Legal Services
SIC 8111
NAICS 541110
The legal services industry includes offices of lawyers and other legal advisers and services.
In the mid-2000s, the legal services industry was growing. The top eight firms listed on the 2004 American Lawyer 's "Global 100" list had revenues of more than US$1 billion each in 2003. Four of these firms were based in the United Kingdom, with the other four based in the United States. The top 100 firms around the world had aggregate earnings of almost US$48.2 billion.
Consolidation has created larger, more competitive firms with bigger profits. Midsize firms continued to find themselves squeezed out by mega-firms with dozens of offices housing thousands of fee earners. Law firms also are seeing greater profits from their embrace of high technology resources including software and the Internet. These resources allow attorneys to deliver services more efficiently, and cut down on the number of employees needed for case work, thereby resulting in significant cost savings, as well as increased client satisfaction.
The largest voluntary professional organization representing lawyers in the U.S., the American Bar Association (ABA), was founded in 1878 by a group of 100 lawyers to provide some national uniformity in the profession. At that time, lawyers trained under other lawyers as apprentices, rather than having formal law school training. As of 2005, the ABA had more than 400,000 members.
The hiring of diversity managers was becoming a new law firm trend. Many firms were hiring full-time diversity managers. These experts served in a variety of roles. The roles included advising during the staff hiring process, recruiting, professional development and review processes. An Altman Weil survey found only 15 percent of the diversity managers participating in their research study had been employed by their firms for more than three years. Almost one-third of them had only been on board for less than a year.
Legal services offshoring was another trend gaining in popularity and practice. The soaring costs of legal services in both the United States and Europe were leading many companies to send legal work to countries with lower costs such as India. According to research findings reported by ValueNotes, offshoring for legal services vendors was expected to have growth rates ranging anywhere from 30 to 100 percent in the near future. There were concerns about the legal services that would be provided because some industry experts estimated not more than 15 percent of the approximately 79,000 lawyers graduating from more than 400 colleges in India every year were capable of ensuring the high-quality work clients desired.
In the United States, lawyers (also called attorneys) serve as advocates and advisers in both civil and criminal cases. Lawyers generally are required to have a four-year undergraduate degree plus a three-year graduate degree from an accredited law school, and also must pass a written examination to be admitted to practice in any state. Because of a number of scandals involving lawyers beginning in the 1970s—notably Watergate—by 1997, 48 states required that the examination include a section on professional ethics.
Lawyers who pass the exam may be employed as individual practitioners, as employees of a law firm, as government employees, as employees of businesses, or as legal services attorneys (in civil cases) or public defenders (in criminal cases), representing those who can't afford to hire an attorney. In the early 1960s, the U.S. Supreme Court determined that all defendants in felony cases have the right to an attorney; in 1974, the federal government established the Legal Services Corporation, a private nonprofit corporation that represents the indigent in civil cases, even though such representation is not legally required. Lawyers also can become judges, magistrates, or hearing officers, who hear cases and render decisions. In the United States all licensed lawyers may argue in a courtroom, unlike the system in the United Kingdom.
In addition to lawyers, there are many other paraprofessional personnel who assist in providing legal services. Paralegals, who assist lawyers by doing research, investigating facts, and preparing legal documents, are usually college graduates, but they do not need special licensing or examinations. Law clerks assist judges in research or in writing documents. Title examiners, abstractors, and searchers assist real estate or bank attorneys in determining the legal status of property being bought and sold, by examining public and private records.
Most U.S. law firms are structured as partnerships in which senior attorneys own the company and share in the profits. Some firms may also divide partner status into various ranks, with the highest rank culminating in full partnership. Partner status is typically conferred on lawyers after they've been with a firm for a number of years based on such considerations as seniority, their level of annual billings, and their success rate in trials.
The globalization of the legal services industry has created an increasing demand for firms that can seamlessly take care of all of a client's needs under one single establishment. A growing number of accounting firms have been pushing the American Bar Association (ABA) and state bar associations to allow multidisciplinary partnerships (MDPs). These certified public accountants (CPAs) want to offer legal services in addition to their financial and business service offerings. Accounting firms are the biggest employers of attorneys worldwide. At least three of the Big Four accounting firms were affiliated with or had acquired law practices in many nations, allowing them to offer legal services. However, accounting firms are not allowed to own law firms in the United States, even though this is common in many countries in Latin America, Europe, and other parts of the world.
Many of those in the legal profession have a number of concerns regarding MDPs. They believe that confidentiality, independent judgment and advice, and loyalty to clients could be compromised if firms were allowed to offer both accounting and legal services. They also question whether there really is a demand among clients for seamless access to all professional services. Another concern is that MDPs that provide legal services will pose increased competition to the legal services industry.
According to Accounting Horizons, the ABA organized the Commission on Multidisciplinary Practice (MDP Commission) to examine and make recommendations on the issue of enabling lawyers to become partners and share fees with non-lawyers, including accountants, stockbrokers, and financial planners. After the MDP commission heard testimony and conducted open hearings on the matter, it recommended unanimously that the Model Rules of Professional Conduct (MRPC) be amended to permit MDPs. In August 1999, the ABA deferred voting on the recommendation, dependent on further study. The MDP Commission instituted more hearings and again proposed its recommendation, but the ABA voted against it in July 2000. However, the MRPC is strictly advisory, and individual states are free to adopt, change, or ignore it. A number of states have been holding their own debates on MDPs, and it is likely that the ABA will take another look at the MDP issue in the future.
England, Wales, Scotland, and Northern Ireland each have distinct court systems and bodies of law. However, all of these countries divide professionals who provide legal services into two categories: (1) barristers, who hold exclusive rights to argue in the higher courts; and (2) solicitors, who meet with clients and provide advice to them. Generally, these two coordinate their efforts for the client. France maintains a similar division, dividing advocates into avocats (the equivalent of barristers) and avouets (the equivalent of solicitors). English barristers belong to one of four Inns at Court, which are combinations of a school and a professional organization. French law students must decide whether to follow a career path as a judge or a lawyer. Canada combines qualities of numerous legal systems, by requiring that lawyers complete college and law school, pass an examination, and serve an "articling period" of apprenticeship to another lawyer.
Written codes of law date back at least to 1700 B.C., when Babylonian king Hammurabi had his kingdom's laws carved on a huge column of stone. His code contained hundreds of categories of offenses for which punishment was in kind; that is to say, the crime of the transgressor was enacted upon him or her as punishment. For instance, if a builder cut corners and a house collapsed, killing the owner's son, the builder's son would be executed. The Judeo-Christian Ten Commandments, probably dating to around 1300 B.C., drew heavily from Hammurabi's code and served as the basic framework for many modern Western laws. The first law school might have been based in Bologna, Italy, around 1150 A.D. Students would hire a teacher to explain the Roman law; one teacher, Irnenius, was so popular that he had to hire other teachers to assist him, thus setting up the first law faculty. By the time of the reign of Henry II in England (1154-89), a person brought...
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