You have to wonder what it’s like to be the managing partner of a large law firm right about now. This wasn’t how it was supposed to be when he or she signed on for such a prestigious gig.
The old model had four E-Z levers for rising profitability:
1. Get more work.
2. Hire more lawyers.
3. Bill more hours.
4. Raise rates.
Now, during a downturn that’s increasingly looking like a @#$%%$ (insert D-word that must not be uttered), all of these levers seem stuck. Like when the wizard was exposed in the Land of Oz, managing partners have no simple tools at all save for layoffs.
And all layoffs are doing is buying a tiny bit of time, masking the inevitable restructuring and re-ordering of much of the AmLaw 200. Some observers speculate that last Friday’s bloodbath may not be the end of law firm layoffs.
Sadly, I don’t think it’s even really begun. (Update 20 Feb 09: Allen & Overy layoffs are Exhibit A of this. Managing Partner Wim Dejonghe was very forthright in explaining things: â€œThere is simply not enough work to keep all our people sufficiently busy and we do not see that changing in the near to medium term.â€).
Law firm staffing is the most lagging of indicators. Many firms are still living off the inheritance: toiling away on matters that were landed years ago from clients secured decades ago.
New work? Not so much.
And for this the typical managing partner had to give up most (if not all) clients?
Our hidden camera shows a BigLaw managing partner at work recently; go away and come back tomorrow!