Let’s be blunt (and a bit provocative) here. A critical part of BigLaw’s strategy for perpetuating its grasp on the lucrative end of the legal market is based on a sort of partnership-by-primogeniture. It goes like this:
- BigLaw offspring are produced by nearly exclusive recruitment of blueblood law schools. The incestuous plucking of the best-and-brightest of the top law schools by the preceding generations of the best-and-brightest of those same schools creates a baby-boom of summer associates who then (with relatively few exceptions) pupate into first-year associates.
- Far more associates are hatched than can possibly survive the arduous journey-of-BigLaw-life to partnership or other permanent position. A sort of primogeniture is required to avoid dilution of the wealth and power of the partnership. However, these days it is done based more on skills matched to firm needs demonstrated over the course of associatehood than on factors like class and connections already in place the day the first-years walk through the door.
- The winnowing process may occasionally have Darwinian overtones of associate competition, but BigLaw firms generally strive to create a patrician-style “family” environment defined by physical comforts, gadgets and other firm resources, scripted entertainment and other cool perks. Loyalty and identity are nurtured more by trappings of privilege and exclusivity than by deep personal bonding with and mentoring from those who might eventually be cutting the associates’ umbilical cords.
- The associates who (un)willingly drop off the partner track are not simply abandoned. Far from it! They are groomed for strategic marriages with other BigLaw, MidLaw or BoutiqueLaw families or sent out to colonize the in-house world. Some atone for their BigLaw sins by entering the judicial or academic clergies while others become advisors to the princely powers of governmental agencies. Regardless of the destination, the future success of these second-borns continues to reinforce the BigLaw estate almost as much as the efforts of the privileged first-borns who take up permanent residence at the familial manor.
You probably haven’t thought about the strategy in these primogeniture terms, have you? That’s because the strategy is most often described as a pyramid scheme where the purpose of the large numbers of associates cycled through the big firms is to provide financial leverage for the relatively few partners at the top of the heap. The need to allow a few to successfully run the gauntlet to partnerhood is just a necessary evil for keeping the scheme going. In this particular characterization the long-term benefits derived from the network effect of the BigLaw associate diaspora are completely ignored. Consequently, the focus is exclusively on the vulnerability of the pyramid scheme to the changing market conditions in which clients increasingly resist packing their matters with junior associates and in which LPOs, staff attorneys and technology-based solutions undercut the short-term financial value of the base of the pyramid.
Here’s a different but perhaps less crass way to think about the strategy. Pundits frequently decry BigLaw’s built-in structural and cultural barriers that result in the annual siphoning off of all profits in the form of partner compensation with virtually none of it plowed into R&D and other long-term investments in the institution. Critics are quick to point out BigLaw’s predilection for short-term profits and disinterest in R&D, but they rarely offer a coherent argument for how BigLaw R&D should work (or even why efforts like Dentons’ NextLaw Labs should be “owned” by law firm partnerships). All this misses the fundamental point that BigLaw actually invests heavily in R&D. It’s just not in the form you typically see in the corporate world, and its value differs from how corporate R&D generates value. BigLaw’s version of R&D is the time and money it spends to recruit, pay, train/support and entertain the hordes of unproven law school graduates brought in and then run through the BigLaw “development labs” over a period of years. Of course, many of these investments don’t really pan out (hey, that’s what happens with R&D), but some are ongoing fee-earning winners in the near-term and maybe even “blockbuster” winners as partners in the long-term. The others can still pay long-term dividends in the form of business referrals and reputational support of the law firms.
Thinking of R&D in these terms helps to explain why BigLaw hasn’t already switched to a model of permanent staff lawyers for the low-end stuff and experienced lateral hires for replenishing/growing the partner ranks. As pricing pressures continue to rise and the ability to shift these R&D costs to clients declines, BigLaw’s dedication to this strategy will surely be tested. Acceptance – i.e., severe curtailment of the top-of-class/top-law-school pipeline – could very well spell the beginning of the end of the age of BigLaw.
