Law firm consultant Bruce MacEwen, who writes at Adam Smith, Esq., was recently quoted as saying that major law firms are beginning to quote “suicide prices” just to get business in their doors, and that this problem is going to perpetuate itself in the near future. In his interview with Bloomberg Law’s Lee Pacchia, MacEwen observes that the combination of legal outsourcing and too many attorneys at bigger firms will likely lead to more layoffs because the business is just not keeping up with the operating expenses of large law firms.
“Some firms get it completely,” says MacEwen, “other firms are just hoping they can hold their breath and it will be 2006 again.” A major problem for the biggest law firms is maintaining ever-rising partner salaries, which have risen exponentially in the past 25 years. MacEwen believes that big firms have “avoided the really difficult, awkward conversations” about reducing partner numbers, but that those conversations are necessary because “that’s where the money is.”
Given the never-ending stream of predictions about the death of big law, it’s hard to know whether they will be able to sufficiently alter their models to reduce operating expenses and stay viable. Is it possible that the biggest firms will be able to maintain their size and dominance, or is there going to be a fundamental restructuring of the firm model going forward?