Four mainstream media articles on Wednesday, 18 April 2012, about dynamic sectors of the economy offer potential lessons for BigLaw leaders.
Sales Are Stagnant, but I.B.M. Earnings Beat Analysts’ Expectations in the New York Times reports that IBM revenues are flat but earnings up because the company is shifting to higher margin business.
Many large law firms also face flat or modest revenue growth. Most firms think the move to higher margin means more bet-the-company work. Yet a better path to margin improvement may lie in doing higher volume work more efficiently. Consider Online Education Venture Lures Cash Infusion and Deals With 5 Top Universities (NYT), which explains that leading universities are investing in online course delivery that will make classes available to thousands of students globally. Universities may be mission-driven but they need to make ends meet so I assume will eventually generate income from extra eyeballs. Premium work at low volume is not always the winning strategy.
Of course, margins are also a function of costs. Warming Up to the Officeless Office in the Wall Street Journal explains that growing numbers of workers no longer even have cubicles. Instead, in “free address” or “non-territorial offices", workers claim a desk or space at a communal table each day. This lowers occupancy and energy costs significantly; it also reduces e-mail traffic and speeds decision making. It might not work for lawyers but with many working virtually anyway, firms can adjust real estate.
Firms can also adjust other costs. They can emulate IBM, which taps” pools of lower-cost skilled workers, especially in India.” Law firms don’t have to go offshore today for lower cost labor - many smaller cities offer lawyers and business support staff at lower cost than major metro areas.
Business - and even education - changes daily. For those of who think BigLaw is not changing enough, a question is whether law firms can’t change faster or simply won’t. Carriers Warn of Crisis in Mobile Spectrum (NYT) illustrates the difference between “can’t” and “won’t", suggesting mobile operators can make do with their current spectrum allocation if only they invested in the right technology.
Law firms can change if they have the will. The tools and the strategies are not that complicated. The only question is how long before “will not” becomes “can”.