Producer prices in the legal services industry after the Great Recession
Following the 2008 financial crisis (which occurred during the Great Recession that began in December 2007), businesses and corporations experienced substantial difficulty in accessing credit required to maintain operations at current levels. As a result, they were forced to reduce their demand for outside legal services and rely more on in-house lawyers. With demand for commercial and business legal services lagging, law firms responded by reducing their employment levels, changing their workforce composition, and adjusting their pricing strategy. These actions sharply reduced year-to-year inflation, as measured by the Producer Price Index for legal services. The article explains why, more than a decade after the financial crisis, legal services inflation level has yet to return to its precrisis (before the Great Recession) levels. In short, as businesses and corporations adjusted to the economic climate following the financial crisis, a new business model was developed: one that prioritized efficiency over billable hours, regularly outsourced its low-skill work, embraced the use of emerging technology, and often substituted temporary employees for recent law school graduates.