What's wrong with the business of law? Quantifying the return on investment of legal services

Expanding on my earlier post, it occurs to me that the law firm model itself is largely to blame for associate attrition. At its most basic level, the practice of law is a service business, meaning revenue growth requires delivering more units of labor. Based on a billable hour paradigm, growing partner profits means profitably outsourcing work to other attorneys, specifically junior associates. Keeping this relationship profitable means dancing between ardently developing the skill sets of junior associates and keeping them doing grunt work as long as possible.

As argued previously, better pay and a better "work-life balance" will do only so much to keep associates from bolting. There must be a fundamental shift in their roles; less paper pushing and more opportunity to deliver value to clients and take on accountability for projects. In order for such a transformation to occur, however, the view that firm profitability is dependent on leveraging associates must change. Firms and attorneys need to identify themselves--indeed to market themselves--as business partners delivering a quantifiable return for their fees.

Under the current model, legal services are essentially commoditized. Although specific complex issues and cases may be difficult to compare and quantify, law firms and attorneys are not easily differentiable from one another, particularly among the "top" 200 firms. There are degrees of talent to be sure, but the majority of legal work (i.e. an attorney's time) is fungible. Because of this, notwithstanding the value and insight they often bring to the table, lawyers sit at the bottom of the food chain in transactions, and are a necessary evil in litigation. The client says jump; the attorney says how high. When a client calls on Friday at 5pm because they "forgot" about an issue, the attorney either takes the job and works through the weekend or someone else will. (And there will be no premium rate for weekend time.)

Moreover, as transparency has moved into the law (much like patients becoming more informed than their their Doctor's), in some sense the jig is up. Legal services are something that a client outsources; not because they can't do it, but because someone has to do it, and that someone must be a member of the Bar. Much like IT spending, clients are--or soon will be--looking to gain some quantification of the value delivered.

What would such a shift mean for associates? In my mind the future is highly uncertain. Quantifying a return for legal services should incentivize efficiency, meaning increased technology utilization and fewer associates locked up doing grunt work. Because quantifying an ROI for legal services themselves implies more sophisticated methods of valuing legal talent, associate compensation should broaden to a fuller spectrum. In other words, market forces should chip away at the heavy reliance on political positioning to advance one's skill sets. This implies a thinning of the associate herd, or at least a more meritocratic environment.

Perhaps the droves of attorneys leaving their golden thrones aren't yet fully conscious of this forecast, but with an historically "riskless" career path becoming more volatile, is anyone really surprised?