The overall cost of legal services has decreased, although this is due to decreased demand rather than an oversupply of lawyers.
The "hourly rate" for a certain lawyer or firm may not have decreased, but in some situations has grown. However, I believe that the average sum spent by a client to have a specific legal problem handled has decreased dramatically (albeit due to firm opacity, it is difficult to locate information that would corroborate or refute that perspective).Prior to the recession, an M&A transaction could have been handled by a senior partner, one or two junior partners or senior associates, and a slew of junior associates.
Today's personnel is significantly leaner, and the overall cost to the client for handling the situation is lot cheaper than it was in 2007. I don't think it's a secret that big law firms are aggressively competing and discounting these days. While profits for equity partners are up, this is primarily due to aggressive cost-cutting and de-equitization. I believe that price competition due to decreased demand for legal services (rather than an overabundance of lawyers) drives up and down the legal services market.
Why hasn't a surplus of law graduates reduced the number of experienced lawyers?
Most legal work's value is created by experienced lawyers rather than law graduates. However, as the number of law graduates increases, the number of experienced and skilled lawyers decreases.Historically, many business-focused lawyers received their early training at large legal firms. However, during the crisis, law firms significantly reduced the number of law graduates they hired in an effort to save expenses while preserving rates and profits. So, while there is a glut of law graduates, it is not translating into a glut of experienced and educated attorneys.
The converse is true: the number of experienced lawyers is declining as work moves up the food chain and fewer law graduates gain experience.
Another aspect is that work that was previously undertaken by junior associates is now handled by senior attorneys. This increases demand for senior attorneys, driving up their rates.