Move over, Big Law. Small Law is in. And the trend has proven to be more than a temporary reaction to the 2008 financial meltdown. Four years later, corporate lawyers are flocking to small firms.
Some lawyers call it disaggregation, and it reflects a change in the way the legal industry operates. Small firms are flourishing because clients’ demands have evolved over the years. Rather than relying on one firm and paying for a package of legal needs, clients are turning to different firms, and in some cases to legal support businesses, for different tasks. While the economic downturn certainly encouraged clients to search for more cost-effective legal representation, many clients had already come to think that they were throwing money away by sending all their work to big firms.
The key has been the unbundling of legal services. This allows legal departments to match specific tasks with the right service providers. Converts point to high-priced first-year associates as an example of the problem with big firms. Some clients unknowingly pay nearly the same hourly rate for these inexperienced lawyers to review documents and perform discovery as they pay for partners to, say, write briefs and hold settlement conferences. By contrast, small firms aren’t saddled with the need to train armies of associates on the client’s dime.
The unbundling of tasks has also permitted firms to tap new technology to perform time-consuming jobs. They now rely on software to help speed some of the most burdensome e-discovery jobs, like document production and review, rather than hit up clients with first-year associate rates.
Beth Anisman has watched the evolution over the past decade. She was a lawyer for Lehman Brothers Holding Inc. before the financial firm declared bankruptcy in 2008; then she became the chief operating officer for the legal department of Barclays Capital Inc. She spent years managing legal operations for the two financial powerhouses before she struck out on her own to found B&Co Consulting in New York, which advises corporate lawyers on how to manage their clients’ needs. Much of her current work consists of advising corporate lawyers on which law firms and agencies to hire for which tasks.