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Convergence: Growing dissatisfaction with
Biglaw and the Rise of the Alternatives
Presented at Harvard Law School
by Micha...
BIG LAW: TIME FOR CHANGE?
HOW DID WE GET HERE?

Ongoing changes in technology and society
Economic Crash of 2008
Rise of Megafirms in late 1990s in
...
CRAVATH SYSTEM
In early 1900s, Paul Cravath turned the affiliation of partners with
apprenticeships model into an up-or-ou...
ASSEMBLY LINE
Changes in society and business models from the 1920s,
and hyper-specialization resulting from Cravath Syste...
BILLABLE HOUR
Before 1960s, elite law firms would send a bill for “services rendered”.
Clients began to demand clearer met...
AMERICAN LAWYER RANKINGS

In July 1987, American
Lawyer Magazine starts
ranking law firms by
profits and revenue.

Result:...
LIMITED LIABILITY PARTNERSHIPS

2
1992

40
1996

In 1992, only two states allowed LLPs, by 1996 over
forty states had adop...
MEGAFIRMS
In response to globalization, Limited Liability Partnerships (1992)
and AmLaw revenue rankings, law firms compet...
ECONOMIC CRASH
Overleveraged firms with large employee and real estate
Overhead, and high salaries promised to rainmakers,...
RISE OF ALTERNATIVE MODELS

(2000)

(2008)

(2001)

(2008)

(2008)

(2004)

(2008)

(2008)

Clerky
(2010)

(2010)

(2011)
...
WHAT PROBLEMS
ARE WE TRYING TO SOLVE?

COST

QUALITY

Too high

Unpredictable/O
paque
Poor Incentives

High leverage
Assoc...
WHY NOW?
Convergence of changes in
TECHNOLOGY, CULTURE and the
ECONOMY
THE ECONOMY HAS PLAYED A HUGE ROLE

Corporate legal departments are under
tremendous pressure to manage costs and justify
...
CHANGES IN TECHNOLOGY
Disruptive Technology lowers the barrier to entry
enabling startups to compete with Big Law.

OLD RE...
EXAMPLE: RIMON
STRUCTURE

TECHNOLOGY

Quartet
TRADITIONAL MODEL
Managers
Partners

Associates
Product produced by Associat...
CHARACTERISTICS OF

ALTERNATIVE LEGAL
SERVICES MODELS
ALTERNATIVE FEE ARRANGEMENTS
Flat/Fixed
Fees

Pooling
clients

Partial
Contingency

Increased
focus on
project
management
...
DISTRIBUTED MODEL/
ONLINE DELIVERY OF SERVICES
Palo Alto

San Francisco

Tyson’s Corner

New York

New Orleans

Washington...
SEGMENTATION OF MARKET AND ASSIGNMENT
OF WORK BASED ON RELATIVE IMPORTANCE

1

2

3

Bet the
Company

Important

Routine

...
EXPERIENCE
Recognized by Best Lawyers of America and

All of Rimon’s

SuperLawyers

partners have at least

10 YEARS
OF LE...
SAMPLE OF REPRESENTATIVE CLIENTS
CONCLUSION

Big Law is not dead

Most prestigious firms
will continue to thrive

Innovation will need
to occur at all leve...
THANK YOU
Presentation at Harvard Law School: Evolution of Elite Law Firm model and Rise of Alternatives
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Presentation at Harvard Law School: Evolution of Elite Law Firm model and Rise of Alternatives

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Presentation to be given at Harvard Law School on the evolution of the elite law firm model, what brought about recent changes, and alternatives that have been rising up since 2008.

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Presentation at Harvard Law School: Evolution of Elite Law Firm model and Rise of Alternatives

