Law Firm Ancillary Businesses – Follow-up To Orrick Post
Last week I wrote about the possibility that Orrick might provide back-office services to other law firms. That post generated two interesting comments that question and expand on my conclusion that this could be a distraction.
On 8/19 fellow blogger Rick Klau commented:
Ron – thanks for the pointer to this article. I recall Orrick’s announcement several years ago to move to this model, it’s interesting to see reports of its success.
Question – when you say that firms should avoid the distraction factor, what about Womble & their spin-off FirmLogic? Seems to me the gating factor for most law firms isn’t their inability to manage different service lines (and margins on some tech offerings can be just as high, and far more scalable), it’s their inability to be business-oriented in their management.
Do you agree?
I had been thinking about Rick’s question, knowing that I did not agree, but was having trouble articulating the reasons. The next comment sums up my views better than I could have said myself….
On 8/24 John Alber, the Technology Partner at Bryan Cave replied to my post and Rick’s comment:
I disagree with Rick. The business imperatives and core competencies of a technology company are very different from those of a law firm. Very, very few businesses–even the best managed businesses–are able to mix and sustain radically different business models under the same roof.
The law firms who dream of offering their “cost centers” to the world in order to reduce their overhead burden or even achieve profitability from those centers have not learned from the business histories of their clients. Turning cost centers into profit centers was all the rage in the 70s and 80s. Some companies are still licking their wounds.
Technology is best used to create an extraordinary service model within the existing business structures of law firms. Any other use undermines the core business of the firm.
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