This post is a follow-up to two earlier posts about whether BigLaw lawyers ought to consider moving from BigLaw to a boutique. The first post, entitled Should you leave BigLaw for a boutique? was followed by my second on the subject entitled: Should you leave BigLaw for a boutique: Part 2: The state of BigLaw.
This third installment in the series is a result of a recent series of stories and commentary about the state of what are referred to as “service partners” in BigLaw. Service partners are either former equity partners that have been de-equitized, or partners who simply hold the title of partner but have never possessed an equity position in a firm.
A recent Washington Post article describes the marketplace BigLaw service partners now face. That article, entitled The rising economic pressures on non-equity law firm partners by Kenneth Anderson, cites another recent and widely circulated article on the subject which profiled a BigLaw partner in New York who was now facing personal bankruptcy after a job loss precipitated by a lack of work in his firm. That original article, by James Stewart, appeared in the New York Times recently.
The service partner conundrum: Should you leave BigLaw?
In his Washington Post article, Anderson quotes “William Henderson, a professor at the Indiana University School of Law and a director of the Center on the Global Legal Profession”: “‘[A]nyone who doesn’t have clients is in a precarious position. For the last 40 years, all firms had to do was answer the phone from clients and lease more office space. That run is over. The forest has been depleted, as we say, and firms are competing for market share. Law firms are in a period of consolidation and, initially, it’s going to take place at the service partner level. There’s too much capacity.’”
As Anderson concludes: “[BigLaw Service partners] were long understood to be a haven in a heartless world for certain smart, technically skilled, professionals, once they achieved a certain level of seniority — but a haven no longer.” [emphasis added].
What now for BigLaw service partners?
I would encourage any BigLaw service partner to follow the various legal industry commentators I’ve cited herein. I believe the take-away from the current situation in BigLaw is that service partner positions are probably going to remain tenuous going forward (unless perhaps if you’re in a high-growth practice area like energy for example). But even then, service partners in high-growth practices could find themselves threatened by the multi-faceted wave of internal efficiencies many BigLaw law firms are making. Who’s to say work that’s safely performed by one service partner now won’t be dis-aggregated in the future? Parts sent overseas, parts done by associates or paralegals. Parts done by new technologies. For more on this dis-aggregation read Professor Richard Susskind’s book The End of Lawyers? as reviewed by Jordan Furlong. To keep up-to-date on BigLaw economics I’d also recommend following Bloomberg Law with Lee Pacchiaand Bruce MacEwen who writes at Adam Smith Esq blog. And Ron Friedmann of Prism Legal is an excellent source of information on what is happening in law firm technology and innovation.
For most service partners, however, the market for your services will likely continue to shrink. The decision point many if not most of you will face prospectively is: Should I leave BigLaw for a boutique? (NewLaw law firms are also a potential source of new employment. See Dr George Beaton’s blogpost entitled: The rise and rise of the NewLaw business model for more information on NewLaw). And the central question you must face about leaving for a boutique is: Do you want to move from primarily practicing law to primarily running a small business? And the most important immediate need in running that business will be to attract and retain clients.
Be prepared for any eventuality
As I’ve written before, a boutique can be a very attractive place for BigLaw lawyers. Income can increase from previous BigLaw employment if you go about ensuring your business development and services provision components of your boutique are in place and functioning at high levels from as close to launch as possible. I believe the hardest part of boutique life for BigLaw lawyers, is making the decision to commit to a boutique, then making the follow on day-to-day decisions necessary to see that commitment through. Not an easy series of decisions, but given market conditions in BigLaw – this decision may suddenly not be a choice but a necessity. So it’s best to be prepared for it in case it happens.
Interested in improving your law firm’s business development efforts? Contact John Grimley, Editor & Publisher of Asia Law Portal, for a discussion: