Law firms have been forced to carefully examine partnerships due to declining demand for legal services, pressure on billable hours and falling revenues according to a survey of the legal industry.

Top tier law firms have been the most affected, according to the report by Mahlab Recruitment, with rationalizing and restructuring of practice groups a common occurrence. The report said that throughout the downturn firms have focused on non-performing individuals “as they seek to reduce partnership membership to high performers only”.

These moves, which started in late 2008, have been kept quiet with discretion being the “name of the game.” The report predicts that, if the global economy cools further, partner departures will likely be managed quite aggressively.

Mid-tier emergence

Mahlab said that mid tier firms who have remained lean in recent years have taken advantage of the big firm’s absence of partner acquisitions to lure new partners and acquire practices.

“Another trend is what one may call the ‘maverick’ boutique firm, set up by a group of individuals seeking greater autonomy, lower overheads and an escape from the politics and fee expectations of the majors,” the report said.

Many of these firms have proved quite successful in generating profits and are attractive options for partners with good transportable practices. The report found that these firms were able to offer fee rates of up to 30% lower than those of their large firm competitors because of their different overhead structure.