Corporate Counsel is out with a fascinating article, Bye-Bye Big Firm. The article focuses on disaggregation as a disruptive force in the change cycle. And while this is true, it is only part of the story. The unbundling of services has allowed new entrants into certain markets, particularly in the process and content buckets (see here for explanation). While everyone acknowledges that these specialized service providers (Novus Law, Integreon, being good examples) can provide their services at lower prices, the real key is that they provide better quality. Because they specialize in what they do, these firms hire people with different career paths than most biglaw associates have in mind, and they develop highly specialized systems to allow quality to be measured, managed and improved. They are light years beyond at least most law firms in terms of the quality of services they provide, and they provide these superior services at a fraction of the cost. As more clients move to these specialized providers, word will spread and only those still pining for rotary phones will expect their law firms to provide this type of service.
These service providers compete with many law firms, who like billing big bucks for process-rich work, whether document review or due diligence. And many law firms are hesitant to rely on the work product of these service providers and so they find ways to “check it” that amount to a do-over on the client’s dime. But as things evolve, law firms, at least those that want to thrive instead of fighting just to survive, will make the adjustments to work seamlessly with these subcontractors, just as a general contractor with good subs works seamlessly with those sub-contractors. In the meantime, clients will have to be wary of the do-over tendencies of many firms.
The Corporate Counsel article ends with some interesting observations by Peter Zeughauser, with whom I agree. But I would add that the number of large law firms is likely to decline at an accelerated rate until the equilibrium of the new normal is reached.