Anyone remember the Jerry Reed song, “She Got The Goldmine, I Got The Shaft”? The country crooner garnered a Grammy for singing about the inequitable upshot of his divorce. That song came to mind when I read the recent Law 360 “Glass Slipper Report” on women in law firms. Perhaps a female lawyer with a good voice and an ability to strum could reprise Reed’s tune and call it: “He Got The Corner Office and I Got The Door.” Female lawyers still get the shaft. Why?
The ABA recently renewed—and shelved– the alternative business structures (ABS) debate, and the battle lines were familiar. The retail segment of the legal market is where the most strident exchange occurred. Reform advocates maintain that the access to justice crisis cannot be meaningfully addressed without ABS. The opposition cautions that ethical concerns mandate preserving the status quo. And some candidly admit that some form of ABS would knock them out of business. That’s hard to fathom since technology and process will help leverage lawyer time, reduce cost, and make legal services affordable to the millions of Americans—and small businesses presently unrepresented due to price. Translation: ABS will lower sky-high legal cost and introduce millions of new clients into the marketplace. And that’s good for society. And lawyers.
It’s hardly news when law firms merge, dissolve, or announce office openings or closings. So too has it become routine when big-name partners lateral from one large firm to another or take the boutique route. But it is noteworthy when waves of partners exit a firm with a profit-per-partner (PPP) just north of $3.5 million.
That firm is Kirkland & Ellis. And it’s worth questioning whether the defections have broader implications for the traditional partnership model.
What’s Happening at Kirkland & Ellis?
“What’s your biggest professional challenge?” I asked. There was a momentary silence. Then my friend, who runs the global legal portfolio of a Fortune 50 company, responded, “I wish I could hire certain lawyers without having to retain their firms.”
That answer says a great deal. True, one buyer a market does not make. But my friend isn’t just any buyer of legal services. He is a savvy, thoughtful legal consumer, a former law firm litigator turned in-house attorney who oversees his company’s legal matters across about 150 countries and multiple business units. He also has one of the largest legal budgets on the planet.
“I don’t mind paying the senior lawyer his or her rate,” he continued, “but I don’t like the cost that comes with it.” The cost, of course, refers to the supporting lawyers and their sky-high rates necessary to prop up profit-per-partner and the traditional law firm partnership structure. This begs the question: if lawyers-not law firms-are the key, what is the future of law firms as we know them?
It’s The Lawyer, Not The Law Firm
“So you hire certain lawyers for their judgment and expertise,” I said, “and you would prefer to have the support work going elsewhere? I guess that means that in your estimation the supporting law firm cast and infrastructure do not drive the same value as your go-to lawyer? [Read more…]
Law firm networks have quietly multiplied in number, size, geographical reach, and — to a lesser extent — brand recognition. Could highly selective, well-branded, and technologically integrated networks with well-funded centralized management become the preferred legal delivery structure in the coming years by offering more client-centric, efficient ways to procure legal services than mega-firms or the Big Four?
What are Legal Networks and How Prevalent are they?
Legal networks began as law firm “clubs” and, by the 1980’s, evolved into organizations with admission criteria, territorial exclusivity, global reach, and brands. While member firms maintained their independence, they also co-branded themselves under the network banner. This channeled an already well-established practice of accounting firms seeking to provide an alternative to the global reach of the Big Four.
The size and global presence of legal networks has expanded significantly during the past 20 years. Today, there are now approximately 170 such networks comprised of hundreds of thousands of attorneys and several thousand member firms. And while Lex Mundi and World Services Group (WSG), the two largest, may not be household names, their geographic coverage and aggregate attorney numbers dwarf the likes of Dentons and Baker & McKenzie. Why, then, are networks not more visible and how are they different than mega-firms created by relentless acquisition? [Read more…]
Richard Susskind gave palpations to thousands of lawyers back in 2008 when “The End of Lawyers?” was published. The author’s track record as a legal soothsayer, coupled with the convulsions affecting the global economy to which law was far from immune, ruffled many stiff feathers. Of course, the provocative title of his work was no doubt designed to sell books, if not to provoke serious self-examination and adjustment by the legal establishment. In fact, to paraphrase Mark Twain, the reports of lawyers’ death were greatly exaggerated, though there is little doubt that their overall health was deteriorating and in need of rehabilitation. So, when five years later Professor Susskind wrote “The Future of Law” some were relieved to learn that law had a future, albeit one that was very different than the way things were pre-2008. This begs the question: is the legal deck being reshuffled or should most lawyers—especially young ones—throw in their hand and cut their losses?
The Sky is Not Falling—But the Climate is Certainly Changing
Let’s start with the obvious: law is a big business—a HUGE business—and it is not going to go away. Though size estimates vary, let’s take $650B per year as the annual global legal spend. This is good news for lawyers throughout the legal ecosystem. Companies will continue to transact business that requires lawyers; there is clearly a need for retail (non-corporate) lawyers, and the Academy might be pared down considerably—not to mention change its methods of training new lawyers—but it will certainly not disappear altogether. Law—even as Susskind sees it—has a future. But don’t look to the past as precedent for how its future will appear. [Read more…]