‘Innovation’ and ‘disruption’ are the legal industry’s favorite terms these days. Articles and conferences on ‘legal innovation’ and ‘disruption’–whether, when, how, and by whom—are legion. Pinpointing when disruption will occur is as unpredictable as an Amtrak train’s arrival. As Yogi said, ‘it’s tough to make predictions, especially about the future.’ Another way to chart the industry’s future is to consider whether the traditional partnership model law firms are becoming obsolete and, if so, what will replace them? That does not require a crystal ball or a Ouija board; a growing body of evidence points to advancing obsolescence of the incumbent partnership model. The structural and operational characteristics of its replacement are now identifiable–even if its dominant players have yet to be determined.

How Are Firms Becoming Obsolete When They Still Have Majority Market Share?

Profit-per-partner (PPP) and revenue remain high at law firms, so how can they be on the way out? Short answer: PPP has been preserved by internal belt synching that does not address the fundamental problem: client dissatisfaction. Partner ‘de-equitization’ and showing the door to experienced lawyers that have high client value but are a drag on PPP (read: high salary, no business) will not stanch the erosion of law firm market share–even if is props up PPP in the short-term. The Georgetown Report and numerous other industry studies conclude that internal cost-cutting has gone about as far as it can go to maintain robust PPP figures. Meanwhile, client dissatisfaction with law firms remains high as evidenced by the rapid growth of in-house departments and elite service providers. This migration from firms has created a growing delta between increased demand for legal services and a flat demand for law firms. Excepting 20 or so elite, brand-differentiated firms that handle high-value, price-insensitive matters, law firms are confronting two systemic issues: (1) delivery; and (2) structure.  A closer look at each helps to explain the plight of most law firms and the reason why their sustainability is in question.

The full article at  https://www.forbes.com/sites/markcohen1/2017/06/12/are-law-firms-becoming-obsolete/#7bd3e5612264