Northwest Arkansas Law Firms Feeling the Recovery

Some of northwest Arkansas’ largest law firms were able to handle the post-recession market thanks to some planning and diversity.

During northwest Arkansas’ economic growth in the early years of the 21st century, many outside law firms made moves into the area and opened local offices. One northwest Arkansas lawyer said it was a “gold rush” for law firms to get a foothold in the region.

“They wanted to be on board with all the growth we were experiencing,” said Jack Butt, the managing partner of Davis Wright Clark Butt & Carithers PLC of Fayetteville, which is 21st on Arkansas Business’ list of largest Arkansas law firms with 12 lawyers. “The recession didn’t seem to affect law firms at first. The downward dynamics can produce as much [business] for lawyers. Social friction creates litigation.”

Butt said when the recession hit and business was still good, Davis Law Firm, as his firm is known, resisted the urge to add lawyers. Butt said many firms understood the recessionary effects on the law industry would eventually hit, which he said happened between 2011 and 2013.

“The recession didn’t hurt until everything else leveled out,” Butt said. “The egg had gone through the snake. The law business slowed down. There were fewer filings and fewer trials.

“Everyone knew the sky was falling and no one wanted to hire. People didn’t need extra lawyers. Hiring in northwest Arkansas is starting to return.”

Butt said the recovery of the economy is starting to be felt in northwest Arkansas law. Davis Law Firm, which Butt said normally focuses on major business litigation, opened an office in Springdale specializing in immigration issues and hired a lawyer to handle those cases.

Butt said Davis Law Firm used to compete against just a handful of other law firms in the major business litigation field, but now, thanks to the gold rush, there are 15.

“That competition has happened and we just persevered and sustained,” Butt said.

Ed McClure, a managing partner of Matthews Campbell Rhoads McClure & Thompson PA of Rogers, said his firm covers a wide range of legal issues and that diversity helped it handle the economic slowdown. The firm, ranked 18th with 13 lawyers, recently hired two lawyers to replace partners who had left for other opportunities.

“Our law firm, we didn’t slow down,” McClure said. “The nature of some of our attorneys’ practices changed. It helped us cushion the blow. If somebody calls our office, somebody at our office will be able to help them. That’s our greatest asset.”

Susan Schell, the senior director of career services of the law school at the University of Arkansas, said Arkansas and northwest Arkansas handled the law contraction better than the nation. Arkansas law graduates did better, too, as Schell said approximately 84 percent of the school’s 2013 graduates found jobs within nine months of graduation compared with a national average of 75.8 percent.

“When the legal market went down during the recession, the Arkansas market didn’t go down as far,” Schell said. “The Arkansas market is recovering faster. The hiring is picking up a little bit. It’s not something you would shout from the rooftops but it’s picking up.

“When times were good, Arkansas law firms were as exuberant in aggressively hiring. When the market contracted, they were able to handle it without laying people off.”

Schell said the economy’s negative effects on the law industry were a couple years in coming. That is borne out by a drop in law school applications, both at the University of Arkansas and nationwide.

Schell said Arkansas seated 115 first-year students in the most recent school year, and that is approximately 10 fewer than normal. Applications to the UA Law School have dropped from 1,514 in 2010-11 to 617 in 2013-14.

Nationwide, the numbers are similar, dropping from 616,646 to 392,008 in the same span.

“Applications are down significantly nationally and down noticeably at the University of Arkansas,” Schell said. “We didn’t seat as many first-year law students this last year. That is in part a reaction to market conditions.”

Still, Schell said Arkansas’ law market is recovering ahead of the nation’s.

“Nationally, it is going to take a while for the market to reshape itself,” Schell said.