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I was pleasantly surprised to read Debra Baker’s recent blog post, “Eastman Kodak, Big Law and Human Capital.”  Outside of Dan DiPietro, Jerry Kowalski, and Steven Harper, we don’t see too many other folks bringing the real problem to light.  Most consultants’ and vendors’ articles are designed to tell the law firms what they want to hear, not the true realities of the marketplace. Baker discusses how Kodak had an opportunity, not only to adjust to the market trends of the day, but to lead the business model revolution that would forever alter their industry.  Kodak chose not to adapt, and they’ve never quite recovered.  Most law firms today are acting similarly:

“When the economy crumbled, law firm managers acknowledged the need for fundamental change to its business model. The Wall Street Journal reported on the death of the billable hour. But instead of fundamental change as it related to the use of technology, legal project management and efficiency models, Big Law responded with layoffs and lots of them.

Three years later, at the first sign of clearing, are law firms looking at the long-term need for change? No. They have remained short sighted. The Big Law business model has survived and even thrived as law firms have started posting record setting profit per partner earnings.

In The American Lawyer’s recent Law Firm Managers survey, the number one challenge facing managers was failed lateral integration initiatives – and by a wide margin. Yet, according to author Steven J. Harper, (The American Lawyer, “Fed to Death,” December, 2011), ‘Tellingly, the non-economic well-being of their firms isn’t even on the responding managers’ screens, but it should be.’

Has Big Law proved that its business model can weather any economic storm or, like Kodak, is it merely at the beginning of long, protracted decline? I’d like to think positively, but — to borrow a line from Harper — ‘Unfortunately, the predicted phenomenon illustrates a persistent case of lessons not learned.’

The greatest threats to an industry often bring about its greatest opportunities. For lawyers, the opportunity is that no firm has ever before truly had to market and sell into a Buyer’s Market. The first firms that move decisively to teach these skills to its lawyers will be analogous to the foreign companies who led the digital camera revolution. The law firms that keep going on doing business like nothing’s changed will be like Kodak, watching the competition pass them by while they stick with their color slides and Instamatics.

Mike O'Horo

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