You can try to resist the list, but it’s part of being in the blog family:
(Here’s the link for those who can’t see Michael C.).
Here are my Top 10 trends for 2011, a look at the legal space from the inside out. The first five today relate to the large client, large law firm sector of the industry. We call this the legal military-industrial complex. Tomorrow, five more trends that break out of the white-shoe orbit, perhaps showing that there’s even less normal about the new than some think. Which is a good thing! This is all in fun, it’s the holidays, and your mileage may vary:
1. Value Hits a Wall. Not “the” wall, “a” wall. Value is good, value is important; a renewed focus on value helps drive change. But let’s be honest: some law firms practice denial by carefully pouring old service model wine in shiny new bottles with a “Value!” sticker slapped on the label. There is no line item in a GC’s budget for this “value premium.” Clients expect it from good law firms. It’s not a real differentiator for 80% of legal work. Which leads to pricing.
2. Alternative Fees, Good; Lower Costs, Better. General Motors emerged from its “quick rinse” Chapter 11 filing in 44 days. This is much quicker than the typical first iteration on an RFP-driven, multiple version Alternative Fee Arrangement negotiation. Law firms can’t internally support leaving money on the table; smart GCs know this so they have to scrutinize increasingly exotic proposals to find the “gotcha!” Meanwhile, other GCs decide that a lot of work can go to firms in lower cost cities that provide clear budgets and utilize lower effective rates. When you go from $550 to $375 per hour, now that’s alternative billing you can believe in! Which brings us to the gambit formerly known as convergence.
3. Convergence is Dead (As We Knew It). Ah, the concept was great for the GC: take your work to the legal Shangri-La called One Stop Shopping. The funny thing is after about a year in this jurisdiction you feel like One Shop Stopping. Consolidating work in one firm can be shrewd for common matters (e.g., liability litigation) or out of necessity (think international for many US clients). But true convergence was based upon the assumption that law firms were better at managing legal matters than their clients. Which was a real leap of faith that gave birth to a new legal trinity.
4. Project Management! Lean!! Six Freakin’ Sigma!!! When law firms start using these terms profusely it means (a) change is really here or (b) GCs should start adding a wallet chain to their attire. In-house lawyers know that their companies are built upon groups of projects aligned in a strategic direction. GCs know that law firms are enterprises built upon charging out many people on more matters at increasing rates. Most large law firms can’t really turbocharge service delivery when they buggy-whip their same economic model. Some in the industry even call for certifications in these areas, as if layering on more bureaucracy or CLE will solve things. Meanwhile, good partners with great clients are making a list and checking it twice, wondering if they will have to leave their firms before their clients do. Which (you guessed it) leads to number 5.
5. The Am Law 200 Becomes America’s Top 40. Before the cease and desist order forces a change in this one, here we go. There will be much less in common with similarly-ranked firms than ever before. In a given market, some firms are (relatively) thriving while others just (barely) hold on. Partners who can leave do so, either finding a better large firm for their clients or really going for it with a smaller practice that is built from the start without the legacy costs. This accelerates in 2011 after final 2010 distributions as the slowly improving economy puts a real spring in the relationship partner’s step. But what about the merger elixir, Santa? I’m sorry, Virginia. You know that’s been rare the last few years; and even those who aren’t naughty find it hard to do for strategic reasons. Funding equity partner retirements or paying off lines of credit doesn’t count (and isn’t nice). (Also see items 1-4, above for additional lumps of coal).
Tomorrow, trends 6-10. Time for the Grinch to grow his heart, let the GC share some responsibility and look at a few bright spots of opportunity…