When it comes to Dewey & LeBoeuf, we’ve been like gawkers driving slowly past a car crash, our morbid fascination at times overwhelming the tragedy of the long-established firm’s slow and painful demise. Today on Forbes, though, Axiom CEO Mark Harris warns that Dewey’s saga may not be an anomaly, and in fact, the traditional model of a large law firm sets itself up for similar failure.
While the rest of the business world changes, law firms stay the same. “The micro-economy of corporate lawyers has been preserved in the kind of pristine stillness usually associated with nuclear waste in an underground salt cavern,” Harris writes. For example, while nonlegal business costs have increased by 20 percent over the past 10 years, law firm prices have increased by 75 percent, and corporate clients are not happy. A 2010 survey showed a decrease in legal spending for the first time in years.
Maybe, Harris posits, the problem is in the pocketbooks. Lawyers work long and hard to achieve partner status at a firm, and the handsome compensation that goes hand-in-hand with that title. Of course, when law firms want to change up the traditional model using modern technology or different delivery methods, that change can be costly. If the firm decreases partners’ salaries to invest in the future, partners may start to defect to places where they can get the compensation they feel they deserve. And then, Harris says, we have another Dewey situation on our hands.
The actual Dewey situation, to no one’s surprise, continues to worsen. The third of its four-member leadership team is leaving to join Proskauer Rose LLP, and one of Dewey’s employees filed a lawsuit against it on Thursday, alleging that the firm did not give enough notice for its giant 450-employee layoff.
“In a new era of unabashed free agency, the move to abandon firm loyalty and make haste for the highest bidder will be rationally irresistible,” Harris writes.
Read more InsideCounsel coverage of Dewey’s downfall: