Cartelization drives up prices a great deal. 5:1 would be unsustainable if firms competing for clients would lower the bill, or firms competing for associates would raise their salaries. But it's in the right ballpark if the firm adds that much value to a lone associate's work.

What drive up the bill:salary at firms are the economies of scale (or is it scope?) that firms create:
(1) legal support (including paralegals, associates, subscriptions and management) --> lower overhead per attorney.
(2) clients (who consolidate legal services into one firm, and stay for the long term) --> a free client base for associates to pass through
(3) reputation (which, to those clients paying for black-box legal services, is the total value a lawyer's work)
(4) larger firm size --> more fertile network to cross-pollinate ideas

(A)Technology and globalization will change the nature of our clients.
(B)These forces, and new political pressures, will change their legal questions (our work).
C) These forces will change the structure of our firms.

RE (1): Legal support will get hardest hit: paralegals, then Wexis, then associates. Associates altogether will add less value to the partners. The pyramid will TAPER. But does that mean firms, with fewer associates, will need to lower associate attrition to replace the same number of partners? Will each associate be paid more?
RE (2): Will clients prefer less to consolidate their work in one firm? I wonder--have firms used requirements contracts? Either way, I think the CLIENTS enjoy an economy of scale (or is it scope?) by unloading all their problems in one place for all time.
RE (3):Will clients have fewer black-box legal problems, lowering the value of lawyers' reputations? (black-box = not of easily measurable value)
RE (4) Will lawyers make their knowledge more freely available, so that other lawyers can benefit without compensating them? I assume this cross-pollination is most implicated by Eben's vision for the future of intellectual property.

-- AndrewGradman - 26 Jan 2008