Is the business model broken?
At the Legal Marketing Association‘s annual conference, I attended a moderated roundtable discussion on Disruptive Legal Trends. While it began as a discussion of the Axioms of the world, the conversation quickly shifted to the business model itself. The summary of that session, along with the Big Data session, can be found in LMA Think Tank Live Summary prepared by Shift Central.
I was in the room when Toby Brown spoke his now immortal words, summarized in his post, The Business Model is Not Broken, and he is right, all eyes in the room “turned and gave
me [him] the ‘who farted’ look.”
I must admit, I am one who believes that the model, in general, is broken. And while there are exceptions out there, such as Toby’s firm, Akin Gump, who are leaders in the change management, there are too many firms out there refusing to evolve.
The leverage pyramid of partner to associate is gone. The billable hour is losing popularity and faith. Alternative fees are not discounts at $1 million billed. And merger to grow (or survive) is not a strategy.
Clients are more and more in tune with cost and price to value propositions, and lawyers, the service provider, need to evolve and meet their clients on their plane (and I am not talking the kind with first class seating to be billed out as a necessary expense).
I have heard attorneys say, when presented with new processes and procedures that will save time, “Don’t they know how I make my money?”
And that’s what’s broken. The profession of law has evolved into the business of law and not all lawyers and law firms have drunk the Kool-aid and evolved.
Firms and attorneys that truly understand the nuance between profession and business will survive. Those that don’t will fade away. Sadly, most of those firms will fade away with little fanfare.
Toby and I are not really at odds. We’re just looking at the same thing, yet our perceptions are skewed by our vantage points. He is at Big Law that is doing it right, while I am at a regional, mid-sized firm that is evolving. The conversations we have with our peers are different, because our peers are different.
Our firms are lucky. They are the exceptions. Their legal professionals are in the middle of the conversations surrounding this evolution, and helping to reshape the cultural and business model within our firms. But what about the rest?
The Patton Boggs and Orricks (are they next???) of the AmLaw 100 world get lots of press as they search for a merger partner, yet annually there are dozens of other firms of local prominence across the country that are acquired by big law with little more than a press release, or fail on their own and quietly close their doors.
As I said in the Think Tank, on the smaller platforms it is hard to hide a failing business model. It is readily apparent what is working and where things are not, and merger as a strategy, in and of itself, will not help a firm to survive. It just puts off the inevitable.
It’s a very interesting conversation and one that will continue.
Photo credit: Amanda Hatfield on Flickr