  1. 1. Convergence: Growing dissatisfaction with Biglaw and the Rise of the Alternatives Presented at Harvard Law School by Michael B. Moradzadeh and Yaacov Silberman
  2. 2. BIG LAW: TIME FOR CHANGE?
  3. 3. HOW DID WE GET HERE? Ongoing changes in technology and society Economic Crash of 2008 Rise of Megafirms in late 1990s in reaction to globalization and limited liability American lawyer rankings start in July 1987 Billing by hour starts to take over in 1960s Specialization leads to assembly by 1950s Cravath System of early 1900s
  4. 4. CRAVATH SYSTEM In early 1900s, Paul Cravath turned the affiliation of partners with apprenticeships model into an up-or-out salaried model with strong management, specialization, and hierarchy. Associates who survived became partners. This created a pyramid structure. Senior Partner Junior Partner Senior Associate Mid-Level Associate Junior Associate Senior Associate Mid-Level Associate Junior Associate Mid-Level Associate Junior Associate Junior Associate
  5. 5. ASSEMBLY LINE Changes in society and business models from the 1920s, and hyper-specialization resulting from Cravath System, eventually brought the assembly line to law firms.
  6. 6. BILLABLE HOUR Before 1960s, elite law firms would send a bill for “services rendered”. Clients began to demand clearer metrics, so law firms start billing by the hour. In 1960s attorneys at elite firms were expected to bill about 1300 hours a year.
  7. 7. AMERICAN LAWYER RANKINGS In July 1987, American Lawyer Magazine starts ranking law firms by profits and revenue. Result: obsession with profits per partner and revenue. Leads to larger firm, more leveraging, longer partner-track, higher billable rates, de-equitized partners, more lateral movements, more mergers, higher pay for rain makers, and higher billing requirements. Often to overall detriment of firm.
  8. 8. LIMITED LIABILITY PARTNERSHIPS 2 1992 40 1996 In 1992, only two states allowed LLPs, by 1996 over forty states had adopted LLP statutes by the time LLPs were added to the Uniform Partnership Act in 1996 Limited Liability Partnerships allowed for greater risk when bringing in lateral partners. This led to more movement of lateral partners. Partnership structure is often short-term focused.
  9. 9. MEGAFIRMS In response to globalization, Limited Liability Partnerships (1992) and AmLaw revenue rankings, law firms compete for size, starting in late 1990s. Desire to be everywhere their clients were. Result: higher conflicts, more bureaucracy, increased leverage.
  10. 10. ECONOMIC CRASH Overleveraged firms with large employee and real estate Overhead, and high salaries promised to rainmakers, show vulnerability to economic downturns, especially in 2001 and 2008.
  11. 11. RISE OF ALTERNATIVE MODELS (2000) (2008) (2001) (2008) (2008) (2004) (2008) (2008) Clerky (2010) (2010) (2011) (2013)
  12. 12. WHAT PROBLEMS ARE WE TRYING TO SOLVE? COST QUALITY Too high Unpredictable/O paque Poor Incentives High leverage Associates learning on the job LIFESTYLE Growing dissatisfaction of attorneys in Big Firm practice Is there an alternative to "Soul Crushing" work?
  13. 13. WHY NOW? Convergence of changes in TECHNOLOGY, CULTURE and the ECONOMY
  14. 14. THE ECONOMY HAS PLAYED A HUGE ROLE Corporate legal departments are under tremendous pressure to manage costs and justify expenditures Old model was squarely CYA With increased focus on costs, alternatives to Big Law (including in-house, solos, etc.) are seen as increasingly legitimate options
  15. 15. CHANGES IN TECHNOLOGY Disruptive Technology lowers the barrier to entry enabling startups to compete with Big Law. OLD REQUIREMENTS NEW MODEL Real Estate Cloud computing Technology Infrastructure Subscription model Human capital (admin) Self Administration Expensive Research Tools Increased competition from resource providers
  16. 16. EXAMPLE: RIMON STRUCTURE TECHNOLOGY Quartet TRADITIONAL MODEL Managers Partners Associates Product produced by Associates Firm-Wide Attorney Meetings
  17. 17. CHARACTERISTICS OF ALTERNATIVE LEGAL SERVICES MODELS
  18. 18. ALTERNATIVE FEE ARRANGEMENTS Flat/Fixed Fees Pooling clients Partial Contingency Increased focus on project management Try to reward good work, not inefficiency!
  19. 19. DISTRIBUTED MODEL/ ONLINE DELIVERY OF SERVICES Palo Alto San Francisco Tyson’s Corner New York New Orleans Washington D.C. Los Angeles Seattle Orange County San Diego Chicago Tel Aviv
  20. 20. SEGMENTATION OF MARKET AND ASSIGNMENT OF WORK BASED ON RELATIVE IMPORTANCE 1 2 3 Bet the Company Important Routine Would you have an aerospace engineer repair your Vespa?
  21. 21. EXPERIENCE Recognized by Best Lawyers of America and All of Rimon’s SuperLawyers partners have at least 10 YEARS OF LEGAL EXPERIENCE Hold JDs, PhDs, LLMs, and MBAs from the best universities in the United States and abroad All attorneys working on every matter are highly specialized in their respective field from some of the top law firms in their respective fields. Former partners at global law firms, executives at global corporations, and professors in business, law and science
  22. 22. SAMPLE OF REPRESENTATIVE CLIENTS
  23. 23. CONCLUSION Big Law is not dead Most prestigious firms will continue to thrive Innovation will need to occur at all levels
  24. 24. THANK YOU

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