Working for the B-Man

There’s no question that the successful operation of a law practice requires some basic concept of how business functions which, to this day, elude some otherwise competent lawyers.  The lack of business smarts, like appreciating the Ben Franklin’s admonition that a penny saved is a penny earned, serves to increase the cost of legal services to clients as well as diminish the profit to lawyers.

But George Washington B-School professor James Bailey took it to the level of absurdity in a Washington Post op-ed contending that the future of law is to be managed by non-lawyer businessfolk, He begins by noting that law isn’t raking in the dough like it once was.

But an industry that once experienced extraordinary growth, with revenues and profits increasing at near double-digit rates, saw profitability plummet as the recession deepened. Demand for services and outside counsel spending dropped by 5 percent and 11 percent, respectively.


Curiously, the manner of stating his basis for the problem provides a preview of the dangerousness of his ideas.  It’s all about revenues and profits. this “industry” he calls law.  While these are components of a financially viable business, they are the “tail” of a profession.  Yet he sees these metrics as the “dog” of an industry.


For reasons of tradition and credibility, law firms are run by lawyers, despite the fact that lawyers are not trained in business and management. To be successful, law firms must create executive teams that include business-savvy non-lawyers. They have to think more strategically about the broader economic climate, industry trends, client needs and internal policies.


From the myopic eye of a business prof, Bailey offers only two reasons for law firms to be run by lawyers.  Tradition is a slur, obviously, to suggest that it’s done because that’s how it has always been done, the mere perpetuation of a bad practice.  Credibility, on the other hand, is sloughed off thoughtlessly.  Nor is it accurate.  Credibility, integrity and the elevation of ethics over profits are the components that distinguish what lawyers do from non-professionals.

They may well conflict with best business practices, which would suggest we burn the client and the case when they turn unprofitable or when the cost-benefit analysis of squeezing the last bit of win out of research and investigation no longer justifies our efforts from a revenue basis.  But we’re lawyers.  We do unprofitable things for our clients if it helps their cause.  We push harder even though there’s no revenue justification for it.

Bailey takes a blind, and illogical, leap, when he argues that, “[t]o be successful, law firms must create executive teams that include business-savvy non-lawyers.”  Business-savvy makes sense, but why non-lawyers?  Presumably, because lawyers aren’t trained in business.  But why not argue that lawyers should be better trained in business than that non-lawyers should be running law firms? 

How about the executive committee (which of course applies more to Biglaw than the law firm of One) should seek out the most business-savvy lawyers in the firm?  Lawyers in thousand person firms aren’t a monolithic group of business idiots.  Nor, frankly is business all that complex that the few smart people who happen to become lawyers can’t grasp the basics.



Law firms should introduce pricing models based on metrics other than billable hours. Examples include a flat-rate where a fixed sum is charged for defined services, or value added to client businesses. This is a big departure from the neat and tidy billable hour, but it’s necessary to satisfy budget conscious chief counsels.


Firms could create alliances or even initiate mergers to offer clients more comprehensive and coherent representation. While many law firm partners would recoil at the comparison, Target is successful because it’s one-stop shopping. For example, Martindale.com, a legal information and referral portal, lists no fewer than 65 separate practice areas. Consolidation will make satisfying consumer needs easier.


This is where Bailey offers proof that MBAs have no business running law firms, offering breathtakingly simplistic “must-do” changes that have been the subject of much debate, without the slightest recognition of the issues and problems.  Is he unaware that criminal lawyers have used flat fees forever?  Is he unaware that corporations love to be able to budget litigation costs, but hate not having itemized bills showing where their legal dollars are going?

Perhaps Bailey falls into that legal service consumer mentality that sees lawyers as fungible, with the knowledge and ability to do mergers and acquisitions indistinguishable from civil rights litigation?  The reason for 65 (is that all?) separate practice areas is to be capable of identifying a lawyer with the skills, knowledge and experience to best satisfy a client’s needs. 

A sophisticated client realizes that lawyers aren’t interchangeable, and Bailey’s consolidation cry, to turn law firms into Target stores, has proven to be the downfall of Biglaw.  Does he really think it’s more effective to be Jacks of all trades and masters of none?


