Back in August 2006, Seth Godin released Small is the New Big. Seth stated that being big isn’t what it used to be for business. Mega status once mattered in all kinds of ways. Sprawling buildings, giant law firms and big accounting firms were the vogue. “And then small happened,” wrote Seth Godin.
Seth Godin may have been a bit of ahead of his time when he wrote this passage back in 2006 in regard to the legal field. However, there is now concrete evidence that Big law firms are shedding lawyers and support staff in record numbers. What company wants to pay an inexperienced attorney $400 an hour to perform simple document review? Are these novice lawyers worth the money just because they aced their first year law school exams and “earned” law review. To paraphrase Warren Buffet, the economics of Biglaw appear to have fallen off a cliff. Here are just a few facts:
-On March 9, 2009, the ABA Journal reported that Morgan Lewis, K & L Gates and White & Case announced total cuts of a total of 731 attorneys and staff .
-Akin Gump axes 47 Associates and 57 staff;
-King & Spalding cuts 37 lawyers and 85 staff;
-Latham & Watkins announced plans in late February to cut 440 lawyers and staff.
What’s occurring in the legal field is a massive de-leveraging by the large law firms, that is mirroring what large corporations have been doing during this recession. As a result, more attorneys are starting their own law firms. The evidence:
-UberSolo Carolyn Elefant (on Twitter as @carolynelefant) released her new book Solo by Choice which hit #1 today in the legal profession category on Amazon;
–Law.com reports: Large Firm Layoffs lead to Small Firm Startups;
-The Washington Post reports: Recession Sends Lawyers Home Firms Trade Brick-and-Mortar Prestige for a Better Business Model.
What does this all mean for small firms and solos? The jury is still out. Solos appear well positioned to weather the storm because they are nimble. For example, many have embraced social networking platforms, such as Facebook, Linkedin and Twitter. Just take a look at the top attorney’s on Twitter. Nearly all are solos or work in small firms. Twittesqs (my word) such as Dan Harris (on Twitter as @danharris), Andrew Mayoras (@probateblogger) and Brian Tannenbaum (@ miamicrimlaw) are using Twitter in innovative ways that are raising their profile that may lead to more business.
Solo’s also have the ability to change the focus of their practice to suit the economic climate. Real Estate attorney’s reposition themselves as foreclosure experts. Corporate lawyers become Bankruptcy Attorneys.
However, the competition for new business is fierce. With more lawyers hanging a shingle and less business to go around, when the dust settles only the most innovative may survive.
You can find me on Twitter @fredabramson