"Clients hire lawyers, not firms,” is the oldest line in the business development handbook. Law has long been a personal services business with a strong relationship component: clients come to rely not only on a lawyer’s expertise, but also on his or her judgment and advice. By contrast, the law firm is equally far away from the client, normally present as just a name on a letterhead or an invoice. Most of a law firm’s clients deal primarily, if not exclusively, with one lawyer or small group of lawyers and staff.
Lawyers have sufficient confidence in this dynamic that they exercise an extraordinary degree of autonomy within their firms. Ask a typical law firm partner to vote on a proposal that will compromise revenue in the short-term but enhance profits in the long term: in most cases, the thumb predictably will be turned down. The brand of the individual lawyer has consistently trumped the shingle of the firm under which he or she happens to practice at the moment.
This is the war that’s been raging within law firms for years now: the fight for control of the business between individual lawyers and the collective firm. Firms have lost so many of these battles that they’ve stopped counting and, in many cases, have stopped fighting. When the firm is nothing more than the sum of its individual, autonomous owner/worker lawyers, what chance does the firm have to escape the immense gravitational pull of those lawyers’ self-interest?
That’s why the coming, inevitable decline in law firms’ lawyer population is of such immense importance to law firm strategy.
“There’s no substitute for a good lawyer.” If any bar association wants to use that as the tagline for its next lawyer image campaign, go right ahead. But it’s also a dangerous and ultimately misleading way for lawyers to view the modern market for legal services.
In economics, “substitute goods” are products perceived by the market as sufficiently similar that raising the price of one increases demand for the other. If you consider McDonald’s and Burger King pretty much interchangeable, you’ll go to McDonald’s if Burger King raises its menu prices, or if the closest Burger King is inconveniently located.
Traditionally, legal services have been considered immune to the law of substitute goods, in part because law has often been considered (by lawyers, anyway) as a “credence good,” one whose value is not fully clear to the consumer even after using it.
Another more salient reason is that competitors to lawyers in the legal market were banned through regulation. Doing what lawyers did, without being a lawyer, constituted the Unauthorized Practice of Law and was duly prosecuted.