Three articles today give us a read on the BigLaw market 

This morning AmLaw Daily (9:41 AM) reported The Am Law 100 2011: Back in Black. This afternoon (5:45 PM), they reported The Am Law 100 2011: Growth Returns. Both report growth of 4%. Take that with a grain of salt though. The morning piece notes that, excluding two big firms to adjust for methodology, growth is only 1.4% And in the afternoon we learn only “eight firms managed double-digit gross revenue growth in 2010” and “60 percent of Am Law 100 firms increased revenue in 2010”. That means 40% shrunk.

The legal market has not returned to the high growth of a few years ago. The higher profits reported reflect headcount reductions more than a robust market. Headlines notwithstanding, we still must ask “what does the new BigLaw normal look like?”

Aptly enough, Paul Lippe addresses that question today in Who Sees ‘The New Normal’ Most Clearly? Law Firms, Law Departments or Clients? (ABA Journal). It’s a great read. My take-away is that you can’t answer the question by looking at what the skeptics say, you have to answer it by looking at what the leaders do.

The ultimate answer to the question lies not in financial results but in what BigLaw actually does. So let’s zoom in… Can Technology ‘De-Commoditize’ Document Review?, by Robert W. Trenchard (partner) and Steven Berrent (managing director) at WilmerHale, is a great e-discovery article.

One conclusion I draw is that WilmerHale is not trying to keep “LawFactory” work. In short, by using predictive coding, the authors say that associates no longer have to suffer the drudgery of endless document review. Instead, they can spend time to understand facts and tell a good story, which is, after all, what litigators should do. (See my June 2009 post, E-Discovery Goal: Win or Avoid Disaster?)

So arguably the days of charging clients for armies of associates or contract lawyers (and profiting mightily from it) have passed. This is not just technology at work, it’s a reflection of how BigLaw has to think about law practice and where it can earn high margins – and where it can’t.

With two years of shrinking revenue and one year with 40% of firms still shrinking and only a handful growing rapidly, it seems harder and harder to argue that nothing has fundamentally changed. Of course, we will not really know for sure until we return to robust economic growth. By that time, many of the skeptics that Paul Lippe writes about will have retired.