"Let me begin by asking - what is the function of the law firm? My view is that law firms serve primarily as aggregators of specialized legal expertise. . . . this model relies on growth (the need to add additional attorneys) to maintain profitability rather than focusing on efficiency gains. In this respect, it is at odds with what I need as a client and General Counsel.
As with so many things, the Internet is changing this business model. It is getting increasingly easier to move the aggregation function in-house. . . . I don't need to turn to a large law firm. Instead, I send out an email to my network . . .
The result is that we are increasingly able to identify and engage specific legal talent directly. Here's an example. Like all large companies, we have a certain amount of employment litigation. . . . we use a very small firm for much of this work. Why? They focus only on employment law, are very good at what they do, understand our business, get excellent results and are very cost effective. They don't have the overhead of supporting attorneys practicing in other areas.
My point is that the epoch of the current law firm model - which derives its profitability from growing scale and raising hourly rates - will soon be over. The firms that will survive and thrive are those that recognize this change and focus on how to maintain margins by focusing on efficiency. . . .
This message provides an excellent roadmap for the successful future of boutique law firms.
