TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Friday, October 18, 2013

Harvard Business Review: Why Law Firm Pedigree May Be a Thing of the Past

Harvard Business Review LogoHarvard Business Review, Why Law Firm Pedigree May Be a Thing of the Past:

Have you ever heard the saying: “You never get fired for buying IBM”? Every industry loves to co-opt it; for example, in consulting, you’ll hear: “You never get fired for hiring McKinsey.” In law, it’s often: “You never get fired for hiring Cravath”. But one general counsel we spoke with put a twist on the old saying, in a way that reflects the turmoil and change that the legal industry is undergoing. Here’s what he said: “I would absolutely fire anyone on my team who hired Cravath.” While tongue in cheek, and surely subject to exceptions, it reflects the reality that there is a growing body of legal work that simply won’t be sent to the most pedigreed law firms, most typically because general counsel are laser focused on value, namely quality and efficiency. ...

A recent survey of General Counsel at 88 major companies conducted by AdvanceLaw ... supports this argument.  The results suggest that GCs are increasingly willing to move high-stakes work away from the most pedigreed law firms (think the Cravaths and Skaddens of the world)… if the value equation is right. (Firms surveyed included companies like Lenovo, Vanguard, Shell, Google, NIKE, Walgreens, Dell, eBay, RBC, Panasonic, Nestle, Progressive, Starwood, Intel, and Deutsche Bank.) The results of the two questions the survey asked are below.

Bad News for Pedigreed Firms

But it would be unwise to count out white shoe firms’ ability to adapt over the long run. Their higher margins could be reinvested into client service innovations. They also have the potential to roll out differentiated lower cost solutions (as some have already begun doing in the form of contract lawyers). Of course, there are many challenges to any of these strategies, not the least of which is firm culture. But make no mistake: the competition for market share in the legal space is tough and getting tougher.

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