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The Myth of BigLaw Quality

February 27, 2014

3 vulturesBigLaw has a Big Problem.  Really Big.  Big Big. Pull the plug Big. End of an era Big.  Okay, enough already, we get it. Just tell us what the problem is.  Sure.  It’s simple really, but oh-so-unsolvable. Ready? BigLaw can’t compete on price.  A five word death sentence.

The Golden Era of BigLaw is el finito.  The cat is out of the bag. Informed clients now know (and this news is spreading exponentially) that the lion’s share of BigLaw work can be, and currently is, being competently done by NewLaw for $60 an hour or less.  There’s no amount of secretary buy-outs, back office outsourcing, summer associate program cutting, or partner de-equitizing that will get BigLaw’s billing rate anywhere near that “new normal” market rate.

Start building the gallows and find me some rope, because if you can’t compete on price, the party is over, right?  One would think, but let’s not forget who we are dealing with.  Burying BigLaw is harder than trying to get my wife’s cat into the crate for her annual vet visit.  The old coots just won’t give up!  Heck, I wouldn’t either if I had a bunch of Fortune 50’s writing me open-ended blank checks to keep my armies of associates churning away.  Who’s gonna willingly walk away from that money tree?

So, if you can’t compete on price, you’re left with your old tried-and-true trump card (trumpets blaring) QUALITY! (voice-over by James Earl Jones).  The standard pitch invariably goes like this:

  • The best we can do is a blended rate of $650 per hour (after discounting our inflated rack rates to make you feel like we care), but our work is of clearly of superior QUALITY compared to that of our competition, who use a bunch of non-Ivy League lawyers, or worse yet <wink-wink>,  foreigners for their work.  Heck, some of these law factories might even be using non-lawyers (!) on some of their projects.  What else can we say, you get what you pay for.

Dang. Maybe we all got a little overexcited with this New Normal Coronation Ball.  Maybe Law is different than the rest of the world, maybe only BigLaw can do all this important stuff, and we’ll just have to suck it up when we get those sphincter-puckering bills.  Sure, we can keep the C-suite off our back by handing out some non-essential work to a couple of these cheap shops, but we better keep the important stuff with the guys who provide QUALITY, no matter what the cost.

Deal.  But before we hand over the keys to the company coffers, it couldn’t hurt to take a look at the objective proof BigLaw has for substantiating their QUALITY claim.  No problem, this should be a piece of cake.

Great!  Let’s start with the AmLaw 100 rankings?  What better way to prove QUALITY than key metrics like gross revenue, revenue per lawyer, and profits per partner.  Wait, I’m a little confused here.  How do metrics focused on law firms’ bottom lines, rather than any outcome or value provided to clients, have any reflection on quality?  It seems that these metrics actually measure how successful firms are at maximizing hourly billing, rather than meeting their clients’ needs.  I get it.  The firms that turn the screws the hardest on billable hours deliver the best QUALITY to the client?  Big means best?  Under this theory, Walmart would clearly be the highest quality retailer.  Tough luck, Nordstrom’s and Bloomingdale’s.

Perhaps then, it’s that BigLaw attracts and develops only the “best of the best” talent?  Yet, there is almost universal agreement that the first few years of BigLaw lawyering is occupied by incredibly long hours on the most mundane and mind-numbing of tasks.  Very few young BigLaw associates ever get near meaningful work or a plum assignment.  Most leave from exhaustion before ever gaining any real lawyering experience.  Do we really need summa cum laude Harvard Law grads on due diligence and document review? Does mundane work magically become QUALITY work when billed out at $300-800 per hour.  Even if you buy into this elitist blather, how then does BigLaw differentiate itself from many of the New Law providers that are run by, and staffed with, those same Harvard Law and Stanford Law grads? Must be that those newbies had poor GPA’s and graduated near the bottom of their class?  Or maybe they could only get into lower-ranked law schools, like Michigan State or UCLA.  Slackers.  We all know that Ivy League credentials and high GPA are prerequisites to QUALITY; how else can you explain the genius of Steve Jobs, Bill Gates, Richard Branson, and my personal favorite, Abe Lincoln.  Oops, the first two never graduated and the latter two never went to college.  If these four went into law, they couldn’t sniff a BigLaw job.  The rest are screwed.  Book a ticket to India and hope for the best.  Maybe Gates, having Harvard on his resume, could get a job at a regional firm back in Boston.  So much for the “best of the best.”

But . . . then . . . uh . . . what objective proof is there to back BigLaw’s boast that only it can deliver QUALITY?

