Great piece by Alan Feuer in Sunday's New York Times chronicling carnage at a major US law firm: "A Study in Why Major Law Firms Are Shrinking." It talks about how White & Case has had to lay off hundreds; close offices in Dresden, Milan, and Bangkok; and cut the budget for its "depressive" holiday party to a mere quarter million dollars (oh, the humanity!).
Big law firms run on a peculiar business model, where profits per partner seem more important than plain-old profits. According to the article, White & Cases's profit rose 7.7 percent last year to $1.6 billion. But the all-important law-firm metric — profits per partner — declined six percent to $1.6 million. So they fired nearly 600 people, including 279 lawyers. Makes perfect sense, right?
As in many pieces on the current troubles in BigLaw, the tendency is to place the blame on the economy and the failures of Wall Street. But as readers of The Client Revolution know well, I believe that the problem is more fundamental than that, and has more to do with a system that focuses on billing hours rather than delivering value to clients.
There are some great lines in Alan's article. My favorites:
- [T]he corridors of White & Case are quiet, the happy buzz of business having gradually been replaced by a melancholy pall of diminished billable hours.
- The gentleman’s profession of the law is becoming a vestige of the past, removed enough from reality to be remembered, like phone booths or fedoras.
- "You used to feel the intensity in the office,” said a longtime partner at a big New York litigation firm. “When people walked to the bathroom, they would actually scurry. Now it’s more of a stroll. For the first time in their lives, people feel sort of useless. All of a sudden, you can go to lunch for two and a half hours and really not be missed. It’s a blow to the ego. You’re talking about people who have never really failed.”
- But the natural order of this world has been set on end by the economic crisis and the possible disappearance of fixtures like the pyramid system (under which associates are thrown en masse at certain cases, fattening the fees), and the billable hour itself (increasingly replaced by flat rates or retainers in a client’s market).
Read the whole article here.