Why Do Law Firms Grow?

This blog is another in a series of blogs around the fringes of ACC’s Value Challenge. As I said in my Bio, one of my purposes in these blogs is to give you an opportunity to think outside the box, a luxury that your daily routine may not permit.

So why do law firms grow? If you go to a big firm what are you buying. The firm would tell you that you are getting a great array of services. So why do you need a great array of services? One of the reasons you exist is to provide your client access to the precise legal service it needs. Perhaps that means giving the advice yourself. Or it may mean finding the expertise that is more cost effective and better than the big firm.

Well, you say big firms grow because they have the best talent, attract lots of clients because of the quality of service they provide—wrong answer. They grow because they have to grow—it is genetic. To be sure, going beyond the demand for services or at least the ability to artificially create demand does have limits and portends change

In the Tournament of Lawyers; the Transformation of the the Big Firm, University of Chicago Press 1991, the authors describe the tournament to become partner, and the need to create partners to give legitimacy to the tournament as the reason large firms get bigger and they predicted a lot of the changes we have seen since the book was published.

However, there is one thing that can have a very dramatic impact on the existence of the big firm—a rigorous, objective standard to evaluate actual quality of service. The first thing you are probably buying at the big firm is prestige—because in an environment where the ability to evaluate quality is hard and the costs of misjudgments (as distinguished from wrong judgments) is high, prestige becomes a surrogate for judging quality, or at least a source of cover for you if you selected that firm over a small firm who might have gotten the same adverse result for the same reason.

Please note that when I said judging quality was hard—I did not say impossible. We will explore some options in later blogs to see exactly what you are buying.

-Larry Salibra
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