Companies Dumping Top Law Firms

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jacksonmead
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Companies Dumping Top Law Firms

Postby jacksonmead » Fri Oct 18, 2013 11:09 am

http://abovethelaw.com/2013/10/general- ... law-firms/

actual trend or hype? this focuses on the litigation side. is this less of an issue with corporate work?

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OneMoreLawHopeful
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Re: Companies Dumping Top Law Firms

Postby OneMoreLawHopeful » Fri Oct 18, 2013 12:43 pm

First, given the question asked in the survey, it would seem to be MORE of an issue of corporate work (the handful of firms mentioned are known for capital markets work/M&A).

Second, and more importantly, it's clearly hype. The hypothetical posed in the survey was whether the corporate counsel would consider dumping a "top law firm" (defined roughly as the v15) if the firm hiked its rates by 30%. No firm is instituting anything that looks like a 30% rate hike; something like 2-5% would be more realistic, and we don't have any corporate counsel saying "I'd dump them if they hiked their rates even slightly!"

It's pure hype.

BeautifulSW
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Re: Companies Dumping Top Law Firms

Postby BeautifulSW » Fri Oct 18, 2013 4:43 pm

I have no idea whether it's hype but I was interested in the statement that profits per partner went up a lot faster in "second tier" firms than among the white-shod. I also noted that there's not much in the article to cheer the hearts of T2-4 graduates; one "advantage" of going with the smaller firm is that the client still gets the most highly pedigreed attorneys available but at a lower hourly rate.

The biggest question I would have, though, if I were General Counsel for World Giant Amalgamated Corporation, is whether a second tier firm has the vast resources necessary to take on (say) an anti-trust defense in three countries or (say) a patent infringement involving 12,321 separate filings over twenty years in three countries. Such law suits represent enormous amounts of exacting grunt work over years of litigation in addition to requiring top-notch legal skills.

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manofjustice
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Re: Companies Dumping Top Law Firms

Postby manofjustice » Fri Oct 18, 2013 5:38 pm

OneMoreLawHopeful wrote:First, given the question asked in the survey, it would seem to be MORE of an issue of corporate work (the handful of firms mentioned are known for capital markets work/M&A).

Second, and more importantly, it's clearly hype. The hypothetical posed in the survey was whether the corporate counsel would consider dumping a "top law firm" (defined roughly as the v15) if the firm hiked its rates by 30%. No firm is instituting anything that looks like a 30% rate hike; something like 2-5% would be more realistic, and we don't have any corporate counsel saying "I'd dump them if they hiked their rates even slightly!"

It's pure hype.


I don't think you have this quite right.

The question was: "Are you more or less likely to use a good lawyer at a pedigreed firm (e.g., AmLaw 20 or Magic Circle) or a good lawyer at a non-pedigreed firm for high stakes (though not necessarily bet-the-company) work, assuming a 30% difference in overall cost."

So the question doesn't ask about a hike in costs. And it focuses on total cost, not on hourly rate. There can easily be a 30% difference in cost already between a White Shoe and a MidLaw shop for the same work. It wouldn't just stem from hourly rate. It would also stem from staffing efficiency and contractor usage.

I suppose the question also conjures up images of ten BigLaw lawyers in a courtroom to watch one argue a motion (cha-ching!) or six BigLaw lawyers sitting around a conference room table to watch one depose an expert (cha-ching!).

lawalum
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Re: Companies Dumping Top Law Firms

Postby lawalum » Sat Oct 19, 2013 10:34 am

It is not hype. Corporate clients and in-house counsel are extremely focussed on costs. The fact is that there are many competent firms out there who approach engagements in a cost efficient manner and who are open to creative fee arrangements.

keg411
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Re: Companies Dumping Top Law Firms

Postby keg411 » Sat Oct 19, 2013 11:51 am

Of course GC's want to cut costs... that's part of their job. You try to find the "best" firm for the best price. But singling out the AmLaw 20 + MC only as the ones that charge more would make it obvious for the GC's to go cheaper since there is plenty of BigLaw to go around after those 25-30ish firms.

If you posed the same hypothetical and cut out the entire AmLaw 200 (or even the AmLaw 100), I'd bet GC's answers would be more interesting.

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Old Gregg
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Re: Companies Dumping Top Law Firms

Postby Old Gregg » Sat Oct 19, 2013 12:05 pm

Hype.

Anonymous User
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Re: Companies Dumping Top Law Firms

Postby Anonymous User » Sat Oct 19, 2013 12:09 pm

I work at a 'cream of the crop' firm and have sat in on some meetings about our business model. It's interesting to see how our management views it - or at least how they tell it back to us (since I imagine they're not totally candid with the grunts).

