When I saw that Bruce MacEwen of Adam Smith, Esq., had posted “Reinvent Law:” You have spoken, I was ready to hate it. I was geared up to argue why it was more nonsense, more of the same old new normal future of the law fluffery that’s been the darling of the game-changers. I was stoked.
Except that in reading Bruce’s post, I realized that he made a critical distinction that few before him had done. Bruce’s blog is directed to the economics of Biglaw. He doesn’t speak in overly vague or grandiose terms about how “The Law” is changing, but instead focuses on the aspects that differentiate Biglaw from the rest of the law. He wasn’t saying that my law was changing. He wasn’t saying that all law was changing. He was saying that Biglaw was changing.
But second, and for my money far more importantly, those who think the fundamental premise of the partnership model cannot support investment outnumber those who think it can by 2:1. Truth be told, I think this cohort has the better of the argument.
So, if you agree that investment is needed (90%) and that our structure can’t support it (2 out of 3), we have some serious self-examination in our future.
As Bruce breaks up the results of a survey taken of his readers, and I doubt he and I share many readers if any, his use of the words “our” and “we” speaks to the white shoe guys, the thousand plus lawyers firms, the model that involves the problem of huge behemoths that lumber slowly, expensively, and without any individual sense of responsibility among the thousand partners to run their shop lean and smart.
In his “takeaways” from the survey, the focus becomes quite clear:
The bonus question seems a bit too broadly phrased; it seems likely that some law firms (e.g. top-end boutiques) will be able to glide along nicely by sticking to their current model, albeit tweaked a bit when necessary. By contrast, those firms outside this charmed group will really begin to struggle as their business model falls apart at the seams for all the reasons you set out in Growth is Dead, and it’s not clear to me that they have any realistic prospect of re-inventing themselves. [This posits what I’ve called the “Hollow Middle,” which forecasts very challenging times for firms not delivering utterly superb top-of-market service (think Audi/BMW, or even Ferrari/Bentley) or else unquestioned value for money (think H&M or Zara)–Bruce.]
I’ll be damned. I agree completely. And this:
I don’t think any of the answers to the last question really capture my view. Law firms’ response will depend on how they are positioned and which market segments they serve. There will be room for high-end advisory services which can evolve from the existing model of delivering legal services, but there will also be volume plays for lower complexity work where LPO, technology and process will form part of successful business models.
When it comes to Biglaw, he’s right. What became abundantly clear to me as Bruce went on was that his forecast for the future of Biglaw was that the model was unsustainable and they had to become, ta da, us. Solos. Small firms. SmallLaw. The future of Biglaw is small law. Holy mackerel!
Culture within big firms will be a barrier to change. If you want real innovation then you have to do it outside of the walls of a large law firm and start with a clean slate and hire people committed to the new vision. You will never get the majority of the partners in a large law firm to commit to serious change. As the rise of LPOs will be gradual, the level of urgency for change will not be sufficiently felt to implement radical change within law firms. [This is the “boiling frog” metaphor—Bruce.]
This was where the epiphany came to a head. The “culture” of solos, if it’s possible to call what one person believes to be a “culture,” is deliver the best quality legal representation possible without waste, either for us or our clients. We don’t have marble waiting rooms or legal pads with our name engraved in 18 karat gold. We eat lunch at the corner deli rather than our own cafeteria with firm branded coffee mugs. Maybe Biglaw can throw away money on such non-productive things, but we can’t. We work for a living.
Have you ever wondered how it’s possible that a Biglaw firm can manage to get paid ten times what you would charge for the same (if not worse) result? My running joke is I could have lost that case for half the price, but the serious point is that I could provide the same or better representation for a fraction of what Biglaw charges and still been hugely profitable. So how is it they can’t?
Bruce nails it with culture, a curious problem among what the elite call “peer” firms because they need to believe they exist on a higher plane than the rest of the legal profession. When I spend money, it comes directly out of a pocket, whether mine or my client’s. I am acutely aware of it, and consequently don’t squander it on frivolities of no significance to the services I provide.
This sensibility doesn’t exist in Biglaw for two reasons. First, the firms are so large and responsibility so diffused that no one feels the hand reaching into their pocket when money is pissed away like a drunken sailor. Second, the fiction of elitism so permeates their self-image that they can’t imagine, can’t fathom, not being at the pinnacle of legal prominence. In other words, they just can’t accept the notion that the world doesn’t look at them in awe and admiration, and recognize that when it comes to excellence, there is no alternative.
If only there was a contest to see who could cross-examine a witness better, a solo or peer partner. If the contest was to see who could do the cross for less money, there’s no question who would win. And if there were bonus point for the flexibility to adopt to changing circumstances, it would be a slam dunk.
Perhaps the problem we’ve had in trying to mind-meld over the Reinvent the New Normal Future of the Law is that a game-changer to the Thought Leaders of Biglaw has always been the normal of solos and small firms. There is nothing really new here, or out of our normal, but since they refused to acknowledge our existence or take what we do seriously, what they describe as “reinventing” is really just embracing what we’ve been doing all along. Their new normal is our normal.
Remember when Dewey met Ballantine? Neither does anyone at Biglaw, but it started with a couple of guys back when running a law firm was personal. Just like us.