There isn’t any.  Zip.  Nada.  Zero.  Or as Daniel Katz, professor at MSU and co-founder of ReInvent Law, summed it up here:

To say that our ability to assess the quality of a lawyer is noisy is the understatement of the century.  We have very fuzzy notions of who’s good and who’s bad.  If you can’t choose on that point, other factors become your point of differentiation, and a lot of times they’re much easier to detect.

Those other factors include better technology and well-designed processes.  Hmmm, who does those better, NewLaw or BigLaw?

Let’s see.  BigLaw gets smoked on technology and process.  It gets blown away on cost. It has no objective proof that it provides better quality.  For exactly how much longer can BigLaw count on BigClient to keep paying a huge premium for it’s “fuzzy notion” that it does higher quality work than NewLaw?

My answer.  Not much longer. The bread and butter of their dizzying success – hordes of leveraged associates grinding away on grunt work at premium prices – is a thing of the past.  Their last bastion – truly high level work  – keeps getting chipped away at with every success racked up by the NewLaw providers.

Yep, BigLaw, those buzzards eyeing you and your clients aren’t mirages, they’re your real NewLaw competition, and more and more of them are on the way.

10 Comments leave one →
  1. February 28, 2014 6:13 am

    It’s not simply a matter of lack of objective proof “to back BigLaw’s boast that only it can deliver QUALITY.” We have in addition objective proof of a lack of quality, at least when it comes to contract drafting.

    For a sample of my own contribution in that department, see for example my posts about the drafting in (1) the contract used for Jeff Bezos’s acquisition of the Washington Post (http://bit.ly/13uK6NH), (2) the merger agreement providing for Google’s acquisition of Motorola Mobility (http://bit.ly/1bRCHBs), (3) a model confidentiality agreement prepared by a BigLaw partner (http://bit.ly/1kuPxp8), and (4) DLA Piper’s “Document Factory” (http://bit.ly/NbBVUY).

    I’d be happy to have anyone show me that I’m mistaken in my assessment of these examples of BigLaw drafting. So far, no one has attempted to do so with any enthusiasm.

    I’m not suggesting that all BigLaw drafting exhibits such shortcomings. But whenever I decide to have a close look at an example of BigLaw drafting, it turns out to be a turkey.

  2. March 2, 2014 2:26 am

    Agreed that the claim for “Quality” is a strenuous one.
    Most Law department leaders (GC, CLOs, practice area managers) understand and appreciate the value of NewLaw offering and increasingly turning to these providers for “routine” matters.

    The issue is with “business leaders” (whom in-house law departments advise) and big ticket cases.
    Very few in the “C suite” are aware of the debate that rages in our microcosm and for substantial matters would rather engage with a “brand name” as opposed to an option that is perceived (perceived being the operator) as a more risky.

    It’s not that they feel or know that the quality of the work produced by BigLaw is going to be superior as the one produced by NewLaw, it’s more that BigLaw is seen as a safe bet.

    Just like the (overused) cliché “can’t be fired for buying IBM” is now not valid anymore (CIOs must be more creative and now fully aware of all options available to them), the business leaders, guided by the legal team, must appreciate that “you can now be fired for using BigLaw”.

    So my argument is to elevate this debate from a section of the sphere to the business community in general.

    It’s getting there but more work needs to be done for the equation “NewLaw = Risk” to be accepted as a misconception.

  3. March 3, 2014 7:11 am

    Mike, insightful and fun read, as usual, thanks. The dispersion of top talent is a fact, for sure, many outstanding lawyers choose different career paths as alternatives to sticking it out at AmLaw20 firms or their global equivalents. You can find them at midsize firms, in-house, and “on demand” service providers. There are many reasons – greater opportunities for growth and impact on firm performance, work life balance, and building closer relationships with clients, to name a few. GCs and their teams are increasingly hiring lawyers, not law firms.

    [Originally posted on LinkedIn]

