Why Is Big Law Big?

Almost one in four law school graduates went to work for large law firms upon graduation in 2008 - a substantial increase from the percentage even a decade before then. Typically, the "burnout" rate for new associates is very high, with something like 80% of them ceasing to be employed by the big firm in four or five years, training and mentoring of new associates is often modest, and new associates are often given very modest responsibility or client contact in a case, despite the fact that they are earning high salaries and are often the cream of the crop academically.

Why have big firms grown so rapidly, and why do they need so many junior attorneys in whom they invest so little and expect so little from (by way of skills and responsibilities, not billable hours)?

Some of big law firm growth is due to the growing scale of big business, but this doesn't explain why firms have become bottom heavy. Leverage used to create high profits per partner explains why firms would like to have more associates than partners, but that kind of leverage only works if a large share of the work to be done can be successfully delegated to relatively inexperienced attorneys, because clients don't like to have skilled work on cases of importance handed over entirely to junior associates.

The bottom heavy nature can modern legal work can be traced to some specific areas of the law that can be deduced from the work that junior associates typically do. Stereotypically, the main jobs of modern entry level associates are discovery practice, due diligence in corporate ownership transactions and legal research. Both of the first two tasks have strong similarities They involve obtaining and processing large amounts of factual information from an opposing party, with a goal of finding needles of important information buried in haystacks of data.

In big case litigation, discovery often drives as much as 90% of litigation costs. In corporate transactions, due diligence is a large part of the legal cost of the deal. In both cases, the vast majority of the information gathered is of trivial importance to the matter, and the opposing party frequently knows what the important information is, but would prefer not to be required to find it and turn it over.

Big law firms are recent inventions. They were virtually non-existent prior to the 1950s, and have grown in number and scale exponentially since then. Big law firm litigation departments were quite small parts of the total enterprise until the 1980s, a time period which also grave rise to many of the transactions for which due diligence is important, like the leveraged buy out.

Relatively surgical changes in civil procedure and the substantive laws that expand the scope of what is relevant in civil cases, in the litigation context, and in securities laws, in the latter case, could, in theory, dramatically reduce these two stereotypical sources of big law firm associate work. It is also theoretically possible that this could be accomplished without necessarily greatly altering the balance of power in the areas of law where they apply.

These changes in the law, in turn, might put a dent in the scale of large law firms, particularly at the associate attorney and paralegal level. This isn't to say that the silk stocking/white shoe law firms that continued to serve big businesses would cease to charge high fees, pay good salaries to the associate attorneys that they did hire, or cease to be larger than their peer law firm that serve smaller enterprises. But, aggregate big business spending on lawyers might fall, associate to partner ratios might grow smaller, and firms that might once have had a couple thousand lawyers might shrink, even in good times, by hundreds associate attorneys and hundreds more paralegals. One also might see more cultivation for partnership of the associates who were still hired.

Would this be a good thing? Probably. But, the real key point is that substantive and procedural law beyond legal ethics (whose conflict of interest rules drive how many clients a firm can have and what kind of work it can do for them) can drive law firm structure.