How Big is Too Big?

Published April 29, 2008

From a panel discussion that involved the general counsel of the Association of Corporate Counsel and several GCs, to presentations at the ABA Tech Show, I’ve heard a wide range of opinions on whether the collision of $1,000/hour billing rates at big law firms and the apparent recession will make Corporate America turn to smaller, more affordable law firms.

Certainly, in my opinion, there are many talented lawyers available to do the work that Corporate America wants done, at a far lower cost. Why aren’t companies looking for these lawyers? Because it’s safer and easier to justify hiring Big Law to the same CEOs who supposedly criticize these firms and their high costs. It reminds me of a situation years ago when my father, who owned his own business, wanted to buy himself a Buick as a new company car. One of the senior buyers he sold to told him he should buy a Continental. Why? “Because you have to impress people like me that you’re successful enough to buy from.”

One has to be old enough to recall that corporate America once thought that “bigger was better” when viewing itself. Years ago, I remember thinking that the merger mania would gobble everything up and, literally, there would be only four corporations in the world left. ITT was a prime example of the gobbler.

Then, these conglomerates seemed to collapse of their own weight. The phrase, “getting back to core competencies,” became the watchword and large enterprises began breaking up into smaller units. Not all were as forward thinking as 3M, which, within its larger corporate enterprise, encouraged smaller units to operate as independent, entrepreneurial units. Hence, the word “intrapreneurial.”

Law firms seem to follow their clients. How law firms will fare in today’s economic climate is yet to be determined. I don’t think that we’ve seen large enough firms created to experience their collapse simply because they are too big. But, I agree that there will always be a place for good, focused smaller law firms that serve the needs of business as well as individuals. It’s regularly demonstrated that U.S. growth is fueled by smaller, entrepreneurial businesses and the new ideas they create. These companies will require smaller, more adaptable and flexible law firms to meet their needs. And that could leave the big dinosaurs in an uncomfortable position.

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Audience type: Administrators, Associates, Large Law Firms, Small Law Firms, Sole Practitioners