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The Disappearance of Big Firms

Jim Ruttler, Patent Attorney

Posted Sunday, March 8, 2009 by Jim Ruttler

It has been apparent to me for a number of years that the traditional big firm model is unsustainable. However, I think the Big Firm demise will be quicker than I previously thought due to the deterioration of the economy. The traditional Big Firm for which I’m referring operates in large and expensive office space that is lavishly decorated. In order to service the expenses associated with such office space, billing rates are absurd and armies of associate attorneys and staff are leveraged and tasked with the goal of billing as many hours as possible at the client’s expense.

The reasons that I believe these operations are unsustainable are as follows.

First, because of technology, large and expensive office space is no longer necessary for the practice of law. Attorneys spend most of their time in the office researching, writing, thinking, and conferring with others. This work can easily be accomplished away from the office using a computer, internet connection, and phone. And, for the times where meeting with clients or working in the office is required, a smaller equivalent type of office space can be utilized.

Second, the competition is placing downward pressure on billing rates. The technology referenced above is making it possible for attorneys to provide high quality services with less overhead, which translates into lower billing rates. These high quality lower cost alternatives put downward pressure on the billing rates and fees of Big Firms.

Third, younger attorneys who are comfortable with technology and prefer to work more independently are arriving on the scene. It takes many years of schooling to become a lawyer and often some work experience to be admitted to law school. Consequently, it has taken longer for technologically adept lawyers to infiltrate the bar than has occurred in other professions. But, these attorneys are now being admitted in waves and as they become established in the profession, they will begin to question the wisdom of fighting traffic each day and paying downtown parking rates to sit in a high priced office space to read and write.

Fourth, modern clients are demanding more personalized and specialized attention. Big Firms operate in a similar fashion to a manufacturing company. Raw materials (client needs) are input, an assembly line of machines and workers (associate attorneys and support staff) transform the raw materials, and a finished product (legal work) is output. While this may be the most effective way to generate profits for Big Firms, it is not aligned with the needs of the modern client, which are high quality, timely, and cost effective legal efforts that are tailored to the client’s personal and specific needs.

Fifth, given our current economic climate, clients will demand more for less. The need for legal services will continue to be present so long as we have a functioning civil economy. However, the resources of clients are no longer as abundant as they once were and clients will begin to consider lower cost alternatives to Big Firms. These include hiring in-house attorneys, contracting with attorneys, off-shoring legal work, and working with attorneys that are utilizing technology to provide more efficient services.

In summary, the disappearance of Big Firms in their current form is inevitable and will accelerate in the coming years given our economic slowdown.

Ruttler Mills PLLC
One Union Square, 1730, 600 University Street, Seattle, Washington 98101 US
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Phone: (206) 838-6400

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