“Lawyers are Condos”
I was invited to breakfast the other day by an old friend who is the Managing Director of one of the nation’s most powerful lobbying shops. He has a law degree but never practiced–not in the narrow sense, anyway– opting instead to become a political operative, first at the State level and later at the highest echelons of national politics. He has more juice than a Tropicana plant.
After getting past the family stuff, we talked about business and quickly delved into his method for building “teams” to solve the BIG dollar economic/political/legal challenges of his clients (typically foreign Governments or consortia of multinationals “having issues” with those sovereign entities). I asked how he decides whom to bring in as lawyers and whether he had any “go-to” firms. “I don’t think about law firms when I need lawyers,” he said. “Lawyers are condos; I want a particular unit; I don’t care about the building.” His response was a variation on the old saw, “I engage lawyers, not law firms.” But my powerbroker friend’s comments suggested something more fundamental: even in real “bet the company” engagements, selection of counsel is driven by the lawyer, not the law firm. Put another way, a “trusted adviser” attorney trumps the law firm brand, even–at least for my friend–in “bespoke” situations.
This is not to deny the existence of an elite group of law firms–perhaps 20 or so of the AmLaw 200–who do have a differentiated brand and are often retained because of that brand rather than for a particular lawyer. But even Cravath learned years ago that its brand was trumped when David Boies left to set up his own firm, taking several clients with him.
Trusted Adviser versus Law Firm
So maybe what matters is the individual condo unit (trusted adviser/attorney), not the building (the firm)–even at the bet the company level. If so, what does that say about the “fat middle” and “commoditized” work that so many law firms–and more recently legal service companies– vie for? My answer: we should rethink the importance of law firms–at least in their present guise–because they don’t matter as much as most lawyers would care (or dare) to think. The reality is that except for those few lawyers who enjoy “trusted adviser” status with a client, other lawyers in the firm seldom figure into the retention process. Put another way–and many GC’s have told me this–they “put up” with certain law firms because they want to work with a particular lawyer. This begs the question: what value does the current law firm structure–especially BigLaw’s–provide clients? Why not rethink and restructure the current BigLaw model from the client perspective? A retrofit of BigLaw’s model can only go so far; I’m suggesting something more fundamental: recasting the law firm model altogether.
Where’s the Love for the Biglaw Model?
Defenders (“beneficiaries” is more apt) of the existing law firm model have probably stopped reading this post by now. If not, they will point to PPP and say that things are not so bad. Then they will cite the “highest quality” of their hires, the “cutting edge technology” they employ, and the “partnering with clients” as three among a legion of reasons why BigLaw’s structure benefits clients. But marketplace changes suggest otherwise: (1) the proliferation of “alternative providers”; (2) the uptick of firm mergers (in this context, another sign of instability); (3) peripatetic rainmakers (think: free agency); and (4) the erosion of firm loyalty prevalent among GC’s (75% of whom said they would consider leaving their BigLaw firm for an alternative provider for a 30% fee reduction).
Clearly, the bloom is off the rose of BigLaw which persists because of legal conservatism, herd mentality, self-regulation, and the absence of an alternative model established by a global brand with the resources to effect fundamental disruption.
The Corporate Consumers’ Conundrum
Boutiques and small firms have their place, but they lack the breadth and depth necessary to support multinationals whose legal needs are global and often require the very thing those same companies loathe paying for: expensive BigLaw support for the “trusted adviser” lawyer they came for. This client quandry presents an opportunity: to create a law firm with a different structure than the “finders, minders, grinders”, pyramidal structured, billable hour-on- steroids firms we are accustomed to. What might such a firm look like and how might it function?
One of Several New Models: The Crowdsourced Firm
Technology, as we all know, is transforming virtually every vertical to a greater or lesser degree. So far–and this could only happen with lawyers–technology has increased the expense, longevity, and unpredictability of legal services–especially litigation–courtesy of eDiscovery. True, companies have recently sprung up that serve as “relevance sifters”; but even so, the cost of litigation has skyrocketed at a time when OGC’s are engaged in daily fiscal belt synching. And the proliferation of data is not the exclusive domain of litigation; it jacks up the cost of M&A work as well as every manner of transaction.
But imagine this: a secure, integrated IT platform that enables lawyers to interact seamlessly across geographies and practice groups. It serves as the glue for a network supporting “trusted adviser attorneys”. The firm practices transparently with its clients–to assemble the right lawyers for the appropriate tasks at a fixed price that is substantially lower than the traditional BigLaw model could offer, even with aggressive discounts of rack rates.
Further imagine that the platform has hundreds if not thousands of lawyers on it and that they are based across the globe and span the entire spectrum of legal practice areas. Clients engage their “trusted adviser” who has highly-trained project managers as well as other para-professional specialists available to lend required expertise on a transparent, integrated, highly cost-efficient basis. Translation: the “trusted adviser” comes without all the baggage endemic to the BigLaw model (and that includes other cost escalators including opulent real estate and bloated staffing). The platform intelligently gathers data for productivity, cost, and virtually every other internal and client-related benchmark so lacking in the current legal landscape–and makes it available to firm managers as well as to clients. Clients can access the firm’s network (with level of access protocols, of course) so they too can lend expertise and institutional knowledge as required. The new firm will, in effect, consist of “outside” as well as in-house attorneys. And the platform will be “smart” and capture institutional knowledge to be applied in future matters. This data is accessible to clients even if they elect not to retain the firm on a particular matter going forward.
If this sounds utopian, it is not. The technology exists, and so too does the “legal architectural” talent–albeit currently in short supply–to construct and manage such a new model. And there is certainly no lack of desire among clients at all ends of the legal spectrum (this model is equally effective at the retail level) for a better alternative to the status quo. This is just one of several new models that could be adopted by law firms–albeit new law firms. Other paradigms, no doubt, would be equally compelling for the opportunities they present clients and the entrepreneurial lawyers who represent them.
The shifting ground underneath them does not portend the imminent death of lawyers. Rather, it is the marketplace serving notice that the role, utility, and value of lawyers–and law firms–is being reevaluated by those who matter most: clients. It will be implemented by legal entrepreneurs who recognize that “the client is right.”