This blog post is for the readership of students. Over at The Legal Whiteboard blog, Professor Bill Henderson, a leading scholar in the economics of the legal profession, has a blog post that law students may find interest. He collects data on revenue for legal services in years 2007 and 2012. The following chart provides a summary.

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Notice that in 2012 71% of revenue in legal services are from business clients (an increase from 66% in 2007). Only 24% are from individuals (a decline from 29% in 2007). As for 2017, Professor Henderson comments: “[Y]et a further decline certainly seems likely, particularly as services like LegalZoom and RocketLawyer continue to target the retail market. Separate and apart from these new entrants, to what extent is the diminution in people lawyers driven by declining real incomes within the middle class?” Also, my little $0.02, a small part of the revenue shift from individuals to businesses may relate to the increasing growth of individuals forming noncorporate entities, such as LLCs, to conduct business (but further data would need to confirm this).

It is important to note that just because 71% of client fees are from businesses, this does not mean that the fees are for work in “business law.” Businesses have legal needs in virtually all areas of law, e.g, labor, environmental, administrative law, litigation, real estate, insurance, intellectual property, tax, antitrust, criminal law, healthcare, food and drugs, torts, etc. However, the point is that if businesses are the client, it is helpful to understand some basic aspects of this client, such as the laws of corporations and unincorporated business entities (which are fastest growing forms of entities both by numbers and revenue growth). Furthermore, even if your clients are individuals, governments, or nonprofits, it is a virtual certainty that you will be working with businesses in some capacity during the work. For example, if you are a prosecutor specializing in white collar crime, it would be helpful to understand the duties of boards and officers and corporate monitoring, and certainly you should be taking a course on Securities Regulation as well. And, if you are working in family law with clients who have significant assets, it would be helpful to understand interests in businesses such as partnerships, financial accounting, and of course tax issues. If you are working in a nonprofit specializing in environmental issues, it would be helpful to understand the real world constraints on corporate managers when pushing them to do a public good. All of this is to say that all students would benefit from a course in Corporations and Unincorporated Business Enterprises, or Business Enterprises Survey. If you intend to work with business clients, then you will need far more than just the basic courses that explain the legal features of business entities.

Robert Rhee

Professor Rhee’s legal experience includes positions as a law clerk on the U.S. Court of Appeals for the Third Circuit, and a trial attorney in the Honors Program of the U.S. Department of Justice. He also has significant investment banking experience. He was a vice president in financial institutions investment banking at Fox-Pitt, Kelton (then a unit of Swiss Re) in New York, a real estate investment banker at Deutsche Banc Alex. Brown, and an M&A investment banker at UBS Warburg in London. He has worked on public and private M&A assignments, distressed restructurings, private equity funding, and debt and equity issuances. He is an active writer and scholar. His articles have been published in leading journals including New York University Law Review, Michigan Law Review, Northwestern University Law Review, Vanderbilt Law Review, Notre Dame Law Review, Emory Law Journal, William & Mary Law Review, and Florida Law Review.

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