  4. oscarrob permalink
    March 3, 2014 9:53 am

    I agree that the demise of “BigLaw” “should” be around the corner. Unfortunately that has been true for at least 20 years. When I left BigLaw as a sixth year associate to go in house, everyone was touting its demise and that it was pricing itself out of the market and that business simply wouldn’t or couldn’t pay those exorbitant prices. That was in 1992 and I was billed out at $265 an hour. Today I see paralegal billing from big law at more. I think the death of BigLaw is greatly exaggerated. There are at least two reasons: First, no executive is going to criticize a general counsel, or second guess his/her choice, if BigLaw is hire for a complex case or deal, other than for the cost. They will whine about the cost, but in the end they feel more comfortable, just because. Second, speed. Executives are an impatient lot. They have put together the “business deal” and they want it done yesterday. No matter how complex. As I have often told them, you can have it fast, you can have it cheap, and you can have it done right, but you can’t have all three. BigLaw has the warm bodies to get it done. Right or wrong, quality is not the only, or even the, primary differentiator. Perception and speed are the real reasons BigLaw is chosen. Now, when those issues are not in play, then you can (and I do) choose NewLaw/SmallLaw. As an example I recently needed to put in place a new option plan. I told BigLaw, I would not use them because of price. I didn’t and I got a good quality product at a reasonable price. Finally I would say this in connection with the examples of bad drafting cited above, those documents are highly negotiated, not simply drafted, and especially things like materiality scrape provisions, so to blame one firm or another seems somewhat disingenuous. I have given on that, I have not and I have come up with different solutions to “double materiality.” Drafting quality changing “will” to “shall” or being consistent, or “which” to “that,” is much less important than substantive quality, getting a contract that actually reflects the parties’ negotiated deal and is understandable. Often I can fix those things if I so desire, just as often I see them, but they aren’t worth the time or effort. At the end of the day, I find BigLaw annoying and over priced, no doubt. Sometimes, however they are a necessary evil. I will say this, although BigLaw quality may be no better or even worse, it is just as likely that NewLaw will have little or no experience in the large complex transaction, and there is nothing worse in a complex deal than having to deal with amateurs who argue over nonsensical points because their inexperience means they don’t know what is important and what is not.

    • March 3, 2014 6:10 pm

      I’m not sure I understand your points regarding my comment.

      First, regarding double materiality, I’m not “blam[ing] one firm or another.” It’s a generally accepted concept, and I’ve explained why I think it’s illogical. If you believe I’m mistaken, I’d be pleased to hear why.

      Second, I think you overestimate the extent to which the big-deal merger agreements I analyzed are highly negotiated. And even if they are highly negotiated, how does that change what the drafting has to say about BigLaw standards?

      Third, two of the four blog posts I cite refer to model contracts, not negotiated documents.

      Fourth, although some drafting issues I point out are a matter of making life easier for the reader, that’s not a negligible goal.

      Fifth, plenty of other issues I point out aren’t substantive until, unhappily, it turns out that they are. For example, overuse of “shall” is one good way to have a court construe as an obligation something that should have been expressed as a condition. So I don’t accept the notion of a clear distinction between style and substance.

      And sixth, my blog posts also refer to issues that are on their face substantive.

  5. March 3, 2014 4:07 pm

    I spent most of my professional life in house, trying to manage a legal budget that included big law lawyers who I really trusted. I trusted the lawyers, not the firm – I merely paid a premium for the firm. They eventually left big law and started a boutique law firm. No surprise – the quality didn’t change, but the big law premium did. I’m now back in private practice and am partners with these former big law lawyers. Just as quality can vary widely from one office to another of a “national” or “international” firm, so can it vary from lawyer to lawyer. Forget the firm. Hire the lawyers you trust and hold them accountable for quality at a fair price.

    [Originally posted in LinkedIn group “Inhouse Legal”]

  6. March 4, 2014 7:22 am

    I have worked at several large Michigan firms and currently work at one, Plunkett Cooney. Not all large firms charge an arm and a leg. While, as a 23 year attorney, I would not work for $65/hour, my firm does not charge anywhere close to the $650 blended rate cited. We really do negotiate rates and I find that quite often I am charging the same or less than similarly credentialed employment boutique firm attorneys. And, I appreciate Michael’s comment that he was loyal to the attorneys, not the firm. My clients love me and have followed me from firm to firm because, unlike some attorneys, my goal is to keep them out of trouble rather than rack up the big fees defending lawsuits. My way may not have resulted in the most revenues, but it sure makes for a great set of loyal clients! Don’t write off all big firm attorneys. Just shop for the right one that will put your interests first.

    [Originally posted in LinkedIn group “Inhouse Legal”]

  7. March 4, 2014 7:35 am

    This is great. Have you seen the Article put out by the ACC that mirrors your point? Email me and I would be happy to send it to you. Keep up the honesty!

    [Originally posted in LinkedIn group “Inhouse Legal”]

  8. March 4, 2014 10:42 am

    Another great post Mike. I wonder when the big firms or traditional lawyers in general last asked themselves, ‘What’s the mission?’ before they jump in and start lawyering. As Claudia Orr correctly points out that mission has as at least one pillar of its foundation avoiding trouble to the extent humanly possible.

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