Law Firms Are Degenerating—Three Ways to Save Them
In past decades, large corporate law firms were places of loyalty. An entering lawyer faced a several-year apprenticeship, after which, if he had excelled, he could be offered a lifetime partnership with the firm. In this, the Cravath system, lawyers who had not excelled could still be offered a place with a client or a partnership in a smaller firm. The way business has expanded and evolved so rapidly in the past years has dramatically altered this formula. Instead, all partners face the possibility of being let go or of being forced into retirement. Companies have grown too large for strong bonds to be formed, and with partnerships reaching the three hundreds in number, loyalties are weak. Each person strives to protect him or herself against the possibility of a job loss.
The way the firms have evolved, the new core-and-mantle model offers more lawyers associate positions, but in order for this model to succeed, advancement must be based on performance and must remain unaffected by ''nepotism or economic expediency.'' Obviously, in the current economy, this is by no means a guarantee. As a result, more companies (former big-firm clients) are hiring in-house lawyers. Where there once used to be little to no movement between firms, now there is a huge percentage of lawyers who are not only willing, but are sometimes forced, to move between firms and companies throughout their careers. Now firms who used to have long-standing clients are seeing their previous clients hiring their own personal lawyers.
Since it is becoming increasingly clear that large law firms can no longer sustain themselves on the current core-and-mantle model, how then can they save themselves? Galanter and Henderson suggest three separate options, but not every option will work for each firm. Firm leaders must assess their own needs and find the solution that will work best for them.
Option One
The first option they put forward is to ''abolish partner/associate distinctions.'' Galanter and Henderson assert that by making partners and associates equals the firm will commit itself to ''its present leverage.'' True, a few partners may leave the firm out of anger, but if the firm truly has strong bonds, then few will leave. This action would enable the firm to offer its employees (after they have proved themselves through lengthy interviews, background checks, and probationary periods) lifetime employment. Loyalty would develop the firm would be able to develop lawyers with specialties and then clients’ loyalty as well, ensuring a lucrative future for the firm as a whole.
Option Two
The second option they posit is investment in non-lawyer entities within the firm. This would require a ''modification of the ethics rules,'' but such changes have already occurred in Australia and England. This change would offer the firm opportunities to ''finance bold new initiatives'' in areas that would ''generate long-term competitive advantages.''
Galanter and Henderson warn, however, that this action could likely anger powerful partners and cause them to leave the company. They maintain, however, that the new capital generated would balance the partners’ leaving, because it would draw lawyers who wish to be ''part of an outstanding organization.'' The exiting of powerful partners could also be a bonus to the company by giving it more freedom. This option may not work in large firms, however, and will only be effective in an environment where ''cohesive business'' reigns.
Option Three
The third option they offer is ''legislative restoration of the enforceability of partners' covenants not to compete, enabling firms to signal their commitment to collegiality and sharing.'' This would enable firms to commit to ''collegiality and sharing.''
Conclusion
There will likely be more solutions suggested in the future, but these three options are a start. It is obvious, however, that some action must be taken for law firms to ensure their own safety and financial viability.
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