An increasing number of major law firms are quoting “suicide prices” just to get business that will keep their lawyers occupied, even though the firms can’t make money on the work, according to law firm consultant Bruce MacEwen.

Those firms may be training clients, like department stores have done with their customers, only to buy when prices are discounted, which could lead to more major firms going out of business, says MacEwen, who writes at Adam Smith, Esq. (http://www.adamsmithesq.com)

MacEwen talks with Bloomberg Law’s Lee Pacchia.


Oct. 12 (Bloomberg Law)

There are simply too many partners and associates at many firms. Adding to the firms’ economic challenges, the revenues of legal process outsourcers (LPOs) are expected to grow 85 percent in the next few years. The result is more attorney layoffs are likely ahead, he says.

Big firms have “avoided the really difficult, awkward conversations” about trimming partner ranks. But “that day is coming, because that’s where the money is,” he says.

“Most partners actually don’t understand the firm’s business. It’s not their job. They want to serve their clients. That’s why they made partner. But it presents a tremendous challenge to managing partners” in a time of economic challenges, MacEwen says.

Twenty-five years ago, average partner pay at the AmLaw 100 law firms was 11 percent higher than that of the average American worker. Today it is 23 times higher. “You cannot grow that tree to the sky forever,” says MacEwen.

“Some firms get it completely; other firms just are hoping they can hold their breath and it will be 2006 again.”

Category: Legal, Video

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7 Responses to ““Suicide Prices” (& the Coming Crisis) at Big Law Firms”

  1. WrteStufLA says:

    I’m a little confused by a stat in the next-to-last paragraph. Should “11 percent higher” actually be “11 times higher”…?

  2. Undebt says:

    If these folks can’t prosper in Obama’s corrupt regime, who will?

  3. bda_guy says:

    Just like WrteStufLA, similarly confused!

  4. Eleven times higher; not 11% higher. I know the profession well.

  5. crbrokers says:

    The partners at Dewey & LeBoeuf coughed up $71.5M to settle their bankruptcy, reportedly $50M was covered by insurance they were smart enough to buy but the rest was split out of pocket.

  6. Asymptosis says:

    I went looking a while back for long-term trends in legal fees charged. Could only find data for Canada. There, at least, hourlies have been plummeting for a decade:

    http://www.asymptosis.com/what-if-the-doctor-market-was-like-the-lawyer-market.html

  7. [...] The Big Picture Blog reported last week on big law firms resorting to “suicide prices” to get business. It defines “suicide prices” as prices where the firm loses money, but keeps associates busy. Here is the post. [...]