Big Law May Be Dying, but It's Strangely Durable

Moneybox
A blog about business and economics.
July 22 2013 10:45 AM

The Strange Durability of Big Law

I loved Noam Scheiber's piece on the end of Big Law and the enormous stresses on America's white-shoe law firms. Something worth adding to his analysis: One reason the traditional law-firm business model is collapsing is that it honestly never made much sense in the first place.

After all, why should lawyers work for law firms that are owned and controlled by partners and staffed primarily by associates who hope that if they work hard they can make partner? Almost anyplace else you look, a large business is going to be owned by shareholders, managed by managers, and staffed by employees. People sometimes assume that the legal profession is organized the way it is because of something having to do with the economics of legal services. But there's no business reason for it. Or, rather, there's the best business reason there can be—lawyers work for firms that are owned and managed by by lawyer-partners because it's generally been illegal to have a legal services firm that's not organized that way.

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Lawyers can (and often do) work for a company that's not lawyer-owned as an in-house counsel. But you can't have LawCo Inc listed on the New York Stock Exchange, headed up by a CEO, and just employing a bunch of lawyers.

So part of what's happening in the legal profession is that demand for its services seems to be declining even as the number of law-school graduates has risen. That's tough in any business. But the legal business is unusual in having been sheltered by custom and by law from adopting standard forms of doing business. The economic stresses on the industry haven't repealed those laws, but they are pressuring the industry to rationalize. But while the pace of change obviously seems furious to the people at the center of the storm, the genuinely remarkable thing is how long the Big Law model has lasted—not the fact that it's fading away.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

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