Friday, October 19, 2012

Big law firm suicide

In The better angels of our profession, I sorted law professors into three camps according to their reaction to recession and industry-wide restructuring in the legal profession. Because the revolution in legal education and law practice has not abated, I believe that the time has come to perform a little triage.

One deeply cynical camp refuses to change business as usual. To comfort themselves, members of this camp have their sinecures and the self-satisfaction drawn from academic achievements as irrelevant as they are ancient. At their worst, this camp's partisans gleefully trash critics who have been insightful and courageous enough to identify serious flaws in law schools and law firms. Once upon a time, I took umbrage at people this petty and this selfish. With age comes wisdom — These days I just remind myself: "[It] [d]oesn't mean that much to me / To mean that much to you." Live and learn; live and let live. All it took to rediscover the the right motivation was to remember this bit of sound advice: we should strive "to make a positive difference in the world, not to win popularity contests among people we don't respect."

I will therefore devote the bulk of my efforts to persuading a second group: that "less angry cohort [that] fervently wants to believe that tough times in the legal profession are merely cyclical." Their wish appears to be this: "Wait a year or two or five, . . . and things will be back to the way they always were."

The Nile

More than just a river in Egypt.

No, they won't. We have ever stronger reason to believe that the legal profession and the academy that feeds it have both undergone permanent, structural change. Adapt or die.

This, at any rate, is my position. This view, I believe, commands a meaningful fraction among lawyers, judges, and law professors. The latest evidence of permanent, structural change comes via Bruce MacEwen of Adam Smith, Esq., with a further hat tip to Debra Cassens Weiss. MacEwen points to the prevalence of economically suicidal, cut-rate fees among law firms as evidence of "excess capacity" and "enormous pricing pressure just to cover fixed costs." Those firms have the thinnest of margins for error: "A law firm cannot really lose money for even one year and remain viable . . . because that’s what they pay their partners with."

I speak with greatest urgency to fellow legal academics and to law firm partners who fit the life stage that David Bowie once described as "[t]oo old to lose it, too young to choose it." It's sad to watch these law firms, some at the pinnacle of the profession, cannibalize themselves and their employees. The clock waits so patiently on their song. They walk past a café, but they don't eat when they've lived too long. Oh no no no: We may be witnessing big law firm suicide.


Anonymous shg said...

I suspect that the firms at the "pinnacle of the profession" aren't the ones engaged in suicide pricing. Rather, it's the dinosaurs who thrived in an environment of abundance who now find their watering holes drying up.

The same complacency that is causing these dinosaurs to fight for survival when they've had five years to adjust to the new environment is the law practice counterpart to academia refusal to accept that the days of wine and roses are over.

Mind you for the law firms, rather than shed their excess weight when they had the chance, they now offer suicide pricing just to survive. Will law schools learn from the refusal to adjust to the changing environment and find themselves offering the academic equivalent to suicide pricing: empty seats, low-price profs, green stamps with that diploma perhaps?

10/19/2012 6:48 PM  
Blogger Jim Chen said...

Scott, I wholeheartedly agree that the academy and the broader profession have come late — perhaps too late — to the realization that the gravy train has long left the station. Scarcity and not abundance will characterize the legal profession. Schools and firms alike need to adjust, if they have any interest in survival.

10/19/2012 9:06 PM  
Anonymous shg said...

The irony is that the dinosaurs propped up the gravy days of law school tuition and scholarship, and it's going to end one way or another. I think we're still a long way from finding a solution, which will require involvement of practitioners (not just the Biglaw and official guys) and academia.

It will be a while before it dawns on all the stakeholders what's really at risk here, and the biggest question may be whether we deal with it intelligently or delay until nature takes its course, to everyone's detriment.

10/19/2012 10:02 PM  

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