H-P put out there that things are "tough going." It was not so much its huge loss that has been so alarming. As THE WALL STREET JOURNAL reports, that problem was mostly the result of the writeoff for EDS. The scary part is that the company seems to be playing in the wrong sandbox - PCs - and seems clueless on how to get itself into more promising space. The PC world is a declining industry. Whether H-P can navigate this transition or not is the question. If I were advising investors I would cry out: Short.
Yesterday, as Abovethelaw.com brought to our attention, a source revealed that Winston-Strawn had about 30 stealth layoffs last week and only about 70% of summers were offered positions. That should put out the red flags for those who intend to seek or hold onto jobs in BigLaw. The Layoffs could be coming again just as they kept coming in 2008. The bottom line is that BigLaw should have already developed a business model which is aligned with a buyer's market and it hasn't. Until it does, like H-P, it will struggle. Some firms will tank. It's possible H-P will tank. Yes, it's that bad.
What is the business model? There is no monolith. Each law firm will have to develop a cost-efficient way to deliver legal services. Parts of the solution will involve outsourcing, using many more non-partner lawyers, much more technology, alternate billing, management by business experts not lawyers, and financing through structures such as investors buying shares in lawsuits.