It’s time for law firms to reconsider their basic operating model. The long-standing assumption of large and mid-size law firms has been that recruiting the top academic graduates from prestigious law schools is the way to build the strongest firms. Similarly, use of an up-or-out partnership model, which has served firms well for a century, continues to be the almost exclusive career framework for these firms. The last recession has shown that these choices are no longer valid. It’s time for law firm leaders to look at their organizations as businesses and seriously undertake the design of new operating models. It will take tremendous courage — which firm’s leaders will do this first?
Here are some reasons why the current model is not sustainable:
• The singular career path of technical specialist to partner does not fit the needs of these firms. There are in fact three different partner roles that need to be embraced for firms to prosper in the future: Rainmaker, Client Service Partner, and Technical Expert. Once these roles are defined and carefully understood, firms will need to change their approaches to recruiting and development with an eye on grooming the right lawyers for these respective roles.
• Companies have built strong internal legal departments that have greatly reduced the work available to law firms in many areas. These companies now pay their lawyers well to the point where any shortfall from pay at a law firm is more than offset by better work/life balance and job security. Now, when a company’s General Counsel assigns its work, the internal team is a viable competitor to the outside law firm.
• Companies have become increasingly adept at purchasing outside services, including legal services, in an affordable way. Gone are the days where law firms could dictate their fees. They have joined the pack of outside vendors whose services are viewed as overhead where cost management is critical.
• Law firms work from expensive offices rather than on the client site. This has four disadvantages:
1. It undermines the opportunity to build ongoing relationships with clients by frequently being in their presence. This “wall” between lawyer and client creates a cultural barrier that is damaging to law firms.
2. It conflicts with the collaborative mindset that is quickly becoming the norm in today’s work world where outside consultants and corporate staff work as a single team co-creating strong outcomes.
3. It results in a cost structure, real and perceived by clients, that undermines firm and profitability.
4. It requires clients to travel to see their lawyers, wasting client time when they are increasingly pressed by work demands and making it difficult to invite additional client members to meetings on short notice.
There are other factors to consider as well, but this is a pretty good list. To be sure, there are a few firms who are so extraordinary that they can survive and prosper under the existing model. But these are the rare exceptions and striving to become one of them is not a sensible bet.