Are Law Firm Mergers Good for Clients and Lawyers?
Insights Michael Moradzadeh · June 15, 2016
Only a few years ago, a firm with 300 lawyers was considered very large. However, the legal world has grown used to seeing firms with over 5,000 lawyers. This is due to the rise of mega-firms due to a growing “grow or die” policy by law firms looking for a response to a rapidly changing business world. But is it working?
The same time as these firms hold to their policy of expansion, the traditional law firm model is withering on the vine. Based on an outdated feudal system that creates inefficiency, unhappy lawyers and underserved clients, traditional law firms are shedding clients and attorneys in a new and unforgiving business environment.
What has occurred is that smaller firms have taken market share away from the traditional firms. By taking a different tack, and adopting business models from other industries, cloud computing and virtualization has allowed for the creation of different models of law firm. These models allow attorneys better lives through increased freedom and productivity, and also allow for better client service.
Traditional law firms are organized with a strict hierarchical design. The hierarchy is determined by seniority, thus encouraging an up-or-out model. If a young associate works hard enough and bills enough hours, he or she eventually rises to the rank of partner. Once made partner, after about 10 years of practicing law, he or she is asked to develop business for the first time. This is an entirely new skill set that the attorney has never had to develop, and may not be equipped for. Associates make partner due to long hours in the office, not necessarily because of a strong ability to attract clients.
After many years, if this partner successfully generates enough business, he or she is asked to take on an administrative role. Once again the attorney is thrust into a position that has nothing to do with previous successes or interests. After decades of working hard as a lawyer and business developer, the partner is expected to shift toward administration while still billing many hours and bringing in new clients. Combine this with fulfilling the bureaucratic needs of the traditional law firm and engaging in office politics, and the attorney wastes a significant amount of time on tasks that have little to do with practicing law.
The hierarchical structure described above is a legacy of feudal guilds and apprenticeships. Traditional law firms are among the last professions clinging to this legacy. The industrial revolution brought more efficient business models and the ability to specialize: those who prefer to administer focus on administration, those who enjoy sales and business development make that their careers, and so forth. Yet the traditional law firm hasn’t adopted this model.
The Internet age, into which we are still transitioning, allows for even more specialization and freedom. Attorneys no longer need to be tethered to their desks. Cloud computing allows attorneys to work as a close team from anywhere. They can work from their clients’ offices, from law libraries, from offices near their homes, from law firm offices better designed for collaboration, or even from home offices. They can do all this while maintaining the benefits of being part of a close-knit international law firm. Cloud computing makes it possible to access all of one’s documents from a smart phone and to collaborate live with a client or colleague thousands of miles away. Video conferencing instantly connects attorneys with their clients and colleagues at any time. All this comes at very low cost, creating substantial savings for clients and higher profits for attorneys. Brick and mortar offices can become more effective collaboration spaces and places to meet with clients, rather than rooms where attorneys sit in front of a computer alone.
Downtime doesn’t have to be wasted in the office, and the bureaucracy of the traditional firm can be left behind. Attorneys can be paid based on work done and clients brought in, rather than hours wasted on bureaucracy. This also translates to more stable firms since overhead no longer threatens to destroy a firm if work temporarily slows down.
The adoption of long-tested modern business models and new technologies is ushering in a new kind of law firm. At the same time, it is important to keep the excellence and teamwork of traditional law firms rather than throwing everything out wholesale. Tools that benefit the client, firm or attorneys in any way should be optimized and enhanced. Those that do not should be reconsidered. The marriage of innovation and excellence, through evolution rather than revolution, is the path forward for high-end law firms.