BigLaw, et al. - Beware Black Swans

This Monday's article in THE AMERICAN LAWYER is titled "For Am Law 100 Firms, the Sky's the Limit." The author is Peter D. Shere, a business professor at the University of Calgary. 

No fool, Shere provides disclaimers for his rosy projections for growth of major law firms.  That done, he sticks to his faith in relying on the past for predictions about the future.  From that faith, Shere discloses what he found when, based on data from the past, he analyzed the growth trajectory of BigLaw.

Among Shere's predictions is: "U.S. corporate law firms of the future will we wealthier, larger and more international than were in the past."  Okay.  But what about Black Swans, those unexpected, probably unpredictable developments or events, which have game-changer impacts? 

Uncertainty expert Nassim Taleb who published a book on this subject "The Black Swan" has remained on the best-seller list for years.  That's because in these increasingly volatile times his concept makes plenty of sense. 

Think how the Internet derailed Microsoft and how that company can't seem to get traction in this new field.  In my profession I am still reeling from how the Black Swan PowerPoint changed the art of speechwriting into the craft of creating presentations through the technology of PowerPoint.  And the introduction of Green-Collar jobs could be the Black Swan which eliminates those white-collar/blue-collar class divides in the supposedly classless U.S.

Most shrewd industries, companies and even individuals have given up on long-term planning.  While it's intriguing to speculate about the future, the smart money isn't betting on it.  What Black Swans could be the game-changers in the business of law?  Where do we start?  Here are just some:

• Software could be developed to simulate all the possible strategies and tactics, both traditional and novel, for a certain kind of litigation, say, lead paint public nuisance.  The companies being sued for allegedly contributing to a public nuisance through the lead paint products they have not produced or marketed for many decades could simply use that software.  Then their in-house legal staff could go on from there.  The nuts-and-bolts legal filings and briefs could be outsourced to India.

• Alternate forms of dispute resolution could become mainstream, even for major kinds of litigation.

• The U.S. could so lose its economic-leadership status vs. other nations that the legislative branches nationally and in the states push through industrial-strength tort reform.

• No one wants to train to become attorneys any more.  That means no talent or even warm bodies to staff traditional type law firms.  This sort of thing happened in the nursing profession.

• Companies take the lion's share of legal work in-house.  Some General Counsels predict this will happen.  They have had it with the billable hour.  The revolution, they tell me, won't be announced.

Chances are actually slim that BigLaw as we know it will be anything like what it is in several years, even if there are no Black Swans but only predictable development. Some of those expected developments? 

• Associates' being fed up with the 80-hour week without a real shot at partnership.  Human resources research shows that Gen Y males want more of a life.

• Companies like Cisco just saying no to the billable hour.

• More defendants such as Sherwin-Williams which refuse to settle, discouraging those kinds of class-action lawsuits.

• Collective action among workers in the legal profession to scrap the current model of the traditional law firm.

So, what is BigLaw to do to keep profits healthy and growth possible?  I will be presenting a number of exclusive interviews on that on this blog.   

Comments

[Nicole Auerbach]

I read your post as well as Shere's article and wanted to point out that there ARE a few "Black Swans" swimming around the legal pond who are committed to creating the revolution. At Valorem (meaning "value" in Latin) Law Group in Chicago, a handful of partners from various BigLaw firms decided that the predictions Shere made were the very reason why clients needed to have some options.

Our firm (www.valoremlaw.com)is built on the theory that results, not hours, are what should be measured. Exclusively a litigation shop, we design alternative billing arrangements with some element of risk, usually in the form of a "holdback" amount to be paid if we achieve the results the clients have expressed. Our model rewards and encourages collaboration, creativity and efficiency. Best for the client, we have a "value adjustment line" on each invoice so the clients can mark up or down the amount we get paid depending on the value they perceive they received from us.

Our ripples are slowly turning into waves, and these Black Swans fully expect that those who don't rethink the typical approach to legal services to be the ugly ducklings of the future!