“Europe's largest law firm merger with US financial power”
“Regional powerhouse law firm closes its doors”
“Litigation superstar bolts city's largest firm to start boutique practice, 20 lawyers follow”
“Major IP firm merges with technology power”
“Law firm terminates 20 partners, de-equitizes 15 others”
“Brand name firm poaches practice group from midsize firm, midsize firm seeking suitor”
“Big accounting firm considers next step in legal industry strategy”

These headlines are all fictitious—some effort must be made to protect the guilty—but every one of them represents at least one, and generally a number of real life situations that have played out over the past 12 months. How can an industry, any industry, experience so much turmoil?

To understand these and other events, we must start from the proposition that the legal industry, to a greater extent than almost any other industry today, is undergoing a radical restructuring. In 10 years the present structure of the industry may be entirely unrecognizable. All of these events are part of a process that will ultimately take the legal profession from where we are today, to where we are going. But what does this mean? What is the nature of the restructuring and where are we heading?

The Legal Industry—Yesterday and Today

Much has been written about change in the practice of law, but relatively little has focused on the structure of the legal industry. Historically, and continuing today, the legal industry has operated on a model approaching pure competition. For purposes of this discussion, this means that:
  • There are a large number of individual businesses (law firms) competing for all or most legal work.
  • Each geographic and most specialty niche markets have multiple competitors, none of which can dominate the practice.
  • Individual law firms have difficulty controlling pricing, given the large number of competitors.