Most of what we hear about the lawyer market tracks current employment figures at law firms. Everybody knows they’re down. Today’s WSJ discusses laid-off lawyers who have found it so bad they’re leaving law altogether and going into things like comedy. But then it’s bad all over, so this may be about the economy.
Well, the really bad news is about the fundamentals – where are those future jobs coming from? On that, noted legal economist Bruce MacEwen (aka, Adam Smith, Esq.) has a lot to say. He notes:
If document review can be conducted by Ivy League law school grads trained at white-shoe and Magic Circle firms for $50/hour instead of $350/hour, what’s not for a client to like?
CPA Global, which bills itself as the world’s leader in legal process outsourcing, * * * raised a mere $700-million in a private placement in the UK this past spring. * * * This is a war chest on a scale the AmLaw 10 and the Magic Circle, put together, would be very hard-pressed to match. * * * The ambitions, and business strategy, of CPA Global and their ilk are no secret: Bypassing law firms altogether and marketing their offerings directly to clients. * * * They would like to take the law firm out of the equation altogether.
MacEwen discusses a point that I frequently make to lawyers skeptical of my Death of Big Law theory: how this sort of innovation has fundamentally changed other supposedly entrenched industries, such as air travel.
Now what I always hear back is about the huge advantages of hiring an integrated law firm. But MacEwen has an answer:
[I]f all those activities are being performed at New York (or San Francisco, or Chicago) rates, the benefits of that integration better be strong. Because the CPA Globals of the world will offer to review the documents and deliver witness and exhibit binders at Bangalore, or at least at Fargo, rates.
Another response I often hear is that outsourcing can only go so far. What about the stuff only a skilled lawyer can do? But he has an answer to that too:
Once clients begin to get accustomed to the notion of being able to unbundle, or unchunk, legal engagements-be they disputed matters or transactional ones-there’s potentially little end to it. First, clients hire, or “request” (read: demand) that you hire an outsourcing firm for, say, document review. Next, the outsourcing firm makes it known that it can prepare witness binders, and next, that it can aid in the preparation of witnesses. * * *
I would argue the implication is clear (“stark,” if you prefer, but as for me, I’d choose “energizing,”or maybe even “chance of a lifetime”): our associates–indeed, your entire team–needs to move up the value chain even faster than your new competitors.
But all is not lost, according to MacEwen. He sees a possible new world in which skilled professionals are freed from “scutwork” to partner with “Knowledge Management,” and in which firms finally have the incentive to reinvent themselves.
Envisioning this world is my current project.
In the meantime, there’s always open mike night.
I still think law is a very satisfying field, and there will always be a demand for good lawyers. The field is going through a bit of a shakeout right now. As MacEwen points out, there is a bright side to this of fantastic opportunities for the nimble and alert. This could include some who may not have done so well in the traditional legal world. But there may be suffering by others along the way.
As someone who narrowly escaped law school, I found your thoughts very interesting. It’s true that lawyers have always been the cliche answer to outsourcing, but I suppose the market can only be held back for so long
Well, as someone who still must decide whether or not to go to law school, I can’t help but take this news as disheartening. I’ve been trying to look for any bright spots in law, but when I ask practicing lawyers their own opinion, I usually get a shrug or a chuckle.