Perspectives on law department growth
Law firms will continue to grow much faster than law departments. The simple reason is that when two law firms merge, they do not lay off lawyers to achieve efficiency. The merger is purely additive.When two companies merge, inevitably the resulting law department terminates lawyers. The merger is partially subtractive.
Secondly, law departments are subject to internal headcount constraints; companies do not like to add permanent employees. Law firms, on a different economic footing altogether, strive to attract additional business and therefore hire more lawyers. Much renown and brand power goes to those law firms that can trumpet their gargantuan size.
The third reason is productivity. Law departments strive to get more work done in the same amount of time and with the same number of people. Law firms that charge by the hour open the cash register more when they add staff that charge more and more hours.
Thus, economics and politics will drive the difference between the largest law departments and the largest law firms wider and wider.
By law department consultant Rees Morrison. Adapted from his Law Department Management blog (http://lawdepartmentmanagement.typepad.com).
This page is featured in the October/November 2007 issue of National.
Is bigger necessarily better?
“Growth by itself does not create improved competitiveness and value... If you are able to grow in size and competitive capabilities at the same time, then bigger can be much better.”
— Susan Raridon Lambreth and Lisa Smith, Hildebrandt International. From Capitalizing on Your Firm’s Growth — Is Bigger Better? (www.hildebrandt.com)
“Business is a game of margins, not market share, and growth for the sake of growth is the ideology of the cancer cell, not a profitable business.”
— From The Firm of the Future by Ron Baker, guest blogger on Matt Homann's the [non]billable hour blog (http://thenonbillablehour.typepad.com).