Here’s The American Lawyer’s recent review of my new novel, The Partnership. (http://amlawdaily.typepad.com/amlawdaily/2010/10/harper.html)
More reviews are available on the book’s Amazon page: (http://www.amazon.com/Partnership-Novel-Steven-J-Harper/dp/0984369104)
I read “The Rise and Fall of Finley Kumble” fifteen years ago or so, when I’d only been in this market for a few years. At the time, all my experience was in the commercial world. I read with naive wonder the tale of massive egos crashing against the rocks of business- and financial reality. I couldn’t understand why there were no adults overseeing the very expensive playground.
Now, after 20 years in the business of coaching lawyers, I’ve seen so many permutations of this theme on varying scales that I’ve concluded that lawyers are no more inherently hubristic or reckless than any other category of human. Rather, these dramatic failures are more the product of a fundamentally flawed business model that doesn’t scale well at all.
At most law firms, nobody is really in charge. Too many nominal leaders’ energies seem spent mollifying a large enough contingent of partners to get anything done. As anyone who’s spent any time around committees knows, committees’ main output is a watered-down, Pablum version of whatever idea first began the conversation.
Law firms’ reluctance to adopt modern business methods seems a vestige of a collegial culture that cannot survive large-scale growth; 1500 lawyers simply can’t be close, trusting buddies. Most of the time, they can’t even know each other at all, particularly as the firms’ offices become more geographically dispersed.
Two other aspects of the old guild-style business model, in which practitioners hand-craft one product at a time, guarantee a continuing struggle as firms get larger:
1) Absence of division of labor. Every lawyer is expected to market the product, sell it, manufacture it, manage the manufacturing teams, manage the firm, recruit and train new workers and manage account relationships. As most lawyers’ lack of any semblance of a life attests, there simply isn’t enough time to do that many jobs. And, no person can reasonably be expected to be adept at so many different tasks requiring such diverse skills and aptitudes.
2) Hourly billing. I call this “the expert’s penalty,” in recognition of the fact that a seasoned lawyer can do in an hour what a greener lawyer might need twenty hours to do (if they can do it at all). As long as law firm economics are constrained by the dollars-per-hour model, they can never achieve any of the economies of scale that motivate many mergers. Sure they may get some of that on the operating expense side, but that’s not the big ledger item; lawyer time is. The upshot of time-based billing is that lawyers have developed the mindset that marketing and sales are extras, performed when they have spare time. As we showed in #1, that time doesn’t exist.
Finally, BigLaw clients are waking up after an astonishingly long period of tolerating continual price increases. Many are now declaring, “I know you’re an artist, who makes the finest armoires extant, but you know, an armoire, no matter how elegant or perfect, just isn’t worth $1000/hr to us to make anymore.”