Corporate & Securities Law

The shrinking of Big Law

The ABA Journal reports that eight Seyfarth Shaw lawyers, “a substantial portion of the public sector practice group at Seyfarth until last month,” have formed a small boutique in the Chicago suburbs focusing on local governments. The result is a lower-overhead firm that can cut its rates by 10-15% vs. Seyfarth’s charges.

The article explains that the clients “don’t need the big-firm infrastructure that Seyfarth provides.” One name partner spoke of his “increasing realization that this recession was real and the rate pressure would continue to be there if I stayed at Seyfarth.” The clients get a more accessible office with free parking.

This little anecdote illustrates some points made in my recently published Death of Big Law:

• Client cost pressures are helping to drive the changes at small firms. You know it’s getting serious when parking fees figure prominently in the rationale.
• The death of big law isn’t about the death of the law business, but about the death of the big firm business model. The article notes that the public sector has “big-ticket concerns such as pension-funding issues.” This suggests the departing Seyfarth lawyers are going after an increasing pie driven by changes in the economy. They just don’t see a reason for sharing this business with their partners.

Although there are special facts here, the general situation isn’t unique. A central point of my article is that big law’s supposed synergies and economies of scale are illusory for many, if not most, practice areas. As the profits from the big firm structure dissipate, cost and fee factors will, among other things, induce these practice areas to split off into boutiques.

When free parking becomes a trigger the end is near.

Full post as published by Truth on the Market on September 12, 2010 (boomark / email).