Big law made the rounds this week in news, blogs and social media. Noam Scheiber’s article in The New Republic titled The Last Days of Big Law was syndicated in several places including the Huffington Post and Real Clear Politics.
Unfortunately for TNR, the subsequent chatter, from Muck Rack to JDUnderground also confused Google. You can see from the screenshot nearby, that Real Clear Politics’ syndicated post actually ranks higher in search than the original story.
The crux of story and Noam’s thesis?
“Stable” is not the way anyone would describe a legal career today. In the past decade, twelve major firms with more than 1,000 partners between them have collapsed entirely. The surviving lawyers live in fear of suffering a similar fate, driving them to ever-more humiliating lengths to edge out rivals for business.
Reactions to the article ranged from – complete agreement to visceral disagreement. As my colleague Russ Haskin remarked in an email conversation, “The answer generally lies in the middle.”
Here are other eight reactions to the story we found worth reading. These links are listed merely in the order in which we found them:
Big Law has been declared dying for decades. Pieces touting the death of Big Law have been written for decades. Unfortunately, “Big Law Still Really, Really Dying,” while arguable (except where it’s still really, really profitable), doesn’t sell copy.
The 100 biggest law firms, ranked by their gross revenue, continued to post revenue and profit gains even as the U.S. economy sputtered. Revenue at these firms grew 3.4 percent, or $2.43 billion, to $73.4 billion—a new record—last year. Average profits per equity partner rose 4.2 percent, to $1.47 million on average, as firms kept their partner head counts flat in 2012. Profit margins, meanwhile, stayed at 38 percent.
In 2007, Am Law 100 total revenue was $62.9 billion. In 2012, it had grown to $73.4 billion. Yes, some of that was due to cross-border mergers. But most of it was not. By 2020, Global 500 revenue is predicted to double – from $15 trillion to $30 trillion. Call me crazy, but the business, legal, political, demographic, and other changes that accompany that growth will doubtless require some considerable, proportionate growth in legal services.
“Doomed is the New Black” when reporting about how large law firms are doing. It definitely makes for interesting reading, but are all of these doom and gloom articles really saying anything new, or are the rehashing old arguments that have been around at least since the 1980′s on how large firms will eventually eat themselves and collapse under their own weight?
And in the end, despite all the homilies about how you can do anything with a law degree, firms big and small are still the major driver of J.D. hiring. Without Big Law’s explosive growth, it’s impossible to imagine that law schools would have ever expanded or raised tuition the way they did during the good times. With Big Law on the rocks, we can only be thankful that schools themselves are now shrinking.
Whether law firm partners, at Mayer Brown or at any of the country’s highest grossing law firms, find themselves in the Last Days of Big Law isn’t clear just yet. Many observers agree that the traditional law firm model simply isn’t sustainable, and nobody disagrees that the profession as a whole is undergoing dramatic change. But it’s been more severe for some firms than for others. No doubt, money and its attendant misery will be the source of more changes to come.
7. Erin Fuchs in the Business Insider: America’s Lawyers Are Screwing Over Their Own Colleagues To Get Ahead [worth noting she also has a quote from Steven J. Harper]
Lawyers hoarding their precious clients is nothing new, but it’s gotten worse since the recession. Baby Boomers are putting off retirement and holding onto their clients, and there’s just less work for lawyers these days.
8. Whet Moser in Chicago Magazine: How Giant Salaries and Brutal Hours Ruined Big Law
After more than a decade in the business, Helman joined Mayer Brown in 1967 as an income partner at $33,000 a year, or $215,000 in 2010 dollars, not a great deal more than associates would make after he retired from the firm in 1998 and salaries went to the moon. (And from 1971 to 2011, law school tuition “increased by a factor of four in real [inflation-adjusted] terms,” as the size of the industry, as a percentage of the economy, actually shrank.) Partners, as Scheiber documents at length, were then making bonuses almost twice the size of Helman’s starting salary as an income partner. Firms followed the economy up the mountain, and then off the cliff.
Bonus: Bloomberg’s Lee Pacchia caught up with Noam for the Business of Law segment to discuss reaction to the controversy the initial article.
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