BigLaw Growth is Dead. Here’s What’s Next
Feb. 28 (Bloomberg Law) — The era of ever-expanding revenues and profits for the nation’s largest law firms — a period that lasted from 1980 to 2008 — is over, and it’s never going to happen again, law firm consultant Bruce MacEwen tells Bloomberg Law’s Lee Pacchia.
Big law firms are now “in a battle for marketshare,” he says. Corporate clients have recognized they have pricing power over firms and “we’re never going back.” For firms to succeed today, “we’re going to require people all up and down the food chain in biglaw to . . . work more hours,” MacEwen says.
That new economic reality is putting the squeeze on “this relatively undifferentiated mass of mid-market full-service firms,” which even their own managing partners are hard pressed to tell the difference between. “That’s a sector [of the legal marketplace] I would short,” he says.
In an October interview with Bloomberg Law (http://about.bloomberglaw.com/videos/suicide-prices-the-coming-crisis-at-big-law-firms/), MacEwen spoke about firms using “suicide pricing” — handling matters for less than their cost to service the client, on the hope they would later get higher-margin work from the client. Since then, the situation has gotten even more dire, with some firms providing work for free, he says.
The only way out of the suicide pricing trap is “discipline in the law firm to say we don’t do that, and let the work walk,” he says.
MacEwen blogs at Adam Smith Esq. (http://www.adamsmithesq.com) and has recently published a book called Growth is Dead.