U.S. firms trim teams as demand flattens, survey shows many law schools to keep LSAT, two lawyers disbarred over rioting during George Floyd protests
Reuters Legal
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Law firms say they are struggling to reconcile all the hiring they did last year with a drop in demand from clients, leading some to use internal performance reviews to push lawyers out. Some firms told Wells Fargo's Legal Specialty Group that they're using internal performance reviews to manage overcapacity.
According to a newly released report from the bank, the increase in lawyer headcount in the first nine months of 2022 did not match the billable hours lawyers logged, as compared to the same time frame in 2021.
Last year's surge in big law hiring was partly driven by a record $5.9 trillion in M&A activity . However, rising interest rates and ongoing geopolitical tensions have caused global M&A work to tumble in 2022.
Wells Fargo said net income for the law firms it surveyed dropped by 7.3% during the first three quarters of 2022 compared to last year.
Profits per equity partner also dropped by 8.5% during the same time period, in part due to a 1.4% increase in the number of equity partners, Wells Fargo said.
Still, Owen Burman, a senior consultant in the Wells Fargo unit, said the U.S. legal industry is 'not falling off a cliff by any stretch,' nor are we seeing a repeat of the layoff patterns of the Great Recession.
"It’s a very healthy industry that got a little overheated last year. We’re dialing down the heat."
Responding to a new survey, a significant number of U.S. law schools said they will continue using the Law School Admission Test for admissions even if the American Bar Association, which accredits them, no longer requires it.
Half of the 82 law school admissions offices surveyed by test prep company Kaplan this fall said they are either 'very likely' or 'somewhat' likely to continue requiring a standardized admissions exam even if the ABA drops its testing mandate, according to the survey released Tuesday. Kaplan provides LSAT prep courses and has a financial interest in schools continuing to require the test.
The ABA's Council of the Section of Legal Education and Admissions to the Bar is?slated to vote ?on eliminating the admission test requirement Friday.
Four schools told Kaplan they are 'very likely' or 'somewhat likely' to stop requiring applicants to take an admissions test if the mandate is dropped, while 37 said they did not know what they would do.
The respondent pool included 12 of the top 25 law schools as ranked by U.S. News & World Report, according to Kaplan, which did not identify respondents' answers by school name.
Jeff Thomas, Kaplan's executive director of legal programs, said:
“Irrespective of how this vote goes on Friday, it doesn’t necessarily mean that anything in admissions is actually going to change.”
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Attorney regulators in New York disbarred lawyers Colinford Mattis ?and?Urooj Rahman after the two pleaded guilty ?to throwing a Molotov cocktail at an empty city police car during protests over George Floyd's death.
Although the court's order was released Tuesday, it retroactively dated the start of their disbarment to June 2, when Mattis and Rahman admitted in Brooklyn federal court to conspiracy to commit arson and possessing an explosive device.
Rahman represented tenants in the Bronx as a public interest lawyer. Mattis worked as an associate at law firm Pryor Cashman but was furloughed in April 2020 due to the COVID pandemic. The firm suspended him after his arrest.
Prosecutors have recommended a sentence of 18 to 24 months for Rahman and Mattis, who have agreed to each pay $30,137 in restitution to New York City.
Paralegal Becky Louise Sutton, who was accused of embezzling over $600,000 from law firm Saul Ewing Arnstein & Lehr's bankruptcy estate accounts, has asked for a plea agreement from the Chicago U.S. attorney's office.
Sutton pleaded not guilty ?to multiple counts of embezzlement and wire fraud in May. But on Friday, prosecutors?told ?U.S. District Judge Gary Feinerman that Sutton requested 'a proposed plea agreement from the government.'
Prosecutors said they would need time to draft a plea deal 'and to determine whether this matter may be resolved pretrial.'
Prosecutors said Sutton siphoned $682,980 from the firm's bankruptcy estate accounts that was meant for creditors and transferred the money to her personal credit card, bank, and PayPal accounts, as well as her mortgage and student loan accounts.
According to the indictment, Sutton assisted a law firm partner with work on Chapter 7 and Chapter 11 bankruptcy cases from 2009 to 2018.
The indictment did not name the partner or the firm, but a Saul Ewing spokesperson confirmed her former position there.
Feinerman on Monday ordered prosecutors and Sutton to report back to him by Jan. 12.
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