare cash in August, which is now.
I predict that many attorneys will find themselves forced to terminate agreements with their employees, contractors, and landlords. At least they self-represent themselves in court effectively if they get sued for breach of contract. It's hardly the glamourous life that law is made out to be on TV.
Tips to keep going
The lawyers who have been most successful at waiting out the pandemic are pushing low-cost options for clients. They are focusing on independent legal advice, demand letters, and legal coaching. These clients do not want to "waste" money on things like examinations for discovery or notices to admit.
Whatever it is, lawyers should not be turning away work during COVID-19.
Clients want to solve their legal problems as quickly as possible. They are self-representing whenever possible, like at case conferences and settlement conferences. The lawyer starts off the process with the pleadings and will likely get involved again once the case makes it to the trial conference.
It's time for lawyers to stand up for their profession by showing their worth. Lawyers work hard for their licenses, so let's make sure the license to practice law remains valuable.
Lawyers need to make it clear to the state bar, law societies, and government that they need more assistance. Attorneys worked too hard on their education to struggle to make ends meet.
And lawyers must adapt to the times. They must practise law differently, and that is largely up to them.