Is biglaw a bubble waiting to burst? Forum

[biglawlawlaw]

Much has been made about how biglaw realigned after the financial crisis of 2008; clients were forced to tighten their belts, and as a result were able to assert more control over how and when they spend on legal. This is terrible for big law firms who depend on the billable hour; big law firms favor opaqueness and an aura of expertise, so that they can bill tons of hours behind that veil, especially on document review.

But is this "realignment" only a precursor to something much more drastic? To measure big law firms' economic position, people put much focus on firms' PPP and "leverage" - metrics which mainly focus on law firms' internal organization. But the bigger question is what is the source of law firms' work? And what percentage of that work currently consists of document review?

Some would argue that big law firms exist because of discovery. They originated in the paper days of discovery, and formed a business model of which a significant component was premised on the volume of documents to be reviewed and firms' ability to apply the billable hour to that review. Then, their clients switched to storing documents electronically - but big law firms needed to maintain their voluminous document review, billed by the hour. By pure happenstance, of course, a discovery industry evolved with the marked flaws of inefficiency and overcomplication.

What if the logistics of discovery were almost as easy as using Gmail, and in-house legal retained complete control over their data and its movement through the discovery process? A whole lot of billable hours would need to be replaced.

And discovery is not even the only area where inefficiencies persist.

What if the discovery faucet turned into a couple drops?

[Anonymous User]

no.

[Anonymous User]

For partners? Absolutely. The last 20 years their salaries grew way faster than any other salaries in this country. It's like what you see for CEOs. This was earned off the backs of overworked underpaid folks beneath them and clients who are tired of paying these rates.

For junior associates? Doubt it. They currently make about $80-120 an hour if you look at all the work they do, not to mention the stress.

For staff? Already burst. Biglaw is not a good place to work if you're a doc reviewer, paralegal and stuff like that.

[Right2BearArms]

no.

[Npret]

Citibank has done yearly reports on biglaw status.
Here’s the last one, no one sees a bubble. There is no indication of that at all.
https://www.privatebank.citibank.com/iv ... visory.pdf

[Traynor Brah]

This post is too dumb to engage on the merits.

[yomisterd]

I for one welcome our automated doc review platforms

take my job pls mr robot

[nealric]

A "bubble" is when the price of an asset inflates well beyond its intrinsic value- usually fueled by debt and usually over a relatively short timeframe. This is not that. Even if you are correct that law firm profits may go down over the long term, that doesn't make it a "bubble", it just means its an industry with a poor profitability outlook.

But to answer your question, to the extent that AI eliminates such profit centers, that risk is shared throughout the economy. The vast majority of human job tasks could theoretically be automated. That being said, litigation in general has been a declining share of revenue for firms. Biglaw doesn't exist because of discovery- biglaw exists because of M&A. That's where the big bucks really are. Clients are much more comfortable with outsourced doc review than outsourced diligence.

[Anonymous User]

Biglaw doesn't exist because of discovery- biglaw exists because of M&A. That's where the big bucks really are. Clients are much more comfortable with outsourced doc review than outsourced diligence.

Ah - well that is good. Still, I wonder what portion of firm revenue comes from document review and productions. In terms of the costs to clients of individual cases, it is a huge percentage. And we don’t even need AI to pull that rug out - we only need in-house legal to assert full control over doc review and productionS. What would happen if doc review and production revenue came down severely? The theory that only staff and doc reviewers would be affected probably doesn’t hold water.

[Anonymous User]

Biglaw doesn't exist because of discovery- biglaw exists because of M&A. That's where the big bucks really are. Clients are much more comfortable with outsourced doc review than outsourced diligence.

Ah - well that is good. Still, I wonder what portion of firm revenue comes from document review and productions. In terms of the costs to clients of individual cases, it is a huge percentage. And we don’t even need AI to pull that rug out - we only need in-house legal to assert full control over doc review and productionS. What would happen if doc review and production revenue came down severely? The theory that only staff and doc reviewers would be affected probably doesn’t hold water.

This isn’t as easy as you think. The largest doc reviews (that keep teams of associates busy for months) are unpredictable require way more resources than in house legal depts can keep around. Many of the largest reviews these days are also in connection with government investigations, which for obvious reasons many corporations/entities keep outside. Smaller, everyday litigation doc review can be done by one associate in less time than it takes to write a motion and isn’t a huge cost center.

Plus, you need outside counsel familiar with the documents anyway, so even if the relevant/not-relevant determinations could be brought in house, outside attorneys would still be reviewing productions (and, of course, opponents’ productions).

[biglawlawlaw]

Biglaw doesn't exist because of discovery- biglaw exists because of M&A. That's where the big bucks really are. Clients are much more comfortable with outsourced doc review than outsourced diligence.

Ah - well that is good. Still, I wonder what portion of firm revenue comes from document review and productions. In terms of the costs to clients of individual cases, it is a huge percentage. And we don’t even need AI to pull that rug out - we only need in-house legal to assert full control over doc review and productionS. What would happen if doc review and production revenue came down severely? The theory that only staff and doc reviewers would be affected probably doesn’t hold water.

This isn’t as easy as you think. The largest doc reviews (that keep teams of associates busy for months) are unpredictable require way more resources than in house legal depts can keep around. Many of the largest reviews these days are also in connection with government investigations, which for obvious reasons many corporations/entities keep outside. Smaller, everyday litigation doc review can be done by one associate in less time than it takes to write a motion and isn’t a huge cost center.

