1/15/10

BigLaw's Problem: Downturn Wasn't 'Down' Enough

When many of us took the 2009 calendar off the wall and hung up the new 2010 calendar, we said "Thank God that awful year is behind us!" I've been hearing that the 'downturn in the economy' will start to improve in the first or second quarter of 2010. Like most of us, I'm ready for things to turn around and start moving back into a positive direction. Although the law firm library model has probably been changed forever due to the '08-'09 recession, I'm worried that many in the industry (mainly in large firms) are simply ready to get back to business as usual. As I read "Urgency for Change" from the Hildebrandt blog, my fears seemed to be verified that the 'down' economy didn't go down enough to produce the necessary sense of urgency needed to motivate leaders to change their overall behavior.
Given that law firm declines in profits per partner are merely tepid, rather than dramatic, creating this sense of urgency may be the biggest challenge to law firm leaders – and the longer they wait, the harder this becomes. (In fact, in a recent conference we attended, when presented with data on industry profitability in 2009, one law firm manager remarked, “You see? I think this proves how resilient our business model is.”)
Oh great... Are we slashing budgets, cutting or flat-lining salaries, laying off people, and addressing worker productivity on the admin side of the house just so the partnership side of the house can get back to 10%+ growth in Profits Per Partner? In a time when General Counsels are standing up before conference crowds and saying "Trust levels are so low between firms and clients that if a firm is suggesting it, it must be bad for the client", now is not the time to tout the 2007 business model.
Number six on my list of ten projections for 2010 was that large law firms would be forever changed. I still believe this, and suspect that even those that worry more about when the April edition of American Lawyer comes out with a new lists of rankings over how they can build or rebuild trust between themselves and the client will feel that change. For those that hold onto the idea that the fact that their firm rode out the recession proves that they have a resilient business model ("as is", "status quo"), will not be happy when the AmLaw 100 list for 2011 comes out and they watch as firms who have adopted new billing methods, mended fences with old clients, and listened to and addressed the needs of new clients, begin to pass them on that all important ranking list.

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2 comments:

jamesbryceclark said...

Patience. The calls at ACCA for smarter pricing were louder thus year. And there were more LRN- type alternatives cropping up on the show floor, too. We are where MDs and accountants were a decade ago ... a few years before The Fall. I grew up in the AmLaw 100, and loved it. But the momentum of that business
model for most of its followers is running out. Entropy & Schumpeter are catching up. Cheers, JBC (general counsel of OASIS, but opinions are my own) @JamieXML

Toby Brown said...

There's always the inevitable backlash to a trend. I remember when people said microwave ovens would only ever be used for boiling water. :D

I say let the reactionaries rant. It will keep them busy until their jobs are eliminated.

 

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