The 2016 Georgetown Report on State of Legal Market uses the apt analogy of Kodak to underscore the risk of law firms obsolescing themselves out of the legal services market.
Those of us who write about innovation, legal industry change and the growing impact of legal tech are very familiar with the Kodak story which ends with the company’s bankruptcy.
Law firm partners still refuse to empower their leaders to undertake the type of change needed to ensure the long-term success and profitability of their firms.
Law firm partnerships are inherently self-serving entities where there has historically been little incentive to work together for the benefit of the firm.
The reason many alternative fee structures fail is that the underlying cost basis is still the billable hour.
And the billable hour shapes virtually all compensation structures in most firms.
The authors assert that law firms are aware of the risks and choose not to act or take on a more proactive stance despite the consequences certain to be suffered.
I’m actually more sympathetic to law firms (it’s rare that I would be) because it’s much easier said than done to transform an entity with a partnership structure and mentality into a corporate one.Growth was flat, with Am Law 100 firms and mid-size firms showing the strongest growth, and the Am Law Second 100 as a group faring the worst.Long term trends indicate that law firms are going to continue having difficulty competing, and the authors feel if proactive change doesn’t occur, many law firms will go the way of Kodak.While it would seem this strategy is the only game in town in today’s legal services market, there are better solutions.In fact, most analysts agree there is no correlation between law firm size and profitability.Many law firm partners don’t act like owners when it comes to compensation and desperately-needed change.