Plus, you need outside counsel familiar with the documents anyway, so even if the relevant/not-relevant determinations could be brought in house, outside attorneys would still be reviewing productions (and, of course, opponents’ productions).

When I say in-house legal taking control I mean not hat in house counsel would review documents but that there are less documents to review because of different tools and processes. And it’s just the large matters I’m referring to being impacted. I’m house counsel has full visibility into project scope/budget/etc, they use fast and easy tools and simply invite in outside counsel to review, project managers have elevated responsibility so that senior associates are playing less of a coordinating role, there are less technical snafus and course corrections, etc. initial relevance and privilege calls are made by shops that aren’t law firms. The universe to review is culled much more at the outset and much faster.

So what is the impact of this scenario where outside counsel plays much less of a coordinating role, there is less complication and outside counsel only QCs a fairly small number of documents?

[Anonymous User]

Biglaw doesn't exist because of discovery- biglaw exists because of M&A. That's where the big bucks really are. Clients are much more comfortable with outsourced doc review than outsourced diligence.

Ah - well that is good. Still, I wonder what portion of firm revenue comes from document review and productions. In terms of the costs to clients of individual cases, it is a huge percentage. And we don’t even need AI to pull that rug out - we only need in-house legal to assert full control over doc review and productionS. What would happen if doc review and production revenue came down severely? The theory that only staff and doc reviewers would be affected probably doesn’t hold water.

This isn’t as easy as you think. The largest doc reviews (that keep teams of associates busy for months) are unpredictable require way more resources than in house legal depts can keep around. Many of the largest reviews these days are also in connection with government investigations, which for obvious reasons many corporations/entities keep outside. Smaller, everyday litigation doc review can be done by one associate in less time than it takes to write a motion and isn’t a huge cost center.

Plus, you need outside counsel familiar with the documents anyway, so even if the relevant/not-relevant determinations could be brought in house, outside attorneys would still be reviewing productions (and, of course, opponents’ productions).

When I say in-house legal taking control I mean not hat in house counsel would review documents but that there are less documents to review because of different tools and processes. And it’s just the large matters I’m referring to being impacted. I’m house counsel has full visibility into project scope/budget/etc, they use fast and easy tools and simply invite in outside counsel to review, project managers have elevated responsibility so that senior associates are playing less of a coordinating role, there are less technical snafus and course corrections, etc. initial relevance and privilege calls are made by shops that aren’t law firms. The universe to review is culled much more at the outset and much faster.

So what is the impact of this scenario where outside counsel plays much less of a coordinating role, there is less complication and outside counsel only QCs a fairly small number of documents?

So the question is what if, through a magical combination of new tech and new processes, biglaw firms are less involved in document reviews? Then big firm billings go down. Some of the savings shift to the new vendors, some to the corporation. Why do you need to ask this? TBH, the question sounds like a middle schooler cooking up a half baked scheme to start a new business.

[biglawlawlaw]

Biglaw doesn't exist because of discovery- biglaw exists because of M&A. That's where the big bucks really are. Clients are much more comfortable with outsourced doc review than outsourced diligence.

Ah - well that is good. Still, I wonder what portion of firm revenue comes from document review and productions. In terms of the costs to clients of individual cases, it is a huge percentage. And we don’t even need AI to pull that rug out - we only need in-house legal to assert full control over doc review and productionS. What would happen if doc review and production revenue came down severely? The theory that only staff and doc reviewers would be affected probably doesn’t hold water.

This isn’t as easy as you think. The largest doc reviews (that keep teams of associates busy for months) are unpredictable require way more resources than in house legal depts can keep around. Many of the largest reviews these days are also in connection with government investigations, which for obvious reasons many corporations/entities keep outside. Smaller, everyday litigation doc review can be done by one associate in less time than it takes to write a motion and isn’t a huge cost center.

Plus, you need outside counsel familiar with the documents anyway, so even if the relevant/not-relevant determinations could be brought in house, outside attorneys would still be reviewing productions (and, of course, opponents’ productions).

When I say in-house legal taking control I mean not hat in house counsel would review documents but that there are less documents to review because of different tools and processes. And it’s just the large matters I’m referring to being impacted. I’m house counsel has full visibility into project scope/budget/etc, they use fast and easy tools and simply invite in outside counsel to review, project managers have elevated responsibility so that senior associates are playing less of a coordinating role, there are less technical snafus and course corrections, etc. initial relevance and privilege calls are made by shops that aren’t law firms. The universe to review is culled much more at the outset and much faster.

So what is the impact of this scenario where outside counsel plays much less of a coordinating role, there is less complication and outside counsel only QCs a fairly small number of documents?

So the question is what if, through a magical combination of new tech and new processes, biglaw firms are less involved in document reviews? Then big firm billings go down. Some of the savings shift to the new vendors, some to the corporation. Why do you need to ask this? TBH, the question sounds like a middle schooler cooking up a half baked scheme to start a new business.

This, as you know, is not the question or the point.

[nealric]

Plus, you need outside counsel familiar with the documents anyway, so even if the relevant/not-relevant determinations could be brought in house, outside attorneys would still be reviewing productions (and, of course, opponents’ productions).

Yeah, this is an important point. A lot of the work in discovery is not the actual review per-se, but the organizing, learning, and strategy surrounding it. AI can be used to weed out irrelevant documents (it already is), but it can't learn the case for the lawyers arguing the case (well, unless we become comfortable with disputes being resolved solely via AI).