Two items read recently chime with each other. A survey by Citi quoted in Legal Week said non-equity partners are the least productive partners because they bill 100 hours less than equity partners and 150 less than associates. The second item is a new law business has opened in London called Axiom Legal, which hires out lawyers to corporate clients on a temporary basis.
The Legal Week story reinforces the approach in the legal profession to making equity partnership a harder ideal to achieve. Moreover, it will remain exclusive, the inner core. While the race for partnership might still have some strength in it, we are seeing a move to the deprofessionalization of law practice as more professionals are assigned to the category of permanent employee. The result is that commitment and loyalty can no longer be taken for granted: they have to be bought. And there is the free rider problem as the Citi survey shows.
Axiom represents a way out of this. In essence it is a kind of legal outsourcing. Axiom hires lawyers who are discontented with the way of the corporate law practice, offers them a reasonably good salary, consistent and predictable work hours and no responsibility. When a business needs lawyers to handle corporate matters it can take in one or more of the Axiom crew and keep as long as necessary. All the resources the lawyer needs by way of research and backup is provided by Axiom. Hourly rates are lower than a law firm and salaries for the lawyers are lower than those paid by law firms. All Axiom has to do is monitor performance and ensure consistent hiring. For the lawyers it's like being a permanent temp.
The largest, the most complex, and the most urgent transactions will continue to require the input of the large law firms with the oversight of equity partners. Certain niche areas will need high levels of expertise, such as complex litigation. But most legal work is routine and mundane and doesn't necessitate the highest qualified and most expensive lawyers to do it. This is the very point made by Wachtell Lipton: "We specialize in matters that require special attention, extensive experience, a high level of sophistication and the reputation of our partners."
A lot of law firms are going to find it difficult to compete in this variable, ever-changing market.