Sunday, February 11, 2007

BigLaw Too Big?

I have made some passing comments to the recent round of first year attorney salary hikes. It's not that I begrudge my young colleagues the top dollars that they are being offered. With BigLaw rates now hitting $700 and $800 an hour for top partners, with a base salary of $160,000, one has to wonder about the impact on clients.

BigLaw certainly has its place, and can in fact provide superior services for clients who need a particular speciality, or who have transactions or litigation that will require 10 attorneys and paralegals. But is BigLaw pricing itself out of the market?

Commentators are taking notice. Larry Bodine predicts that the economic realities are starting to show, and opines that the huge salary increases have
created a huge opportunity for mid-size and boutique law firms. Not only can they
offer better rates but also more specialized expertise.
Marketing Opportunity: Megafirms overpay $160,000 for First-year Associates.

Carolyn Elefant's analysis published at Inside Opinions provides additional analysis. After discussing the commentary and Bodine's comments, she concludes with

...but it leaves me wondering how long this large-firm business model can survive. Already, as he points out, associates are leaving firms in droves; higher salaries seem to matter little in that regard. And how long will even high-paid lawyers tolerate employee status? At the same time, as Bodine points out, there's a limit to how high firms can go with salary, before clients start to depart. And that's where Bodine and MacEwen seem to be most in agreement: that the ability of large law firms to continue to retain their existing business model is very much in doubt.

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