Legal services business model

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The common theme at the “Law Firm Evolution: Brave New World or Business as Usual” conference has been that law firms need to change their business models or risk falling behind. But one panel yesterday afternoon focused on what the new business model would actually look like.

During the “Business Models: Strategy and Governance” panel, Stephen Mayson, director of the Legal Services Policy Institute, introduced a paper on that subject titled “Business Models in Legal Practice: Toward Definition and Assessment, ” which says that the new model for Big Law should focus on four core elements: creating value for clients, figuring out where investments will be made, what returns the firm can expect to bring in, and what resources it will use to get those returns.

The last element, Mayson said, is the one that is most important to consider, especially as legal contracting and virtual firms continue to gain prominence. Nontraditional firms such as those should be considered when tweaking the Big Law model, Mayson said. “The death of Big Law, should it happen, will come from one area only—the failure to manage the wealth of resources out there, ” Mayson said.

Another aspect of creating a new business model that should be considered, Mayson said, is whether a single model is right for a firm at all. In his paper, available here, Mayson writes, “Consider whether the firm is in truth one business (with distinct strategic business units) requiring one business model with multiple elements, or a number of discrete businesses requiring multiple business models.”

Peter Scherer, a business professor at the University of Calgary, argued that modern-day firms could learn from how firms weathered the Great Depression. Many of the top law firms in the 1920s through the 1940s were able to add partners despite the devastating effects of the stock market crash because they had a “critical mass of flexible young partners” that were able to quickly change the firm’s focus on advising clients through the downturn as opposed to the more favorable economic environment in the early part of the 20th Century. As a result, clients flocked to firms that were able to prove their quality in a down market, which gave firms the momentum to continue growing their business. “These are useful things to think about today, ” Scherer said.

That “flight to quality” is evident today, and not just on the client side, said Dan DiPietro, advisory head of the Citi Private Bank law firm group. DiPietro said that laterals are also flocking to firms that have best weathered the economic recession of 2008 and 2009. “They’re voting with their feet. Either they’re voting voluntarily and leaving for firms that may be a better fit, or they’re being forced to vote by being laid off.”

DiPietro said that one of the biggest challenges for firms as they retrench after the recent economic downturn is debt. “Debt is not a leading indicator of a problem, but it is a complicating factor, ” DiPietro said. “Firms that have a great deal of debt may try to pay it off by reducing compensation, which will drive some partners to make a flight to greater quality firms.”


uadreams
Web-Linking Agreements: Contracting Strategies and Model Provisions
Book (Amer Bar Assn)
2006-06-08 09:02:07 by yesterday

I actually had an idea for a business

That dealt with the personal finances (there would have to be a bunch of legal agreements and whatnot) of people with middle incomes like this. Charge a fee to do it all, as an accountant would do (but have to be paid a lot more) on a more detailed basis.
The idea was to build up enough of a client base and a more cookie-cutter package of services in order to make a profit.
(The idea was to do this so that I could subscribe to the service, of course!!)
It'd also include in the business model - classes to assist the customers in basic financial management and responsibility and a first-things-first sort of informational stuff...


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