Are Large Law Firms Headed For Extinction?
The Dallas legal community has been rocked by downsizing and dissolution at large law firms that hired some of the best and brightest law school graduates. One can only imagine the stress these unemployed attorneys are finding themselves in trying to support a high income lifestyle ($500K+ mortgages, leased luxury autos, private school for the kids, and student loans to repay). It is a recipe for foreclosure, heart attacks, and divorce.
Even the most successful marketing plan will take time to earn the type of income previously made at the big firms.
On the macro scale, you have to wonder if this is a sign of things to come.
In the late ’80s and early ’90s, clients of mega-firms yelled “enough.” No more $1 photocopies, no more billing 36 hours a day, no more first class air travel for a partner and a gaggle of associates to take a deposition of a bit player in litigation. Clients told firms to run their operations like a business. There were improvements, or at least the curtailing of the flagrant billing abuses.
Yet even the most blue chip firm remains vulnerable to extinction.
Here’s why.
1. Clients no longer consider the practice of law to be a profession. Like real estate, insurance, banking (and soon to be medicine), attorneys are perceived by many as tradesmen instead of professionals.
2. Technology makes many clients less dependent on lawyers. Most legal forms are readily available on the Internet. Using informal cost-benefit analysis, businesses and individuals are taking the calculated risk of handling their own legal transactions with the expectation that they’ll never end up in court if things go south.
3. Competition is driving down the price of legal services. On the domestic front, there are attorneys who prefer to work-at-home while raising children and take part-time legal work to supplement their income. The full-time attorney cannot compete with the voluntary part-timer when it comes to rates (service is another matter). Foreign attorneys and paralegals are providing cheap legal services from places like India and the Philippines to U.S. law firms for a fraction of the cost it takes to employ a first-year associate lawyer at a big firm.
Does this mean that large law firms will cease to exist?
No.
But it does mean that there will be fewer mega-firms.
Small and medium-size firms can provide clients with comparable or superior service for less money because the cost of doing business is less.
The remaining large firms will continue to enjoy their billables to corporate giants and the benefits of their crispy critter personal injury cases.
However, the 99.5%+ lawyers who work elsewhere will be the standard by which the practice of law is measured.
Hat tip to the Dallas Morning News.
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