Tuesday, May 7, 2013

Bloomberg Is On a “What’s Wrong with Big Law?" Roll

This morning I attended a  presentation at Bloomberg HQ given by Bruce  “growth is dead” MacEwen. He has so many unique insights I definitely recommend reading his book to absorb them all. He showed some amazing slides on the  configuration of the legal industry before  and after the  2007 crash.

 One interesting “aside,”  focused on the corrosive effect of “profits per partner.” The PPP ranking was created the American Lawyer and is a  metric which is particularly susceptible to manipulation. Yet it has become the vehicle for not only measuring success, but also a key driver of rampant lateral poaching, which in turn has contributed to the cratering of many firms.

One  partner in the audience only half tongue in cheek suggested that it was time to move up the alphabet and perhaps a legal publisher name starting with a “B” should create a new  and more reliable competitive metric for   measuring the success of law firms.

The Bloomberg BusinessWeek issue of May 12th sported a cover “What do you do with 176,000 lawyers lying at the bottom of the ocean?” Howrey's Bankruptcy and Big Law's Small Future. 

The article focuses on the collapse of Howrey, but predicts continuing disarray in the legal market. And oh by the way, the Bureau of Labor Statistics predicts that  by 2020 the US economy will create 73,600 lawyer positions and law schools will graduate 24,000 new lawyers a year. This they suggest will result in  176,000 excess lawyers. But is not the real problem that law school are grooming lawyers for the 20th Century Law firm instead of the 21st century law firm?

 Bloomberg Law TV Interviewed Richard Susskind on May 2nd:  With Radical Changes Law Firms Can Beat the Recession.  Last week Lee Paccia interviewed legal "futurist" Richard Susskind who had  a completely different take. Here are some surprising "take aways" Outsourcing is Temporary and  Technology is the Future. We don't have an oversupply of lawyers we have an undersupply of legal knowledge engineers!

Why Now? There is a further irony that Bloomberg has chosen to enter the legal information market at a time of such wrenching displacement in the legal market... unless Bloomberg has calculated to enter the breach and take advantage of the disruption.

1 comment:

  1. If Bloomberg Law didn't exist we would have to invent them. The problem with duopolies such as Lexis and West, natural or not, is even without any intention to behave in concert, the competiton inevitably becomes too cosy. 'Capture' of key buying channels, mirror pricing rather than predatory pricing, M&A muscle, etc raise barriers to entry significantly while the level of service for clients progresses at the pace the suppliers want, not the pace the clients need.

    Prof Susskind has been highlighting technology issues to top law firms for ages now and while he is not wrong, he is not right that law firms are the natural place for this new type of legal engineering to be nurtured or exploited. The academic under and post graduate industries in the UK at least have been producing many more 'lawyers' than the professions want - especially as they see personal economic benefits in restricting supply into their protected professions. The net effect is a willing market among businesses in particular to use lawyers for software and alternative solutions. Not just GCs, but business process automaors looking for people who understand the law and not cowed by it. The solutions they develop often negate the need to refer to law firms at all (which cleints see as 'a good thing'), but that is not their primary purpose.

    Talk of the death of Big Law is much overhyped in my view. This is not the music industry. It is just a tired over protected industry niche eating its own tail. Meanwhile clients who don't have to wait for suppliers to come up with helpful stuff are pressing on and leaving the law firms in their wake.

    It takes billions and decades to make a dent in the positions of Thomson and Reed. They know it; its been painstakingly built. That's why they buy anyone who gets any sort of critical mass, and usually at prices that no VC or especially tech player can afford. They have, frankly, got WK right where they want them. But imagine the kerfuffle if SAP had bought BNA or Practial Law? Law firms would have hated it. Their clients would probably have said it was long overdue.