Date: April 12, 2013 Topic: The Shrinking ... - Georgetown Law

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DECONSTRUCTING BIG LAW
The Future Market for Corporate Legal Services
Preliminary Results
by
Molly Selvin 1 and Patrick M. Hanlon 2
The Shrinking Pyramid: Implications for Law Practice and the Legal Profession Symposium
Georgetown University Law Center
April 12, 2013
Abstract
The legal industry is in transition. A generation of explosive growth in the market for corporate legal
services has ended, and while many big law firms remain highly profitable to their owners, revenues are
stagnant, jobs are increasingly insecure, and the demand for new lawyers is at low ebb. Stories
announcing the demise big‐firm law practice have made the New York Times front page and draw
almost obsessional coverage in legal trade publications.
Though the law firm “pyramid” is under tremendous stress, preliminary results from a multi‐year
Stanford Law School project on the future of the legal profession also reveal a more diverse—and
somewhat less dire—picture of the legal services industry.
The Stanford legal profession project aims to understand the changes occurring in the market for
corporate legal services and their implications for legal education and legal careers. Our research
encompasses both purchasers and suppliers of legal services. The people we have interviewed to date
were candid and thoughtful, and our interviews comprise a rich source of qualitative data.
First of all, these data suggest that that the industry’s financial pressures are neither felt uniformly
across the legal industry nor are they always as acute as often portrayed. While corporate clients have
for years tried to avoid excessive costs, this often does not result in the relentless cost‐cutting and
churning of firms postulated in the literature. Corporate counsel often hire what they regard as the best
lawyers (or sometimes firms) for the job with only limited consideration of cost. This is often due to the
impossibility of replicating outside counsel’s knowledge of the client and its business. By the same
token, despite growing corporate interest in alternative to big law – LPOs, contract lawyers, e‐discovery
and other technology vendors, and even firms that provide highly sophisticated lawyers on a temporary
basis – these alternatives so far enjoy only modest market participation. They have a long way to go to
realize their full potential. Second, cost pressures have allowed some lawyers to capitalize on the
1 Research Fellow, Stanford Center on the Legal Profession, Stanford Law School; Associate Dean for
Interdisciplinary Programs and Adjunct Professor of Law, Southwestern Law School.
2 Research Fellow, Stanford Center on the Legal Profession, Stanford Law School and former lecturer at Berkeley
Law and partner at Goodwin Procter LLP.