Monday, February 17, 2014

The Rise and Rise of Micro-Law

(thanks to

This post is prompted by the news that three Freshfields partners have quit the firm to form a new arbitration boutique law firm. A London partner along with one from Paris have linked with Jan Paulsson, who used to be a partner. The reason this move is remarkable is that it continues a trend I have noticed since around 2010 when I wrote about the rise of the boutiques.

This came back to me as I was reading Brian Inkster's review of George Beaton's book on NewLaw. (Both are good reads.) Beaton's argument is that the traditional law firm model predicated around Big Law is no longer sustainable. Most of the alternatives, however, are based on technology with intensive outsourcing, the kinds of developments we see with Axiom and Radiant Law. But they aren't the only way of organising the delivery of legal services.

There are many problems with Big Law which I won't reiterate here (read Beaton's book). Maybe one of the difficulties inherent in Big Law is within its name. It's big. Rather like the National Health Service, the largest employer in the UK, large organisations are hard to change. There is resistance from those who like the status quo and there are many barriers to getting the change message to everyone in the organisation. There are often games of Chinese whispers that confuse and set factions against each other. For more see Larry Ribstein's essay on Big Law's death.

A key dilemma with Big Law is that in essence it is a set of interlocking networks that both vie and compete with each other. The result is that fission is common, and fusion is less so. Its main form of remuneration--profits per equity partner--enforces short termism and low thresholds of loyalty. See Sida Liu's critique. Even the moves from traditional partnership to more bureaucratic forms of partnership are failing to solve the problem.

So we have the rise of the boutique or micro law as a way of resolving some the issues. A small group of elite lawyers hive off and start their own firm, usually specialising in one aspect of law practice. The reasons for doing this are easy to identify. Strong among them is a resurgence of collegiality which is now absent from Big Law. Starbuck's essay on Wachtell Lipton showed this to be very important. (For those not convinced read Starbuck here.) Decisions can be made quickly without bureaucratic overload. Conflicts issues are reduced and simplified. And remuneration should be easier to decide--note my conditional here though....

Micro law is a return to the law practices of the 19th century when the "big" City of London law firms held sway throughout the world. With three or so partners but many managing clerks they were involved in policy making, lobbying, litigation and transactions. They helped build the City into the financial global centre it has become.

Yet these 19th century firms were still generalist. The new Micro Law is specialist and targeted on one area such as litigation, international arbitration, white collar crime, crofting law or intellectual property. Because of this it has a different style of practice. Micro law is selective both of client and business.

A preferable analogue may be the Bar. Small groups of lawyers in small offices depending largely on referrals from other lawyers. And this is what Micro Law can do: cases can be referred to it without fear of poaching clients and conflicts conundrums can be outsourced. Most importantly the client will be dealing with the key lawyer not a junior associate being trained at the cost of the client.

The case for the Bar analogue is strong. Litigation is the largest segment of Micro Law showing a demand for skilled dispute resolution (and, query, a rising reliance on third party litigation funding?).

There is no end to lawyers. We will always need lawyers. No society could function without them and no they can't all be killed. Lawyers are bad at organising themselves and have created their own Leviathan which they seem to be unable to slaughter. Nor is technology the answer, although it is tremendously helpful. Lawyers need to get back to doing what they do best. The law?


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