Perseus_I wrote:It will probably take years for the big law model to unravel. A lot crashed in 2008, and some took a few years to crash. Most survived the acute stresses. In spite of the fact that we've been in "recovery" for three years, lot of firms are financially stressed right now, but we just haven't reached a tipping point yet. Maybe the next recession, or two recessions down, will provide that tipping point after the next period of growth lays the foundation for even more outsourcing and gives some of the more entrepreneurial losers the opportunity to find a cheaper way of doing the same thing (like the Axiom model). Big law just ain't what it used to be, and it's much easier to see it slowly getting worse, as opposed to better, since it's a business model that isn't completely rational. Business models based on tradition, rather than on the efficiency advice of management consultants, are usually forced to change or die. So far, law has proven to be pretty inflexible. I like to think of the way the legal profession does things today as comparable to the Samurai in Japan during the late 1800's. Law Review, I have found, is a classic example of the inefficient, anachronistic, senselessness based on tradition that stubbornly prevails in the legal profession. The emphasis on this--and other--meaningless proxies for "prestige"--grades, clerkships, etc.--seem more rooted in the traditions of the French nobility than they do in sound business practices.
In Singapore, most court transactions take place via email and software, so there is much less need for lawyers, and law pays about as well as journalism. That's the future of law everywhere.
I agree with some of this and disagree with some.
I don't think Biglaw will go away. There will always be elite defense-side firms where partners make boatloads of money, as long as, like Desert Fox said, the American justice system maintains its ability to hand out enormous settlements. There will always be clients willing to compensate highly successful firms.
I do think, however, that the legal industry will be facing a large "Moneyball-ization" in that clients will be reassessing the way they value the legal services they pay for. I can see Biglaw shifting more to the accounting model, where it will still be hard to get Biglaw positions, but the entry level compensation will eventually decline and the starting salary distribution will become more unimodal, and value will be placed on demonstrated competence through production of a superior work product--rather that the mostly empty "prestige" the law school process places on certain graduates.
As a result, I see Biglaw also surviving more off lateral hiring of attorneys who have demonstrated in practice that 1) they are competent (measured in may ways, such as writing, reasoning, networking, conscientious project management, interpersonal skills, etc.), 2) hardworking, and 3) interested in law for the long-haul. From the client's perspective, it doesn't make sense to pay elite rates for associates with zero experience who only want to stick around for 2 years to slap the firm's name on their resume to get a job elsewhere. It additionally doesn't make much sense to pay first year associates that much money at all, based solely on two numbers: their law school's US News rank, and their law school GPA. While those two numbers may crudely sort graduates into groups of potential higher and lower performers, the entire process as a whole is fairly unsophisticated and sloppy, from law school admissions to they way legal "competence" is evaluated by issue-spotter exams--especially in regards to the latter, for which there is literally zero quality control regarding their assessment value.
The fact that this process is so sloppy is evidenced by the high dropout rates of associates at Biglaw firms. Part of that is the firm's business model, but part of that is that the current mechanism forces itself to recruit people who are simply not good fits for that type of work.
One common justification of compensating first-year associates so highly is that the client is "paying for their training so they can serve the client in the future." However, when nearly two-thirds of these associates drop out before providing the client much real value, it's pointless to pay to train them.
The thing with Moneyball is that it didn't make baseball players' salaries go down (in fact, player salaries went up during the period where teams started implementing its valuation mechanisms). It just made more realistic and scientific the way those salaries were apportioned. It revealed certain market inefficiencies that smart teams could take advantage of while the more archaic, tradition-based teams kept themselves in the dark.
The reason this hasn't happened sooner is that clients have not really been in the driver's seat until now. Biglaw acted as a middle-man and profited greatly off of economic inefficiencies it created. Clients had little leverage to demand value, as competent legal services were far more scarce in the past than they are now. Now that they have that leverage, they will be able to demand economically efficient legal services--ones supported by prudent economics and realistic views about the value of human capital and labor.
Just like they do not like paying an "empty prestige" premium to have JD's do rudimentary document review that your average associate's degree graduate could do for $12/hour, they won't like paying an "empty prestige" premium for associates who, although they have attended a top school and gotten good grades, have not demonstrated in practice that they are great attorneys.
But the money will still largely be there for lawyers who have demonstrated the kind of competence they demand in managing high-stakes cases. It's just that assessment of that competence will become more realistic instead of based solely on prestige.