What got me thinking about this topic was a fascinating guest blog comment on the UK-based Legal Business website by Clifford Chance’s London managing partner. Citing the challenge posed by AI tools like the IBM Watson-based Ross and Riverview Law’s Kim system, David Bickerton asked this important question:
[I]f the apprentice style of learning at the expert’s knee is going to be overtaken by Kim and Ross, how will the profession generate the experienced advisers that clients seek to consult?
Setting aside the fact that Kim is designed for use by managing level in-house counsel and not law firm lawyers, one might expect Bickerton to answer his own question by recommending that BigLaw embrace these emerging technologies and use them to leverage junior associates into resources valued instead of shunned by clients. Nope, Bickerton went a different direction. After a tentative call for partners to lead by example with technology, he reverted to the standard BigLaw playbook for recruiting “the best” by “tak[ing] pay off the table” and providing “exceptional facilities” (referencing swimming pools, squash courts and gyms) and “training” (not elaborated on). Annual reviews and ad hoc feedback, a diverse and accepting work environment with pro bono opportunities were all duly noted as well. As I said…standard BigLaw playbook stuff and a step back from looking more deeply into the chaos.
But Bickerton’s original question still begs to be answered. Will AI be the final nail in the coffin of the BigLaw primogeniture strategy by making junior associates totally redundant? If so, does it herald the end times for BigLaw? Let’s start answering this more directly by getting one thing straight: the “apprentice style of learning at the expert’s [i.e., partner’s] knee” is already largely a relic in BigLaw. Hands-on mentoring of juniors by partners has been in decline for years as the pressure for billing and business-generation by partners has ratcheted up at the same time as client resistance to associate shadowing at meetings, calls, hearings, etc. has increased. Associate leverage has also played it’s part in reducing the frequency of partner contact for individual associates. In fact, one of the primary reasons for the rise of KM and other functions like professional development in BigLaw is this change in the dynamics of partner/associate apprenticeship. If, of necessity, partner/associate interaction has become much more selective and targeted to formalized activities like group training sessions and mandated reviews, this means that the traditional iterative learning process frequently lacks realtime input and correction by a human expert (i.e., a partner or other senior lawyer). Associates either flounder (unhealthy), turn to each other (dangerous), or move onto the next task without feedback on the last (unproductive).
Functions like KM and professional development can provide some context and might jumpstart an associate task with background materials, templates, models, etc., but they seldom offer substantive feedback, corrective guidance, and validation later in the process and particularized to the task. This is where AI can help by, in effect, filling some of the mentoring vacuum left by the absence of real human mentoring. Thus, AI is less of a threat to Biglaw primogeniture than imagined and might even reinforce it. The answer to Bickerton’s question, then, is not to dread or avoid AI and related technology but, rather, to genuinely embrace it as a critical component of your associate “research and development” infrastructure. The good news for BigLaw here is that AI generally improves with scale, so bigger firms with more associates cycling through should have greater success with AI than smaller firms or in-house legal departments.
Of course, all the AI hype might turn out to be just that…hype…in which case the benefits of AI described in the preceding paragraph won’t actually materialize. That would be a shame, but if the benefits of AI don’t materialize, it’s also pretty unlikely that the risks of AI will materialize either. In short, if AI doesn’t work well to assist, correct and guide (human) associates, it’s hard to imagine that it will replace them altogether and become that final nail in the coffin of BigLaw primogeniture.
Great and provocative recasting of up or out as R&D and a network effect. And nice (quasi-Marxist or Hegelian) take on AI’s impact.
On the former, I wonder how effectively Big Law captures the fruit of the network effect / R&D. In the classic network effect, one company reaps most of the benefits – consider Microsoft, Facebook, or Intel. I wonder what percent of network gain the firms actually capture.
So instead of Facebook as the analogy for Big Law investment in associates, perhaps it is Xerox PARC: do all the R&D, seed the market, and let others reap the benefit.
