BigLaw: “If this is beginning to sound like the last days of Rome. …”
“This is undoubtedly the last generation for whom the traditional partnership model is the standard.”
This quote is from *a blockbuster blog post ostensibly about lateral transfers in BigLaw but really about the sustainability and future of the BigLaw model in general. The author, Mark Cohen, of Legalmosaic, in analyzing lateral transfers in BigLaw, says that in this market “profits per partner” is king, and is the usual driver of partners moving laterally.
“Law firms now resemble sports franchises whose rosters change regularly,” he notes correctly. But is this desirable … or sustainable?
Not to him (the post was originally published a few years ago, but the analysis still seems accurate and timely to me).
BIGLAW FIRMS ARE HOLLOW BRANDS
He notes that “most law firm brands are undifferentiated” and that “there’s not much behind a firm brand, especially when partners are so peripatetic.” Continuing, he says that “law firms are as strong as their ability to retain rainmakers and to attract new ones.”
Citing the case of David Boies leaving Cravath, he says that “The firm brand is of little moment since client loyalty — and the term is used guardedly — resides with the go-to lawyer, not the firm.” And that “[m]ost large firms — and there are a few salient exceptions — are hollow brands with interchangeable parts.”
So where does that leave BigLaw?
A DARWINIAN STRUGGLE
Let the author make the case that “If this is beginning to sound like the last days of Rome, it does to me, too”:
BigLaw is in a Darwinian struggle where the rich get richer and everybody else gets bigger, disappears, or – maybe soon – both. The AmLaw 200 is no longer a relevant benchmark; there are about 50 or so firms that are head and shoulders above the others financially. And PPP is king in this market. Is it any wonder, then, that PPP continues to rise even if the means to achieve it is undermining longer-term sustainability?
PPP is no longer the same carrot at the end of equity partners’ long stick dangled before young lawyers. It’s a statistical long shot for any lawyer to win the partnership lottery, and its also unlikely that the next generation will wait their turn to achieve it. The partnership model had a long run, but it is no longer built to last.
He wonders “what should one expect in this free agency era? … Where does it end?”
Well, not in a good place.
The partnership model’s focus on PPP is a short-term play in part because equity means a share of annual profits. And with no financial incentive to take the long view – especially among older partners – the “take it while you can” philosophy undermines the firm’s future. This is a key reason younger partners who “get it” are leaving large firms as never before to set up boutiques, go in-house, or pursue other options.
This is undoubtedly the last generation for whom the traditional partnership model is the standard.
He concludes that BigLaw is “for the most part, a collection of individuals with little institutional loyalty for institutions that, equally, offer them no loyalty.”
Ain’t that the truth!
And he never even mentioned all of the other features and not bugs about BigLaw’s model (or OldLaw, as my partner, Fisherbroyles co-founder, Kevin Broyles, calls it) that make it undesirable – as I discussed in a recent post.
So is BigLaw not long for this world? A dinosaur? What happens, then, to all of the lawyers still there? He says that:
Top lawyers will always command a premium. But is the additional surcharge for their firm necessary? That will be a rhetorical question when scalable alternatives appear.
Sounds a lot like he is referring to our firm, FisherBroyles: top lawyers who left BigLaw for a “scalable alternative,” and command a premium. And no “surcharge” like expensive and unneeded overhead. Need more evidence? Check out an earlier post of mine.
Indeed, I think his post’s conclusion could even be used as a promotional brochure for FisherBroyles.
*This post was originally published on Bloomberg Big Law.