Legal.

• Position: Industry Outlook - Interview

Our panel of industry experts covered an array of topics in our ninth annual legal roundtable. As the economy slows, Utah's law firms are adjusting to meet the needs of their clients, whether a small business or large corporation. The panel also discussed recruiting and mentoring trends for young associates, the growing popularity of unbundled legal services, and the impact of technology and new media on the industry.

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We'd like to give a special thank you to Stephen Owens, of Epperson & Owens and President of the Utah Bar Association, for moderating the discussion, and to Holland & Hart for hosting the event.

How is the economy impacting your firms?

MAGLEBY: We are a seven-lawyer litigation firm, so fortunately we haven't suffered the downturn in transactions. Traditionally in our business when the economy goes down, litigation goes up a little because people fight harder over the last dollar. This is the first time in my 15 years where the economy has gotten so bad that litigation has actually gone down in the sense that we've had cases start and then not finish because one or the other side has actually run out of money. But overall it hasn't been that bad. I think litigation is relatively recession proof. Every month I worry I'm not going to be able to make payroll and all the cases are going to disappear, but they still keep coming, just not quite as fast as they used to.

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CLINGER: Our firm focuses a lot on mediation. And because of the economy, as Jim [Magleby] has mentioned, with litigation sometimes decreasing, the mediation or alternative dispute resolution practice has increased dramatically. People want their cases solved in a fast and timely manner, so they've turned to alternative dispute resolution.

HALEY: I'll take a counter to that. I agree that when the economy goes down, litigation goes up, but we haven't seen a drop-off. We had our best year ever last year, I think because corporate clients are more willing to fight over the deals that they have than walk away from them and have to chase new money.

SCOTT: I do some litigation and I also do some arbitration and some mediation. What I've noticed as a mediator is that mediations are becoming more difficult. They're more polarized. We see more mandated mediations from the court than consensual mediations from the parties. And the mediations are taking on more of an advocacy aspect or a win/lose aspect rather than a compromise aspect because the resources with which they compromise are less and less.

LORIMER: Most of the work we do is very high end, and we're finding that clients more and more are asking for either hybrids or complete caps on patent litigation. Patent litigation traditionally is very expensive and clients are now asking us to say, "This is how much it's going to cost from start to finish." And it's a challenge, but we're working through it. Eventually I think that's where it's going to go.

AUSTIN: We're a patent firm doing mostly patent prosecution, and we've seen a lot more clients wanting to have caps on the prosecution projects we do so they won't exceed a certain amount. Last year's international filings were down about 5 percent and the U.S. patent application filings also declined, which was the first time in about 10 years. So we haven't seen the growth that we expected, and we've seen some of our clients pull back and tighten up the budgets a little bit.

CASEY: We have offices around the country and I don't think Salt Lake is a lot different than any of our other offices. There are few cases being filed, especially in the complex commercial area. The cases that are filed have a shorter life cycle than they used to because we're seeing swifter settlements reached by both sides. Folks just don't want to pay a lot of money in litigation during this recession.

MARSDEN: I'm sure if you ask any one of us, we'd all say, "We're busy and thriving." But the numbers are the numbers and this industry shrank by 15 percent last year. I'm sure there are little pockets that are anomalous, but the fact of the matter is we have a smaller legal industry this year than we did last year and the year before, and that means some challenges for us.

POS: Parsons Behle had a very good year last year, but I would credit a lot of it to the way we managed our operations and our cost site. We were very careful in the way we spent money. We were very careful in the way we managed our cost recovery system. At the end of the year, we had good profitability, but it was a combination of our revenue side and the way we managed our costs.

MARSDEN: We took a lot of costs out of our business and had a good year because of that. But in doing that, at some point it occurs to you that you don't want to introduce all of those costs back into your business next year. And we're not atypical--our clients are thinking the very same. They took a lot of costs out of their business, and they cannot be anxious to introduce the costs willy-nilly again.

HENRIKSEN: On the transactional side, I'm seeing more and more of our clients that will tend to get quite a distance down the track of either putting a deal together or resolving a dispute, developing term sheets, and other things before they get the lawyers involved in an effort to save costs as well. So I think there's a shift on the front end of the matters.

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Traditionally at Parr Brown we've been tied to the local market because we're not a regional firm. But as has been in the past, we're seeing an opportunity, particularly in the cost-sensitive markets that are outside of Utah. With our lower cost structure, we're able to present legal services at a bargain for those that are on the West Coast or in the Southwest. And so we've seen a lot of our work, or at least some of our work, come in from those sources that traditionally have been a good revenue area.

What do you think Utah's business executives should know about the state's legal industry?

METCALF: We have a very excellent Bar here in Utah, and we're fairly on the low cost end of things. I think our local business community is served very well, and they should appreciate it. I've recently taken a visit to Silicon Valley where their rates are sometimes double what we're charging. And some of those people in Silicon Valley are taking a stronger look at moving their work to lower cost markets like Utah.

HALEY: My best advice to businesses is to bring in the transactional lawyer early on. From the litigator's perspective, so much of my cases are a result of poorly written contracts or deals that are cobbled together without thinking through the ramifications. It's a lot cheaper to pay for a transactional lawyer than it is to pay for a litigator.

PINEGAR: On the transactional side in dealing with larger transactions, we're seeing the larger firms cutting their rates tremendously in order to hold onto deals that in the past they would have given away. And so what happens is you have our people dealing...