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Bruce Macewen’s post is a good guide to the changes in the profession. Survey results show 59% believe business people could run the business better than lawyers. He talks about the growth of LPOs and the possibility of firms starting their own in-house LPOs. It’s a good business model from an investor standpoint.
His post doesn’t really address the solo/small practice, though he notes that only 2% picked expertise as determinative while 13% picked “optimized process”. BigLaw isn’t going away for the simple reason that BigClients need them. How would Raytheon talk to you? Could Luxembourg find you on a map? What I read from his post is fewer peers in the profession and more levels of subordinates.
Bear in mind that the survey comes from a highly self-selected group, Bruce’s readers. Biglaw has morphed over the years into far more business than profession, with business attributes such as maximizing profit being part of what has made the model untenable.
It’s a business that doesn’t operate as a business, but if it was run more business-like, it would be at the expense of their being lawyers. A small group of peers overseeing a large group of contract lawyers who serve as profit centers is a fine business model, but an awful law firm model.
The attributes needed for survival that he describes are those of solos and small firms. I could just as easily retain an LPO to do the dirty work as they can, but they can’t be as agile, lean and responsive as I can. And if Raytheon wants to achieve better results at a fraction of the cost, they can call anytime.
For no mean percentage of its legal work, Raytheon would do just fine with smaller law firms — in fact, it would do great. It would get better results, faster and cheaper.
But it would have to give up the cushion — the cushion that a GC relies on when the case is lost and says, well, what do you want, I went with Sullivan and Cromwell, they’re the best.
It’s the social cushion, too, that comes with logrolling major corporate litigation to your friends in the law firm where you used to practice, who will make sure that, if you end up having to deploy that golden parachute, you will at the very least not lose face by failing to have a place to hang your “shingle” (ha) while waiting for the next in-house slot to open up.
It’s the cushion of compensation for a GC, who after all should at least be paid in the same order of magnitude as the outside counsel who work for him.
There is some corporate work, litigation and otherwise, that can and should be handled by smaller firms. But cushions like these — that we don’t have.
When the intangibles are outweighed by the costs and quality issues, something will give. But that will be up to the big kahunas. If they can’t live without the Cravath cushion, then Cravath will continue its way of doing business unabated. So be it.
Biglaw firms also provide a large degree of cushion in that all of their cases will have several attorneys working on them so a client is not likely to be left without counsel. Well, maybe if the case is like a pro bono death penalty case or something 😉
And there is probably some degree in efficiency for a large client operating across multiple jurisdictions requiring legal services across several practice areas to have a large firm on retainer – whether it cancels out the extra overhead costs of a large firm i do not know. But to be able to have a firm who has attorneys in just about any practice area a large corporate client might require available at short notice does provide some convenience (of course, convenience is an expensive luxury). That is one reason why even though the current biglaw model is not sustainable i have to expect that the biglaw model will never totally go away.
The other is that you have to remember that to Biglawyers a 50-100 attorney botique firm is likely to be considered “small.” However, the current Biglaw model originated as a way to provide insurance and avoid dependence upon one large client/practice area. From what i understand, one of the primary motivating factors for the move towards Biglaw was when Mayer Brown then merely one of the largest firms in Chicago (i believe they were in the 50 to 100 attorney range) came close to following its largest client (Continental Illinois Bank) into oblivion in the early 1980s. That many large industrial clients shrunk, vanished, or consolidated in the same time period provided additional motivation for law firms to diversify and grow. The corporations also became larger which provided additional motivation for the firms to become larger. No matter what size firm (or in house counsel) is used, a company like General Electric is going to have an army of attorneys doing work for them at all times.
Of course, if most Biglaw firms do split into smaller firms to be more client friendly and efficient, it seems very likely that eventually the partners would decide “you know, we are too dependent upon one client/one practice area – and being diverse is going to make us more money. Maybe we should merge with some other firms and become larger.”
You are incredibly knowledgeable about Biglaw. Everyone who reads this with decades of experience in Biglaw will appreciate your insight.
the people with decades of experience at BIGLAW tend to be the very same people who designed the current BIGLAW system (or at least those who are very good at navigating it). For some of them the system is working exactly as they intended and they have profited handsomely from it – so they aren’t likely to see a problem with it.
and to be perfectly blunt, they didn’t care about my insights when i worked for them so i know they aren’t going to care for them now.
the ones who that now are seeing the problems inherient in a system which places profits as its highest priority and often places a premium on growing often for its own sake are the often the very same ones who came up with such “winning” strategies such as the Dewey Ballentine-LeBoulef Lamb merger. For them to be complaining about how they wish they could put the twin genies of growth and greed back into the bottle is a bit too late. And experience shows that no matter how many cautionary tales are out there people are still going to be chase the money.
Of course, that doesn’t mean they are wrong about BIGLAW’s substantial problems – but i just have to wonder what took them so long? When i was in law school, thanks to the internet half of the 2L’s in America already knew that greed and growth fever was causing substantial problems in BIGLAW. Large firms had already had massive layoffs or even gone completely bankrupt. Of course, many of us still chased the money but what do you expect from a bunch of naive 24 year olds who all are sure that the firm that they are signing the bottom line with is somehow different from every other BIGLAW firm. i’d expect a 42 year old partner who is already making a lot of money by any standard to be more prudent.
You really aren’t one for subtlety, are you? [Edit: Or brevity] We need to work on that.