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| META TOPICPARENT | name="ClassNotes16Jan08" |
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the death of the giant firm? (Work in progress)
Since our grade is partly based on whether we’re ethical, I must credit Sandor for arguing that the legal product includes trust, and Justin Colannino for predicting that Wexis will be assimilated into Googles and Wikipedias.
Now that I'm going online to upload this, I just discovered i got a b minus in torts, so take my arguments with a heavy dose of skepticism. | |
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< | Eben believes that law firms will be extinct by the time we inherit them. I have my own opinions on what made giant firms so successful, and what could make them obsolete. | >
> | Eben believes that giant corporate firms will be extinct by the time we inherit them. I have wondered what could make them obsolete. | | | | |
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< | The richest corporations want their legal work mass-produced and custom-fit. Big firms accommodate these clients by exploiting economies of scale. The deep bench supplies apprentices to do drudge work for their mentors, and many specialists packed under one roof cross-pollinate their ideas, as at interdisciplinary research universities or think tanks. | >
> | First, why were they successful? The richest corporations want their legal work mass-produced and custom-fit. Big firms accommodate these clients by exploiting economies of scale. The deep bench supplies apprentices to do drudge work for their mentors, and packing specialists under one roof improves the cross-pollination their ideas, as at interdisciplinary research universities or think tanks. | | | | |
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< | I believe that Eben believes that the efficient trade in information will abolish the ownership of symbolic representations, materially, and then legally. Then the brokers and networkers of creative thought will become obsolete. Blogs broke the media conglomerate’s monopoly on distributing news. Recording companies will go the way of switchboard operators. Middle Management is being crushed by flattening corporate hierarchies. The continental investment banks ceded power to an archipelago of hedge funds, run by irreverent geniuses like my three college classmates who started trading currencies together as second semester seniors. | >
> | I believe that Eben believes that the cheap exchange of information will abolish the ownership of symbolic representations: when the “exclusive” right to use becomes unenforceable, the right itself becomes a __.
. Then the brokers and networkers of creative thought will become obsolete. Blogs broke the media conglomerate’s monopoly on distributing news. Recording companies will go the way of switchboard operators. Middle Management is being crushed by flattening corporate hierarchies. The continental investment banks ceded power to an archipelago of hedge funds, run by irreverent geniuses like my three college classmates who started trading currencies together as second semester seniors. | | | | |
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< | By gambling on their own hedge fund over a hierarchical bank, perhaps these friends were selling short our industry too. Perhaps the same centrifugal force will disintegrate giant law firms. Certainly, raw jurisprudential data will be free one day, perhaps when some Robin Hood scans in the entire written Westlaw and Nexis registers, then writes a Google-like algorithm to organize it into Wikipedia-like linked pages. Lone-practitioner Davids will keep pace with firm Goliaths by outsourcing drudgework to India or their cell phone. | >
> | But creative work will never be socialized, at least until someone invents mind-reading or artificial intelligence. Hedge fund managers will still need intuition to predict capital flow from commercial data; managers will need insight to market and innovate; reporters will always rely on pluck to formulate questions, anticipate the scene of the crime, and research non-symbolic facts; songwriters will always daydream and smoke pot. | | | | |
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< | But creativity will never be socialized, at least until someone invents mind-reading or artificial intelligence. Hedge fund managers will still struggle to predict capital flow from commercial data; managers will market and innovate; blogs will rely on reporters to formulate questions, anticipate the scene of the crime, and research non-symbolic facts; good musicians will always smoke pot and drop acid. | >
> | So I must rephrase my original question: what is essential to corporate legal services, and what structure and scale will generate that most efficiently? | | | | |
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< | So what is essential to legal services, and what structure and scale will generate it most efficiently? | >
> | Some legal products are not valued for being “good,” but for being “better” than the competitor’s. When the litigator’s client is committed to reaching a final verdict, or when the lobbyist or appellant proposes to reform the law for the indefinite future, his mandate is to produce a binary outcome (winning). Legally educated persons have a monopoly in the production of these decisions, because their future creative product is inalienable. The demand for a given litigator will be proportional to his or her relative ability to deny the opposite outcome to the competitor’s litigator.
Eben writes (and I add emphasis):
Your generation, unlike all previous generations of lawyers in New York City, will be competing for daily bread against well-trained lawyers in New Delhi and Bombay. The savagery of leverage will soon make corporate finance practice and large litigation support--in general, in fact, the back office practice on which large firms currently thrive—a practice you can't afford to be in. The legal industry is going to look in future more like the garment industry, and more so at its top than it will at its bottom. The jobs that have been considered elite for two generations, and for which your institution is best equipped to train you, are about to globalize elsewhere, leaving a steeper pyramid with much less room at the top for people like you.
The marginal return to transactional work of an investment in legal education will certainly diminish. The mandate for transactional work is not binary: it is to maximize income through contract negotiation [?]. Ivy-educated lawyers will be only slightly more valuable, and much more costly, than graduates of third-tier schools, lawyers in India, and software.
But lawmaking by litigation, unlike transactional negotiations, does not produce value that is easily measured and compared to the costs of production. It implicates the very existence of a stream of value for the indefinite future. It rallies powerful opposing interests. It is war by other means. War leads to arms races, and arms races get out of control. Corporations with immeasurably large interests in changing the law will continue to pay unconscionably large sums to control the “best” possible sources of creative legal ideas.
Law firms, congress, and law schools blaze the path of the law. But when the temptation of corporate money influences the direction they choose, it is only incidental that the partner signs our paychecks, the congressman signs the bill, and Schizer signs our diploma.
1] better is all that’s needed
2] social values are also [high value—uncomputable value? Invaluable? Priceless?]. Whether the pursuit of vast financial value or the pursuit of immeasurable social value is a stronger temptation for the lawyers, legislators, and educators who blaze the path of the law is a question ultimately in their hands. | | | may reduce the law firm’s comparative advantage over the law market in brokering and networking legal ideas. |
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