Basically, our firm views ourselves and a small group of other firms that are in the same field as dividing up the "best" work, which tends to be cost insensitive for a variety of reasons (the stakes are almost too large to be valued in dollars, the transactions are so large/profitable that the legal costs won't ever make somebody bat an eyelash and/or the area is so novel that the market legitimately only sees a small number of firms as having the resources, experience and skills to get it done). Those firms tended to be the ones who weathered the crisis the best, because as work dried up there was still a good amount of work in the mega deal / bet the company litigation universe to keep the machine running. As far as I can tell, nobody in that small group of firms (basically the top firms in each region/practice area) really sees the outsourcing trend or the commoditization of law as an existential threat.

As for the rest of the heard, they see a lot of movement as firms compete on cost, outsourcing takes root, and 'flavor of the month' industries ebb and flow. I think they would actually agree with the premise of the article as applied to the firms which are incredibly expensive but not in the top-of-the-top-of-the top tier of the market.

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manofjustice
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Re: Companies Dumping Top Law Firms

Postby manofjustice » Sat Oct 19, 2013 12:39 pm

Anonymous User wrote:I work at a 'cream of the crop' firm and have sat in on some meetings about our business model. It's interesting to see how our management views it - or at least how they tell it back to us (since I imagine they're not totally candid with the grunts).

Basically, our firm views ourselves and a small group of other firms that are in the same field as dividing up the "best" work, which tends to be cost insensitive for a variety of reasons (the stakes are almost too large to be valued in dollars, the transactions are so large/profitable that the legal costs won't ever make somebody bat an eyelash and/or the area is so novel that the market legitimately only sees a small number of firms as having the resources, experience and skills to get it done). Those firms tended to be the ones who weathered the crisis the best, because as work dried up there was still a good amount of work in the mega deal / bet the company litigation universe to keep the machine running. As far as I can tell, nobody in that small group of firms (basically the top firms in each region/practice area) really sees the outsourcing trend or the commoditization of law as an existential threat.

As for the rest of the heard, they see a lot of movement as firms compete on cost, outsourcing takes root, and 'flavor of the month' industries ebb and flow. I think they would actually agree with the premise of the article as applied to the firms which are incredibly expensive but not in the top-of-the-top-of-the top tier of the market.


I think that's right, but incomplete. How does a "top-of-the-top-of-the-top" firm stay there? Enter Dewey (or really most firms nowadays). By sniping laterals with mega-bucks whose credentials are guaranteed by their experience.

The old model of hiring the best students from the best schools and then partnering completely from within--that's not enough to get clients wet anymore.

I have noticed another thing too. Some of the best, well-sought after lawyers--even those who work for corporate clients--have their own firms.

It's the equitization of legal skill. We're looking more like the finance industry, and the prize of "top firm" is more up for grabs.

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Old Gregg
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Re: Companies Dumping Top Law Firms

Postby Old Gregg » Sat Oct 19, 2013 12:50 pm

Basically, our firm views ourselves and a small group of other firms that are in the same field as dividing up the "best" work, which tends to be cost insensitive for a variety of reasons (the stakes are almost too large to be valued in dollars, the transactions are so large/profitable that the legal costs won't ever make somebody bat an eyelash and/or the area is so novel that the market legitimately only sees a small number of firms as having the resources, experience and skills to get it done). Those firms tended to be the ones who weathered the crisis the best, because as work dried up there was still a good amount of work in the mega deal / bet the company litigation universe to keep the machine running. As far as I can tell, nobody in that small group of firms (basically the top firms in each region/practice area) really sees the outsourcing trend or the commoditization of law as an existential threat.


Yep.

Gorki
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Re: Companies Dumping Top Law Firms

Postby Gorki » Sat Oct 19, 2013 3:52 pm

Anonymous User wrote:I work at a 'cream of the crop' firm and have sat in on some meetings about our business model. It's interesting to see how our management views it - or at least how they tell it back to us (since I imagine they're not totally candid with the grunts).

Basically, our firm views ourselves and a small group of other firms that are in the same field as dividing up the "best" work, which tends to be cost insensitive for a variety of reasons (the stakes are almost too large to be valued in dollars, the transactions are so large/profitable that the legal costs won't ever make somebody bat an eyelash and/or the area is so novel that the market legitimately only sees a small number of firms as having the resources, experience and skills to get it done). Those firms tended to be the ones who weathered the crisis the best, because as work dried up there was still a good amount of work in the mega deal / bet the company litigation universe to keep the machine running. As far as I can tell, nobody in that small group of firms (basically the top firms in each region/practice area) really sees the outsourcing trend or the commoditization of law as an existential threat.

As for the rest of the heard, they see a lot of movement as firms compete on cost, outsourcing takes root, and 'flavor of the month' industries ebb and flow. I think they would actually agree with the premise of the article as applied to the firms which are incredibly expensive but not in the top-of-the-top-of-the top tier of the market.


