Our Trusts & Estates colleague, Russ Alan Prince, has done quite a bit of research about trusts and estates lawyers. He reaches some startling conclusions, and not all are positive. The data paint a picture of an industry in transition, with rising competition from within and new competition without.
First is an analysis of the income of trusts and estates lawyers. Prince & Associates says their average income in 2001 was $284,000; the median was $192,000. That doesn't stack up too well when you consider that the average partner at the nation's largest 100 law firms earned $792,500 in 2001, according to The American Lawyer magazine's 2002 Amlaw 100. Amlaw also reports that the average lawyer, which would include associates and partners at these firms, earned $584,500 that year.
Trusts and estates lawyers surveyed by Prince say that they fear there are just not enough wealthy clients to go around and that the market for their services is diminishing. More lawyers are competing for every client and every case.
The lawyers also are concerned about non-lawyer competition. With accountants, financial planners and others entering the wealth advisory field, “their services are no longer unique or as valued as they once were,” the lawyers say. Three out of four trusts and estates lawyers “are concerned that non-lawyers are emerging as significant competition.” Obviously, in any situation where there are fewer clients and more competition for those clients, income falls.
Trusts and estates lawyers also worry that their practices are becoming commoditized. Competition, they fear, is turning their services into a replacable product. It is something like what generic drugs have done to the original patented medicines. This is not a happy thought.
All these statistices beg the question: Should lawyers team up with non-lawyers? We have talked in this column about multiple disciplinary practice, particularly the version permitted in New York state. Much thought must have been given to the problems in changing the New York Ethics Rules to permit New York lawyers to have an interest in other businesses, and refer clients to them.
The rules that were adopted and put into effect November 2001 merely allow lawyers to enter into general partnerships with other advisors. Even this has its critics. Grace W. Weinstein, a columnist for the Financial Times, immediately warned about the dangers of such one-stop shopping, suggesting there might be a loss in objectivity. But Frank Ciervo, a spokesman for the New York Bar, says the New York Ethical Rules “as a ‘preemptive strike in reaction to events in Europe where accounting firms are buying up law firms and lawyers then owe their allegiance to the accounting firm and not to the client.’”
Some would say the buyout of law firms in Europe is good for the client, and without ethical compromises. Others sharply disagree. We have yet to see a good study of MDP as it is so far in New York.
Meanwhile, each lawyer must chart his own career in these changing times. I remain optimistic about the future for trusts and estate lawyers as a group. There are many boutique firms as well as large law firms with trusts and estates practices that have sound financial models. New laws and ethical rules greatly expand our horizons, giving us enormous amounts of work and challenges. And, however much competition the marketplace might bring, in the final analysis it's the client who selects his or her lawyer — and clients always appreciate good, personalized serivce.
Roy M. Adams, chairman of T&E's editorial advisory board, is senior chairman of the trusts and estates practice group at the law firm of Sonnenschein Nath & Rosenthal, based in New York.