Managing Legal
The Point
In a recent article, Bruce MacEwen, one of the three or four leading experts on lawyers and law firms, explains that those firms and the in-house law departments who hire them can’t keep up with the U.S. legal system’s increasing demands.
Not at the current rate of increase.
This Matters
MacEwen breaks down the numbers to show that the U.S. legal system’s demands on business enterprise are skyrocketing, and that the growth rate of those demands shows no sign of abating.
According to Mr. MacEwen, the corporate law function’s go-to move amounts to simply “throwing more bodies” at those demands as they increase.
Barring basic changes in the way that the corporate law function manages its work — i.e., finding economies of scale — simply adding attorney headcount (in-house and / or in law firms) ratable to the pace of increase in demand is not financially sustainable.
Because …
1. MacEwen breaks down some numbers on the U.S. legal system’s accelerating demands …
- Total pages in the Federal Register (where federal regulatory changes are announced) — a 30% increase between 2000 and 2018.
- Staffing of federal regulatory agencies — a 30% increase between 2000 and 2020.
- Budgets of federal regulatory agencies — a 100% increase between 2000 and 2020.
- Proliferation of federal statutes and regulations — 4% increase per year between 1998 and 2010, and 2% increase per year between 2010 and 2019 according to the relevant peer-reviewed study issued February 2021; and “the quantity of regulations … increased by an even greater factor” than the statutes (according to criteria detailed at pages 11 to 15 of that study — so that “growth of the United States legal system appears to be driven by regulations”.
2. “Just add headcount”
According to Professor Bill Henderson, University of Indiana’s Maurer School of Law, between 1997 and 2017, the number of lawyers working at law firms increased 29.5%, and the number of lawyers working in-house increased 203%.
“Just add headcount” indeed.
Bruce MacEwen offers an authoritative, data-based diagnosis of the corporate law function’s most pressing challenge. CFOs and other businesspeople need to take note, because this challenge threatens both work product quality and cost discipline — and lawyers in-house and in law firms are offering no viable response to it.