Innovation During The Downturn? BigLaw Apparently Says No |

There is a fascinating discussion going on in a Legal On Ramp forum under the same title as this post. I am taking the liberty of quoting in its entirety a post by Fred Bartlit of Bartlit Beck, because it is so incredibly indicative of BigLaw’s attitude about the current state of things:

Re:Innovation during the Downturn 2 Minutes ago

Here is the attitude of large traditional firms. "we know clients want change, but the large firm business model will not change"

Morgan Lewis Chair is ‘Very Confident & Positive About the Future’
Law Practice Management
Morgan Lewis Chair is ‘Very Confident & Positive About the Future’
Posted Mar 10, 2009, 08:06 pm CDT
By Martha Neil

"We’re very confident and positive about the future," says Francis Milone, the chairman of Morgan Lewis & Bockius, in an interview today with the ABA Journal. As clients get bigger and seek legal advice about more complex issues, "I don’t believe that large law firms are going to be disadvantaged," he says. "I think we’re going to be in a strong position, frankly, going forward."

But "I don’t thing the business model is going to change," says Milone of BigLaw practice. "I think the client expectations are going to change–and they have been changing for several years now." Among other differences, corporate clients are more focused on value and costs today, he says, and "our big challenge" is delivering legal services "in the way that clients want them delivered."

Sort of a "sure, clients want change, but screw them" state of mind

I’ve been writing a lot lately that large law firms are changing at the periphery with genius moves like eliminating coffee and terminating associates, but that so far none have demonstrated any real commitment to change their business model. This post, in a nutshell, explains why. And Fred has hit the nail on the head with his characterization of the state of mind involved.

Addendum: I neglected to include in my original post a brief comment on the Legal On Ramp Forums. These include some of the most interesting, informed and insightful exchanges I regularly observe. Kudos to LOR and the many forum participants.

http://ipAssetMaximizer.com Jackie Hutter

History is chock full of business model obsolescence. Lawyers are not stupid people, but they seem to be unable to realize that we are now in a period of disruptive change and that clients will become increasingly emboldened to push back on costs. Clients also will increasingly say “why am I paying for the modern art and exotic wood paneling in your offices when the quality of the legal services that you provide are not improved by such acoutrements?”
I do not dispute that there will always be clients for whom cost is not an option when purchasing legal services. However, there will be fewer of these clients in the future. An analogy is the luxury car market–BMW, Mercedes and Lexus make lots of money selling high end cars. However, it costs alot to make those sales, and the competition is fierce. (Just ask Infiniti, Acura and Cadillac how great they are doing selling against the leaders in this category.)
So, maybe the Morgan, Lewis guy is right and his firm will be ok in the end. But, more likely, he will wake up one day to fewer and fewer clients willing to pay his firm’s going rate for routine legal work. I predict his clients will be willing to hire less prestigious firms for non-complex matters, while saving the “bet the company” stuff for his firm. Put another way, his clients will be happy to drive Chevy’s to go back and forth to the grocery and drop their kids off at school. They will still drive high end cars, but they will not buy them as often and will only buy them under compelling circumstances. The competition for this lucrative work will be increasingly fierce and his firm’s margins will no doubt be lower. Unfortunately, his firm’s response to such lower profits will be to reduce the associate and staff ranks rather than re-think the fundamental business model of the traditional law firm.