Well, as someone whose undergrad major was philosophy with a concentration in the neo-Marxist critical theory of the Frankfurt School, I’ll take that as high praise! 😉 The post was getting too long, so I didn’t dig any deeper into the BigLaw alumni relations function and its relationship to KM, but I’m thinking of doing a follow-up post to explore that interesting topic. I mention it now because I think that large law firms actually do quite a bit to support their individual alumni networks. My sense is that it’s a very significant source of business for them. The specific network effect for each firm reinforces the firm’s brand and increases the firm’s reach and ability to influence powers and act as go-between for clients. In those respects, I think the network effect is vitally important for BigLaw and perhaps its single most important weapon for resisting the forces of change you describe in your excellent post here.
Excellent post revealing the mistaken assumptions that many people make about the BigLaw business model and its R&D strategies.
With respect to the death of the apprenticeship model, or at least its decline from previous times, this might turn out to be just another stage in an evolutionary process. I don’t think it’s a cause for concern. I have not heard of any clients saying that legal experts today are any less expert than their predecessors, although I haven’t undertaken any formal survey.
One big take away from this discussion is that there is a lot of evidence that the BigLaw model has worked well for those firms that have mastered it. This is not to say that we (or even they) fully understand why it works. Yet until we can do that, we can’t say with any real conviction that it is a model that is under threat, let alone doomed to failure.
I believe that BigLaw will adapt and that it has many obvious as well as latent advantages, including the R&D winnowing and seeding of associates as mentioned above. Somewhat ironically, the reality is that the NewLaw entities viewed by some as the saviours of the industry will be feeding off these processes for a long while to come.
The question for those pointing their fingers disapprovingly at BigLaw is how they then characterise the R&D investment strategies of NewLaw enterprises. My take is that these businesses are not yet self-sustaining talent-wise. As soon as freelancing and outsourcing become integral to what you do, building up legal experts becomes extremely difficult – at least to the level that BigLaw has achieved and is still achieving.
Seems to me that we are seeing a widening gap as the better BigLaw businesses move up the value chain and NewLaw businesses descend into skirmishes much lower down without any real hope (and perhaps little desire) to move up.
NewLaw has yet to prove itself, while BigLaw has a long history of getting it right, at least in terms of developing the highest level legal experts, who will continue to be the mainstay of the most profitable firms whether on the payroll or off it.
Thanks for the very thoughtful comment. You raise the very interesting and (to date) under-considered question of what replaces the traditional “finishing school” role of law firms (especially large, highly leveraged ones) if the law firm “R&D” model as I’ve called it breaks down. Law schools do a laughably bad job (to the extent it’s their job in the first place) of preparing law students for real-world practice of law. It strikes me (and you too, apparently!) that the part of NewLaw that isn’t mechanistic and trending toward real robot lawyering is largely dependent on free-riding on the “R&D” of traditional firms.
Yes, the free-riding of NewLaw on the BigLaw diaspora is something that few of us have focused on to date. NewLaw is very much portrayed as an attractive alternative for some lawyers, but as I’ve discussed elsewhere it also comes at a price re their cognitive development as legal experts.
As to law schools, I’d argue that they can be divided into at least two groups. Those that try to develop practical skills so graduates can hit the ground running. And those that through their selection and reward systems signal to law firms (typically at the BigLaw end of the industry) which are the best bets – but no guarantees – as far as future partner material.
I think you’ve covered this area pretty well. BigLaw firms have relied on good selection (aided by signaling by law schools and others) and an attrition-based training framework that has worked well for a long time, although it’s not for everyone (by definition). Insofar as NewLaw promotes lawyer flexibility, inclusiveness and diversity, it will simply not be able to compete in terms of expertise development.
Of course, it’s great that lawyers and clients have so many different options – and many more today than in the past. But the choices themselves have consequences that I think few of us fully appreciate in terms of the character or seriousness of their likely outcomes.