Biglaw

New Warning For Biglaw Firms -- Not That They'll Listen Anyway

The Biglaw model is going to have to change.

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What will it take for Biglaw firms to wake up and see that the way they’ve “always” done business is not going to cut it anymore? Despite several iterations of industry reports generously described as tepid, law firms seem entrenched in their stagnant ways, as they remain committed to “once-successful strategies even as evidence mounts of their failure.”

The most recent report comes from the Thomson Reuters Legal Executive Institute and the Center for the Study of the Legal Profession (CSLP) at the Georgetown University Law Center. Law firm growth is at a virtual standstill, with the Am Law 100 firms seeing a 1 percent increase in demand, and the second hundred in the rankings experiencing a decrease of 1 percent in demand. One report author is even hoping the results read as a wake-up call for the industry, as reported by Law.com:

“Our hope with this is that we can help build a kind of wake-up call,” said James Jones, an author of the report and former managing partner of Arnold & Porter who now serves as a senior fellow at Georgetown’s CSLP. “Because in point of fact, I think that law firms can have a real competitive advantage and be significantly successful if they will only do some of this basic stuff.”

The report goes on to characterize the approach in biting terms — calling it consensual neglect:

“‘Consensual neglect’ seems a particularly apt description of the strategic posture of many (if not most) law firms in today’s rapidly changing market for legal services,” states the report. “Ignoring strong indicators that their old approaches—to managing legal work processes, pricing, leverage, staffing, project management, technology and client relationships—are no longer working, they choose to double down on their current strategies rather than risking the change that would be required to respond effectively to evolving market conditions.”

The report also cites research by Bruce MacEwen that two-thirds of the increases in revenue for the Am Law 100 can be attributed to ~20 of the 100 firms, further illustrating the difference between the Biglaw haves and the have-nots.

“What is becoming increasingly clear is that the market in which law firms are required to operate today may in reality be quite different from the one that most law firm partners have fixed in their minds,” states the CSLP and Thomson Reuters report. “So far, the realignment of competition across the legal industry has been limited, but the direction of movement is clear and the pace of change is accelerating.”

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If Biglaw firms don’t make a change they’ll see (even more) of their lunch eaten by alternative legal service providers like Axiom Global Inc., Consilio, and UnitedLex Corp. which have grown their industry to $8.4 billion in 2017.

Despite these challenges, Jones is somewhat optimistic about the state of the industry:

“[G]iven the types of competitors in the market, firms are going to have [to] work differently,” Jones said. “They’ll need to have different staffing models, be more multidisciplinary in the market. And that’s the hard part. But I’m optimistic that those that do will meet with some success. And the record indicates that.”

And all they have to do is change.

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headshotKathryn Rubino is an editor at Above the Law. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter (@Kathryn1).

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