Small is the New Big in Law Firms — but some folks still don’t get it
As I work on my teaching materials for an upcoming Continuing Legal Education seminar in January, I decided to do a post about law firm management and the practice of law in general.
As most of you know, I am a regular reader of Seth Godin’s books and blogs. I find his “thought-lets” educational, and I can safely say that much of my thinking about business and about marketing has been changed by Godin’s work. I didn’t come up with the phrase “Small is the New Big” — Godin did.
What exactly does “Small is the new big” mean? Simply put it means that the power of technology, when combined with the new rules of marketing (and other factors) have changed the rules of business and will continue to change the rules. Because small companies have more flexibility and can react and change quickly, smaller business enjoy — and will continue to enjoy — certain advantages over their larger counterparts if they take advantage of their small status.
I think law firms are an excellent illustration of the “Small is the New Big” concept.
I can almost hear the grumbling now, so I want to be clear that there will always be room for mega law firms in the legal services market. As long as there is a global business environment, there will be companies doing business in Shanghai, Calcutta, New York, Peoria Illinois, and Johannesburg (among many others of course). And as long as there are such companies, there will be a market for law firms that have the expertise to handle the kinds of legal matters global business generate, and with the size to serve their clients in all of these locations without needing to go outside that one firm.
And let there be no doubt about it — there are some types of cases that require lots and lots of boots on the ground (i.e., large numbers of lawyers.) Environmental litigation, anti-trust litigation and securities litigation come to mind off the top of my head — in other words, complex cases with depositions in multiple countries, tens of millions of pages of documents, thousands of e-mail custodians, you get the point.
So yes, there is now and will always be a need for mega-firms. But at the same time — and at least partly as a result of the growth and complexity of mega-firms — there are incredible opportunities for small, nimble, specialized law firms in today’s economy. As mega-firms have multiplied and grown, they have taken on many of the characteristics and burdens of all other large businesses. Increased overhead, ponderous firm-management committees, slowed decision making, the need to debate every firm decision to death and wait while it is ratified all over the globe — these things also go along with becoming a mega-firm and they do not always make for a pleasant work life.
So if you ask me to hazard a guess about the future of legal services, I am going to throw my lot in with those who say that in the future there will be only two kinds of law firms: small firms and mega-firms. And of course it is always tough to define a small law firm and a mega-firm, but for our purposes I include in the definition of small law firm any firm with 100 lawyers or less and operating only one or at most two offices. “Mid-sized firms” are those with between 101 and 400 lawyers operating either regionally or mostly focused on a particular region of the USA. And I define “mega-firms” as firms with more than 400 lawyers and having a true national scope of practice and with an international presence — in other words, a satellite office in London with one or two lawyers and a dog does not suffice.
So far so good. But I think one critical factor — and often left out in this law firm size calculus, as well as the in other measures of law firm success — is the clientele the firm serves. Mega-firms represent almost exclusively mega-sized businesses. Mid-size firms typically represent regional corporate clients and their business model almost always includes individuals in matters such as domestic relations, wills trusts and estates, etc.
It is the middle group of law firms — i.e., law firms with between 101 and 400 lawyers with a regional clientele that I think is headed the way of the dodo.
(FYI — this post was prompted by a less-than-stellar article I read in a legal publication on-line a few weeks ago, and I had prepared a longer post really sticking it to the guy that wrote it…not because I disagree with what he said, but because his article was so, well, uninteresting…and because he included in his tag line “[insert name] is a consultant to national law firms on business matters”…and because I found it hard to believe that such a pointless article would generate any business. But then I thought better of making fun of this unfortunate gentleman here…Guess I must be getting soft in my old age.)