Reinventing The Law Business: An Ode To Large Law Firms

Do Biglaw firms get a bad rap? Managing partner Bruce Stachenfeld thinks so.

There – I always wanted to write an article that had such a strange title that people would look at it and wonder what I was talking about. So here goes….

Everyone just loves to beat up on the big law firms. I keep reading articles everywhere that say:

They are overpriced.

They are inefficient.

Their partnerships destroy innovation.

They are terrible places to work – sweatshops – associates are worked to death until they quit.

Their business model is broken.

Sponsored

There was even a book that came out a year or so ago with a great title, The Lawyer Bubble: A Profession in Crisis (affiliate link). To me the book described the law business as part of a dying profession that is enmeshed in a conspiracy to ruin the lives of all in it — except the fat-cat senior partners at the top of the pyramid. I admit I read it a while ago and it is a bit hazy in my mind, but the author, a former Kirkland & Ellis partner, clearly is not a fan of the current state of Biglaw….

I could go on and on but I have a very different view in that, as a general proposition, I think very highly of major law firms and respect them greatly. Yes, I am in competition with them, but I don’t want to win “that way” — because other people are picking on them wrongfully. So here are my thoughts.

First, is Biglaw overpriced? The price of legal services is set like everything else — by supply and demand. Large law firms are magnets for the finest minds in the legal world and they are often perceived to be the “best” lawyers for certain jobs. It is no wonder that clients are willing to pay high prices for this talent. When something critical is on the line, you want the best lawyer. Do we make a big stink that Tiffany costs a ridiculous amount to put something in that blue box for a very special someone? Do we complain how much the iPhone costs? Do we complain that Bill Clinton charges $100,000 to speak for an hour? If the foregoing seems reasonable, then it is also reasonable that if you want the “best” law firm in the world for the job you have to pay for that too. Last I heard no one is forcing clients to go to large law firms. They go there because they want the highest quality for mission-critical legal work.

Second, is Biglaw inefficient? Well, surely major law firms are inefficient some of the time, but in relation to what standard? If you are doing a ten billion dollar deal to buy 600 convenience stores in thirty-seven states in thirty days you have something like 12,000 documents and several hundred people to keep track of. You don’t get a running start to organize everything perfectly either because the client just won the bid and you were told it is a mega-rush. The client came to you because you have the bodies (i.e., lawyers) to pull off this incredible task. You go all-out — your team of lawyers and paralegals doesn’t sleep for 30 days — and you do it!!! And now someone says you could have been more efficient. True, I guess — but more efficient than who or what?

Sponsored

Third, do Biglaw partnerships destroy innovation? If this is so, then why do I keep hearing every day – yes, every single day – about law firms trying new ways to service their clients more efficiently and more effectively? Concepts like project management, legal process outsourcing, technological advances that make their work more efficient, and much more. It doesn’t sound to me like a profession that is against innovation. Yes, partnerships often engage in group-think that stifles innovation, but is this more than other professions or industries? I doubt it.

Fourth, are major law firms terrible places to work, sweatshops that work associates to death till they quit? Well, give me a break. Every industry in the world has places that are great to work and places that are completely awful. Is so-called Biglaw so bad? Consider that 6 of Fortune Magazine’s 100 best places to work in the U.S. were major law firms! We at Duval & Stachenfeld are in the recruiting market to “attract, train and retain talent” (our mission statement). Right now, my firm is doing incredibly well — we pay more than just about every law firm in the city, and we go all-out to make the firm a great place to work — yet it is still no easy task to pry Biglaw associates loose or get star-level young law students to interview with our firm after law school.

On this same point, are major law firms sweatshops that work associates to death until they quit? Fiddlesticks! The absolute top law graduates are invariably incredibly eager to get these jobs. They have the pick of pretty much every single job in the legal profession, but these brilliant people (stupidly?) race like lemmings to major law firms to be taken advantage of. That makes no sense at all. They know that they will work hard, probably harder than they like. But in return they will get great training and Biglaw on their résumés, which will open many doors after just a few years of very hard work.

This is not like workers in a mill who have no choice but to show up every day while the mill sucks the life from their bodies. As Peter Drucker points out, the critical change in the world in the last 100 years is the change of workers from workers who work with their hands to those whom he calls “knowledge workers,” who carry the means of production between their ears. These associates are free agents, and — other than now and then, during relatively rare times of legal market stress — they are extremely mobile in employment. They can leave as soon as they have achieved the benefit of their bargain (training and prestige) for which they are well paid while they get it.

Fifth, is the business model broken? I don’t think so. I recall during the global financial crisis that just about every industry was reeling (well, except Apple and Google). The world was full of fear. And if memory serves, big law firms, with their “broken” business model, were down between 5% and 10% top line. Whoah!!! So the financial world is reeling, and the top line of major law firms, the ones that service the financial world, is down only 10%? That doesn’t sound like a broken business model to me. Indeed, with a couple of high-profile exceptions (and we know who they are), the big law firms pretty much sailed through the worst downturn in recent world history.

. . . . .

Okay — sure — big law firms have problems. What major company and what industry don’t have problems? And I am sure that some major law firms are truly awful places to work, and their days are numbered. But the question isn’t whether people can dig up and publicize problems at a few places. The question is whether the problems are worthy of concluding negative things about Biglaw in general. I don’t think so. Instead, my analysis is that the major law firm part of the legal world is doing just fine — but that information is boring and not really newsworthy. Instead a story about a senior partner at a major law firm “losing it” and doing something stupid is “fun” for all of us to read about. So is a book about “Lawyer Bubbles,” where someone scours the legal profession for negative items and paints a negative picture.

To conclude here — I am in competition with major law firms. I like to think we do better in many ways. I think we are more focused — we don’t try to be all things to all people — we love our clients through our hedgehog principle — we are the pure play in real estate law — we have a mission to help our clients build their businesses — and there are things we can do that I don’t think major law firms are set up to do. I am not, however, going to join those who are bashing major law firms. They are, by and large, companies consisting of highly talented and highly motivated people with high ethical standards who are seeking to achieve great results for their clients.

Finally, these major law firms are worthy competition for my firm. As I wrote in my Above the Law column about a month ago, the great competitors are what truly define us. They inspire us to raise our game to the highest level. So I say, Viva Biglaw!


Bruce Stachenfeld is the managing partner of Duval & Stachenfeld LLP, which is an approximately 70-lawyer law firm based in midtown Manhattan. The firm is known as “The Pure Play in Real Estate Law” because all of its practice areas are focused around real estate. With over 50 full-time real estate lawyers, the firm is one of the largest real estate law practices in New York City. You can contact Bruce by email at thehedgehoglawyer@gmail.com.