It has finally happened: Law firms are going through the same
wrenching changes that their corporate clients have endured. Big
firms are getting bigger, small firms are finding niches,
medium-sized firms are feeling squeezed.
And the legal world is reacting to the recent demise of Shea
Gould, a blue-chip law firm if ever there was one, with the same
shocked horror that corporate America felt when it saw the
seemingly invincible IBM run into financial and marketing
"The crashing of Shea Gould has sensitized all law firms to
the importance of managing, planning, monitoring partners, acting
like a business," said Joel Rose, a Cherry Hill, N.J., management
consultant and chairman of the Large Law Firm Committee of the
American Bar Association's Law Practice Management Section.
The shakeout has already begun. Shea Gould, which at its
peak seemed the epitome of legal prestige and opulence, was not
the only firm to dissolve amid partner acrimony.
Other firms, including the New York-based Lord Day Lord,
Barrett Smith and Bower Gardner, also expanded too quickly or
changed too slowly, and imploded. Other firms then picked their
Morgan, Lewis Bockius, for one, picked up nearly 60 Lord,
Day lawyers and now has more than 750 lawyers.
Legal experts predict more of the same as the larger firms
rethink collegial structures that worked when 25 lawyers were
scrunched together but that cannot accommodate hundreds of
lawyers dispersed around the world.
"Big general-practice firms will merge with big Wall Street
firms, and we'll all go the way of the accounting firms," said
Eugene Anderson, one of the founders of Anderson Kill Olick
Oshinsky, P.C., a 240-lawyer firm based in New York.
"We'll have a Big 6 or Big 8, with offices in every major
city, handling huge cases for huge clients. And we'll have
100,000 tiny firms, offering personal service to tiny clients and
handling the bulk of the tort cases."
This will mean lots of obstacles for lawyers with ambitions to
become partners. It will be harder for individuals to stand out
in the huge merged firms. And small firms rarely have the same
But more is changing than just firm size:
Morgan, Lewis, once firmly ensconced in Philadelphia, has
distributed partners and associates fairly equally among its
Philadelphia, New York and Washington offices. "This structure
gives us a better chance of hanging on to the star performers in
the regional offices," said the firm's Washington-based chairman,
Anderson, Kill, where each lawyer is a partner, is rethinking its
one-man, one-vote structure. "We will continue to give all our
lawyers access to financial information, but it doesn't work for
everyone to vote on every issue now that we're big," Anderson
Bickel Brewer, the Dallas-based law firm, has abandoned the
billable hour. It now charges clients a flat fee based on what
their cases are expected to yield, and a percentage of any money
above that amount. "The billable hour puts incentives in the
wrong place," said William Brewer III, a co-founder.
The changes are being driven as much by outside forces as by
introspection. The costs of doing business _ like office rents,
salaries, and computer hardware and software _ have skyrocketed.
And the fabric of relationships between lawyers and clients, and
among lawyers themselves, is unraveling.
Clients no longer believe in one-stop shopping, but are
parceling out their business to numerous firms. Well-known firms
are being forced to participate in what lawyers call beauty
contests _ sessions in which several firms vie for a client's
business. But even getting invited to compete is hard these
Omer S.J. Williams, managing partner of the New York firm
Thacher Proffitt Wood, said, "We now have a full-time marketing
person whose job is to get us on panels, to arrange seminars, to
basically get our name known. …