By MATT CHANDLER
mchandler@bizjournals.com | 716-541-1654

The struggling economy has done a number on all of us.

Companies have been forced to lay off workers, plants have closed, the real estate market has seen more valleys than peaks and, more recently, there are whispers that the price of gasoline could reach, incredibly, $5 per gallon. In many sectors, unemployment is up and profits are down.

The legal industry is no exception.

Though it was once unheard of, law firms have cut staff and even long-term partners. They have closed offices and shuffled practice groups in an effort to stay competitive and profitable.

Law school graduates are feeling the pinch, too. Many find that firms are hiring fewer new attorneys, and that means options are limited.

What does it all mean for the future of the legal profession? The New York State Bar Association recently presented a report that examined the state of the industry and offered a glimpse of the future.

Times have been challenging, said President Stephen Younger, but there's no need for panic. He said attorneys must re-evaluate the way they do business and then make adjustments, a strategy that professionals in other industries have adopted in recent years.

"The reason why we did this report is that we are seeing some really fundamental changes in the profession," said Younger, a partner in Patterson Belknap Webb & Tyler LLP. "Part of those are a result of the fiscal crisis, but others were driven by things like changing technology."

According to Younger, technology is a double-edged sword. Some firms are more mindful these days of the negative effect it can have on employees.

"Obviously there are so many things we can do faster, more efficiently, better with the advances in technology," he said. "But the other side of that is that the reach of technology captures us on a Saturday afternoon when we are at our kid's soccer game."

The key is finding a happy medium.

"We did a survey of managing partners and I was surprised to find that they expected their employees to answer non-emergency emails over the weekend," Younger said. "I think we need to be cognizant of the impact we have on people's lives. When I was an associate, if a partner wanted you to do something over the weekend, they had to call you at home, and it was a big deal. Now, email and Blackberrys have changed all of that. You have to understand what the consequences of that are."

While it may seem at first glance that greater accessibility would translate to increased profits for firms, that's not the case,

"I've always believed that employees who are treated like human beings - whose lives are respected - will stay with a firm longer and be far more profitable than the extra tenth of an hour you might crank out of them on the weekends," he said.

Speaking of squeezing the minutes out of employees, the state Bar Association's report addressed the status of the billable hour. The question is: With more clients seeking alternative billing options, and firms being forced in some cases to adapt to long-standing billing practices, is the billable hour going the way of the VHS tape?

"I don't think we are going to see the death of the billable hour," Younger said. "But I certainly think that it will be a declining methodology, because as much as lawyers are comfortable with the system, the clients are not."

In many cases, he said, there are two client concerns that create pushback against the billable hour. First, it doesn't give a client the ability to budget for legal services because they have no idea what something is going to cost. Second, it is an issue of value.

"The client is not buying lawyer's hours; the client is buying solutions to their problems," he said. "So if you spend an hour analyzing a very complex settlement, you'll be billing out at the same rate as your associate who spends two hours filling out paperwork. And neither of those tasks are of equal value to the client."

According to Younger, the answer lies in how alternative billing methods are reached. The key is to devise a structure in which both the attorney's and the client's incentive structures are in sync, he said.

"When the client does well, the lawyer can do well," he said. "But there also needs to be a more predictable and value-orientated system in place."

Younger addressed the need for schools to adapt to changing times by producing a different type of student in coming years.

"The schools need to develop and mandate more practical skills courses," he said. "We just did a wonderful training academy up at Cornell where young lawyers were given the chance to try their first case. It's programs like that that we need to do more of at the law-school level."

Young attorneys lack practice-ready experience, and that can hinder not only their professional growth but the future success of the firm they join.

"The average law student comes out never having drafted a contract, never having written a complaint and never having interviewed a client," he said.

According to Younger, those are "core skills you need to be a practicing attorney."

He said law school graduates generally know how to spot the legal issues and think like a lawyer, but that isn't enough.

"Clients want and expect more," he said. "They want an attorney who can utilize the tools that a lawyer uses every day."

It may take some regulatory changes to put schools in a position to produce graduates who are better-prepared once they enter the profession, he adds.

"The court of appeals has a cap on the number of hours that students can spend in these non-traditional classroom settings," he said. "So we are going to be looking at encouraging the court to lift that cap so that more time can be spent on practical skills training."

What does all of this mean for the future of the profession in New York? Does Younger see things returning to "normal"? Or has a struggling economy changed the profession forever?

"I am optimistic about the profession. It's a wonderful profession to be in," he said. "Things are starting to turn around. We are seeing law firm revenues turning up, hiring turning up - but we just can't go back to business as usual."

His advice for law firms in New York state?

"Unless we adapt to these changes and restructure our mind-set as lawyers, the clients are really going to run with their feet," he said. "The real concern with that is that the tasks that the young lawyer does could be outsourced to India."