Legal Commentary

BigLaw & The Big Three

Consider Detroit's Big Three.

Having made what  turned  out to be bad bets on  over-investing in now shunned product lines, they've been  conspicuously laying people off, downsizing, attempting to  renegotiate credit lines, and furiously trying to revamp their product offerings to align to and conform with the world's new reality. 

Sound familiar?

It should because the same description, with variants in emphasis, could apply to our industry.

So I have a modest proposal:  Let's put all our lawyer  brethren in Congress—surely we should at least get some good out of the vast over-representation our colleagues enjoy in poliitics—working on a bailout bill for BigLaw.

I owe the genesis of this insight to a faithful reader, Brent Jeffcoat, of McGuire Woods' Charlotte office.  He frames the key argument nicely:

When do law firms start seeking federal assistance?  After all, think of all the people we affect: our young associates marry and live in condominiums in urban centers.  We probably support Starbucks.  Allen Edmonds is toast.  Many high-end automobile dealerships will suffer mightily without the patronage of lawyers.  I mean, the list goes on.  Think of all those poor guys in Scotland who will not be able to sell their single malt whiskeys.  It would be a global crisis of unimaginable proportions if one or two of the AmLaw 100 were to fail.  The Federal government has got to step in and lend a hand.  Before year-end or else the distributions will be hit.  Heck, many people in the medical industry are dependent upon elective cosmetic procedures scheduled just after year-end distributions.  America needs us to survive.  Who will keep the kept women?

This is firmly in keeping with the evident economic philosophy of our times.  Who needs Microsoft, Intel, Starbucks, or, for that matter, Target?  Wouldn't we all be  better off in a world dominated by Wang, DEC, Howard Johnson's, and Nash Rambler?  And isn't your dream  for your kids that they can grow up and join the UAW?  Don't you wish you could, to paraphrase William F. Bucklkey, stand astride the tide of history and cry, "Stop!"?

Joseph Schumpeter (Mr. "Creative Destruction"), and Adam Smith himself, would be outraged and appalled.  And  rightly so. 

Permit  me  to remind our colleagues in Congress what happens when a company declares the dreaded "bankruptcy:"  Its workers are not taken out and shot, its factories and offices are not incinerated, and its customers' demand does  not evaporate.  Rather, all those assets  and market forces are  reallocated elsewhere.  If the Big Three have demonstrated anything  over the past 30 years, it is their unrivalled  managerial genius at misallocating productive  assets and falling ever further behind their rivals.  Time, one might  think, to give someone else a chance to deploy those assets.

Sympathetic as I am to law firms struggling with yesterday'spractice areas, and to lawyers rudely discovering the urgency of reinventing themselves, the dynamism of the  market will not abate. 

That is something devoutly to be celebrated.

Full post as published by Adam Smith, Esq. on November 15, 2008 (boomark / email).