Big Law Firms Have to Compete? The Horror!

August 2, 2011

Large law firms bank on having clients that blindly pay them for legal work without looking for better alternatives.  The Wall Street Journal highlighted how big firms are now having to compete for legal work through “reverse auctions.”  Law firms hate this because it forces them to cut their rates to clients when they had been consistently raising rates to those particular clients over the years.  One quote from the article really struck me:

“Every lawyer will tell you that every piece of work they do is incredibly important and risky and has to be custom-made, and that’s just nonsense,” says Jeff Carr, general counsel for FMC Technologies Inc., an oil-and-gas-equipment supplier for the energy industry that uses reverse auctions. “No matter how legally brilliant you are, there is always an alternative.”

Mr. Carr is right.  Large law firms bill extreme rates for the most routine matters, which are farmed out to low-level associates. Both large and small companies have alternatives that may not need big firm resources.  Especially if the work is being performed by younger associates will little experience and astronomical billing rates.

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