The legal industry is a powerful local economic engine and is one of Washington’s great success stories. But, law firms have never thought of themselves as businesses.

Even moderately intelligent lawyers have realized that maintaining a viable practice requires a certain amount of business-savvy.  Bailey’s assertion, that law firms have never thought of themselves as business, is ridiculous.  But law firms have never, and should never, think of themselves as businesses first and law firms second.   It’s not that we practice law to assure that we have neither revenues nor profit, but that serving our clients, putting their interests ahead of revenues and profit, are the core of what makes law a profession.

If the business aspect of practice becomes more important than providing representation to clients, then you might as well open up shop selling used cars or women’s dresses.  This notion has become trendy with new lawyers, for whom making money and paying down loans trumps all concerns about the practice, and outsiders to the law like James Bailey who would put his MBA kids in charge and hold meetings with pie charts where case files used to be.

Times are tough for the legal profession.  They’re tough for everybody.  But give up what made law a learned profession and when times get better (and they will), we’ll be the proprietors of the only used car lots where salesmen dress in three piece suits.  Law is not just a business, and those who would make lawyers mere widgets, like James Bailey, are just plain wrong.

7 thoughts on “Working for the B-Man

  1. Stephen

    He seems to have missed a trick by not suggesting that lawyers should attend his business classes and pay him money.

    That’s what a real business expert would say, right?

  2. Kathleen Casey

    Substitute the medical industry oops profession and all of its specialties to make plain the illogic. Used car salesmen holding lives in their hands. Come to think of it Bailey may have gotten there already, many years ago.

  3. Dan Hull

    “To be successful, law firms must create executive teams that include business-savvy non-lawyers. They have to think more strategically about the broader economic climate, industry trends, client needs and internal policies.”

    “Firms could create alliances or even initiate mergers to offer clients more comprehensive and coherent representation.”

    On the above 2 parts? He’s 100% Right. (1) Think more like Clients. (2) “Unbundle” the best talent and expertise–and get it working for the customer.

  4. SHG

    You may be reading your own vision into his vague statements.  Given the balance of the piece, he’s not talking about providing excellent client service, but satisfying client price demands without any grasp that price alone isn’t the only metric of client satisfaction. 

  5. Mike

    There are a lot of firms doing flat fees. More than a couple of my friends are BigLaw partners, and they do flat fees on litigation, patent drafting, and even take on deals on contingency – e.g., “I’ll sell this patent and work unlimited hours for 30% of the deal.”

    Lawyers are already do what he claims no one is doing. Many firms in the Valley do legal work for equity in the company, and that’s how Wilson Sonsini made its bones. Fred Bartlett (sp?) and other confident civil defense trial lawyers charge a mixed fee for trials – with a success bonus tacked on if they win.

    I’m guessing that his article was really a sotto voce for a $750/hr. consulting fee. “You NEED me on your board, guys, to learn how to do what most 40-something BigLaw partner views as standard business practice.”

    He’ll of course use pseudo-sophisticated language like “risk sharing” and “alignment of client-lawyer economic interests” to justify that his fee.

  6. Mike

    BTW, most business people/MBA’s would do things that alienate clients.

    I just paid $40 in a “usage fee” for my iPhone. I have no idea why, since I already paid for unlimited data and usage. Some MBA no doubt found a way to sneak a cost in there.

    And that’s what “modern, sophisticated business” is. It’s nickel-and-dimming customers. BigLaw used to do that, and it ended poorly.

    I know a firm that lost a seven-figure book over $52,000. The firm would charge copying fees. Seriously…They’d expect the client to pay $.32 a page, and required lawyers to log every paged printed from the machine.

    When my friend took over the in-house group, she was outraged. She fired the firm.

    Most “modern business” is pretty low-grade, and involves analysts and MBA’s sitting around trying to squeeze a few cents out of people. That works in a high volume business like cell phones. Cheat everyone out of a few bucks.

    For a lawyer with a couple of big clients, “thinking like a businessperson” is exactly what the lawyer should NOT do.

  7. Hull

    Yes. I am. You got me. I went back & read his piece. You’re right. But I still get all warm & fuzzy & jazzed when I see “comprehensive and coherent representation” and “business-savvy”. We work in a profession of connect-the-dots Robots & Mechanics. And good clients know it.

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