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Recent Takes on the New Normal for BigLaw

Some recent commentary suggests that the economic crisis has caused a lasting change in the legal market. 

For a time, I feared the crisis had been wasted, that BigLaw would not change. I see and hear comments from more and more directions that the new normal not only will be but already is very different.

The Hildebrandt blog, in Report from Law Firm Leaders Forum – Change is the Name of the Game reports that at a recent conference

“discussion among law firm leaders has evolved over the course of the last two years. Certainly two years ago there was quite a bit of skepticism about possible changes in the industry. A few firms were trying some creative approaches in select areas but most were not. A year ago there was much more talk about changes but still skepticism about whether things would return to normal when the economy strengthened. This year the discussion focused not on skepticism but on the specific actions firms have taken and how much farther they need to go.”

My take-away from this is that we should expect to see BigLaw continue to change in ways unimaginable two years ago. One factor driving this change is a shift in power. As Toby Brown of 3 Geeks and a Law Blog notes in Convergence in a Buyers’ Market? Whadya Stupid or Somethin? , the legal has become a buyers’ market. With so much buying power, he argues that convergence (law departments reducing the number of law firms) makes no sense because this reduces bargaining power.

I agree that buyers (general counsels) now have the power. And I also think it’s good to keep several outside firms to maintain competitive pressure. Having too many firms, however, may drive up transaction and management costs. I suspect any difference I have with Brown is more where to draw the line than in concept.

So, with the shoe on the other foot now, what are law firms to do? The Wired GC (aka John Wallbillich) argues in Why Value is not a Virus that the billable hour will survive only for top-end legal work, which is no more than 10% to 20% of the total. I agree with this; in fact, I wonder if the amount of true “brain surgery” legal work is even less.

No matter – firms must still adjust. Wallbillich suggests that the cost structure to provide very high end advice differs significantly from that needed to deliver the run-of-the-mill (gasp! – commodity) advice. He suggests therefore that to handle both, “a firm would need two of everything: pricing structures, staffing models, talent pools, comp plans. It’s like merging Wal-Mart with Tiffany: I’d really like to see that ad copy.”

I see his point but think some global firms will manage to do this well. Some UK firms already manage to straddle the seeming divide, from Lovells with its Mexican Wave, to Lawyers on Demand by Berwin Leighton Paisner. Yet I suspect that many firms will struggle to do both high-end and commodity work well and profitably.

All firms should therefore listen to what Adam Smith, Esq. (aka Bruce MacEwen) has to say about branding. He suggests in A Brand Is a Promise that firms will have to focus on selling their brand rather than their lawyers. While he does not tie this imperative to the “new normal”, it strikes me that in the new buyers’ market, brand will become more important, not less. While buyers may have power, they will need to simplify their decision making and brand will help.

So, in one week, you have several smart commentators coming from different perspectives all talking about big change for BigLaw. Of course, I realize I might live in the echo chamber of the blogosphere. That thought was amplified after having drafted most of this post and then reading a post by Steven Levy at Lexician, Over the Cliff: Hourly Billing to Commodity Law?. He cites most the same blog posts as I do.

17 Mar 2010 Update: Jordan Furlong of Law21.ca in The platform is changing writes that the legal market delivery platform is changing from big firms to internet based. He compares it to how Word took over the market from WordPerfect.
Separately, Eversheds report looks at how ‘perfect storm’ will affect the legal profession (Times Online, 18 March 2010) summarizes an Eversheds research report on changes in the legal market. It assesses how “four drivers of systemic change: the Legal Services Act, globalisation, technology and the increasing power of in-house general counsel (GC), which will affect the profession whether working in the high street or on Cheapside.”

  1. Could be the echo chamber, but the simpler explanation might be that all of the people you mention know each other and exchange ideas regularly. Though if our words are bouncing off the ear-walls of others rather than sticking… that would be echoes indeed.