I think OP is correct though in saying its more trend than hype. Yes, top firms will still do the most sensitive work... work that actually incurs real costs to get done... Meanwhile the rank-and-file stuff that used to be bread n butter to fill out the billables for tons of associates has gone to "Law Offices of Random Esq., LLC." The work that is being farmed out is not going from v25 to v100... Its going from top firm to a 3-guy shop run by the GC's/CEO's well known bud who charges discount rates.

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Old Gregg
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Re: Companies Dumping Top Law Firms

Postby Old Gregg » Sat Oct 19, 2013 3:55 pm

Gorki wrote:
Anonymous User wrote:I work at a 'cream of the crop' firm and have sat in on some meetings about our business model. It's interesting to see how our management views it - or at least how they tell it back to us (since I imagine they're not totally candid with the grunts).

Basically, our firm views ourselves and a small group of other firms that are in the same field as dividing up the "best" work, which tends to be cost insensitive for a variety of reasons (the stakes are almost too large to be valued in dollars, the transactions are so large/profitable that the legal costs won't ever make somebody bat an eyelash and/or the area is so novel that the market legitimately only sees a small number of firms as having the resources, experience and skills to get it done). Those firms tended to be the ones who weathered the crisis the best, because as work dried up there was still a good amount of work in the mega deal / bet the company litigation universe to keep the machine running. As far as I can tell, nobody in that small group of firms (basically the top firms in each region/practice area) really sees the outsourcing trend or the commoditization of law as an existential threat.

As for the rest of the heard, they see a lot of movement as firms compete on cost, outsourcing takes root, and 'flavor of the month' industries ebb and flow. I think they would actually agree with the premise of the article as applied to the firms which are incredibly expensive but not in the top-of-the-top-of-the top tier of the market.


I think OP is correct though in saying its more trend than hype. Yes, top firms will still do the most sensitive work... work that actually incurs real costs to get done... Meanwhile the rank-and-file stuff that used to be bread n butter to fill out the billables for tons of associates has gone to "Law Offices of Random Esq., LLC." The work that is being farmed out is not going from v25 to v100... Its going from top firm to a 3-guy shop run by the GC's/CEO's well known bud who charges discount rates.


Easier said than done. Rank and file shit that's the natural result of a high profile project is hard to separate and dole out to a smaller practice. A big company isn't going to use Davis Polk for drafting a merger agreement and Carter Ledyard for the sig pages.

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Old Gregg
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Re: Companies Dumping Top Law Firms

Postby Old Gregg » Sat Oct 19, 2013 3:56 pm

Also consider the source. This is the same blog they uses the headline, "nationwide layoff watch" when discussing staff layoffs. They're looking for a lot of ways to get page views from attorneys.

Gorki
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Re: Companies Dumping Top Law Firms

Postby Gorki » Sat Oct 19, 2013 4:02 pm

Fresh Prince wrote:
Gorki wrote:
Anonymous User wrote:I work at a 'cream of the crop' firm and have sat in on some meetings about our business model. It's interesting to see how our management views it - or at least how they tell it back to us (since I imagine they're not totally candid with the grunts).

Basically, our firm views ourselves and a small group of other firms that are in the same field as dividing up the "best" work, which tends to be cost insensitive for a variety of reasons (the stakes are almost too large to be valued in dollars, the transactions are so large/profitable that the legal costs won't ever make somebody bat an eyelash and/or the area is so novel that the market legitimately only sees a small number of firms as having the resources, experience and skills to get it done). Those firms tended to be the ones who weathered the crisis the best, because as work dried up there was still a good amount of work in the mega deal / bet the company litigation universe to keep the machine running. As far as I can tell, nobody in that small group of firms (basically the top firms in each region/practice area) really sees the outsourcing trend or the commoditization of law as an existential threat.

As for the rest of the heard, they see a lot of movement as firms compete on cost, outsourcing takes root, and 'flavor of the month' industries ebb and flow. I think they would actually agree with the premise of the article as applied to the firms which are incredibly expensive but not in the top-of-the-top-of-the top tier of the market.


I think OP is correct though in saying its more trend than hype. Yes, top firms will still do the most sensitive work... work that actually incurs real costs to get done... Meanwhile the rank-and-file stuff that used to be bread n butter to fill out the billables for tons of associates has gone to "Law Offices of Random Esq., LLC." The work that is being farmed out is not going from v25 to v100... Its going from top firm to a 3-guy shop run by the GC's/CEO's well known bud who charges discount rates.


Easier said than done. Rank and file shit that's the natural result of a high profile project is hard to separate and dole out to a smaller practice. A big company isn't going to use Davis Polk for drafting a merger agreement and Carter Ledyard for the sig pages.


Agreed. I meant more the routine shit such as "brand protection" for TMs and the like. Not really a top firm line of work, but my perspective is pretty skewed by fact I have lived in a tertiary market my whole life.

I was not intending to say that something like the Verizon-Vodafone would just get farmed out to a bunch of solos.




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