It always seems that before a catastrophe or some major event, there’s always people on the fringe that foresee the damage. Take Peter Schiff for example. During the high times of the Wall Street financial soiree, Peter stood firm by his analysis that the thriving economy of 2006 was living on borrowed time. Of course, had the economy never crashed, I never would have heard of this guy. But now that it has, he’s got my attention. Check out this video and note how he’s laughed at in every single interview. The beautiful thing about the internet is that it never forgets. Check out all those people with egg on their faces now.

The cartoon says it all.  Tough times are coming for the legal profession.  In my opinion, this represents an enormous opportunity for the solo practioners and small firms to steal some business from the large players.  

With the housing bubble, the values of homes were artificially inflated due to the amount of funny money in the market.  Banks carelessly extended credit on the premise that property values would continue to appreciate.  The more loans they issued, the more money people could borrow, which led to higher property values, which led to larger loans, which led to higher property values….and the music stopped.  As it turns out, in their haste to dish out credit, banks overestimated the appraisal values of the properties.  Do you see where I’m going with this?  

In the U.S. stock market…same story.  There’s definitely less liquidity in the market now.  Cash is king.  And people are slowly starting to place a higher value on a hard earned dollar.  

With large law firms today, they’re pyramids with a large base of associates at the bottom feeding the few shareholders/partners at the top.  There’s absolutely nothing wrong with this practice, as most companies resemble a pyramidial structure.  But large law firms are unique due to the massive, immense, inordinate amount of overhead associated with running a large law office.  There are highrise buildings, posh furnishings, countless paralegals, expensive recruitment budgets, marketing expenses, secretaries, technology infrastructure, case managements systems, benefit packages, and oh yeah, lawyers.  Each year, I would read about how various law firms would pay first year associates $150K plus.  The salaries were justified in the name of competition…they wanted the best and brightest from law school.  Honestly, most first year associates are barely qualified to run the copy machines, let along generate work worth $300 per hour.  So in the interest of recruiting the top talent, the expenses seem to have balooned out of control.  And who bears the cost for this excess?  Clients.    

As an in-house attorney, it’s my perspective that clients are getting tight with their money.  But is this really a surprise?  I mean, intuitively, we all knew it would end at some point, right?  Clients are no longer willing to pay for the fluff without the substance.  Clients are starting to figure out they can get equivalent services at a much smaller operation.  If a lawyer works out of a smaller office, learns to outsource the no-brainer tasks, does his own research, he could easily save the client 75% in legal fees.  The future belongs to the agile.  And the 50+ lawyer firms better take the hint.