> "top firms have a lot of pricing power and middle firms dissapear"
This is generally true. However, there's increasing pressure from clients, not to simply push billing rates lower, but for flat-fee arrangements.
While in many areas of law the billable hour is secure [1], in many others there not only isn't a strong argument in favor of it, but clients are increasingly pushing back against it [2].
And I'm not surprised to see a successful lawyer completely ignoring it, even in a post that serves largely as a setup for his pitch about coming disruption. IME every lawyer who hasn't seen his primary clients insist on flat-fee billing would prefer to pretend the issue didn't exist. And those that are dealing with flat-fees, would prefer not to talk too loudly about it, for many of the prestige/traditional reasons behind the ever-increasing billable rate itself.
Now, most firms are structured in a way that can wrap their minds around a $400 billing rate and remain profitable without changing things too much -- indeed they likely already have attorneys making the firm money charging "only" $400/hr.
But a flat-fee is not only anathema to their pride, but largely unsustainable given their structures. Between the lines of those comments about "overhead" is the fact that most of it is unnecessary, legacy nonsense that has persisted solely because the billable hour warps incentives. [3] Most law firms are simply not ready for pricing that will require them to so optimize their internal operations. And this is where the real disruption will appear and where middle firms have an opportunity. [4]
[1] Mergers, acquisitions, litigation, etc.
[2] Legal zoom-type work, some ip registration, etc.
[3] Hourly billing rewards inefficiency. If an attorney can generate enough business to keep themselves and their billable staff busy for as many hours per day that they care to work, cutting the time it takes them to perform their tasks by 20% means they bill 20% less. Which means they need to go scare up 20% more work to merely maintain their previous revenues. And as generating new business is not itself billable, Attorneys tend to treat "increased efficiency" as "more work for the same money".
[4] They have some experience, less 'pride' clouding their vision, but sufficient revenue to fund experiments in innovation.
This is generally true. However, there's increasing pressure from clients, not to simply push billing rates lower, but for flat-fee arrangements.
While in many areas of law the billable hour is secure [1], in many others there not only isn't a strong argument in favor of it, but clients are increasingly pushing back against it [2].
And I'm not surprised to see a successful lawyer completely ignoring it, even in a post that serves largely as a setup for his pitch about coming disruption. IME every lawyer who hasn't seen his primary clients insist on flat-fee billing would prefer to pretend the issue didn't exist. And those that are dealing with flat-fees, would prefer not to talk too loudly about it, for many of the prestige/traditional reasons behind the ever-increasing billable rate itself.
Now, most firms are structured in a way that can wrap their minds around a $400 billing rate and remain profitable without changing things too much -- indeed they likely already have attorneys making the firm money charging "only" $400/hr.
But a flat-fee is not only anathema to their pride, but largely unsustainable given their structures. Between the lines of those comments about "overhead" is the fact that most of it is unnecessary, legacy nonsense that has persisted solely because the billable hour warps incentives. [3] Most law firms are simply not ready for pricing that will require them to so optimize their internal operations. And this is where the real disruption will appear and where middle firms have an opportunity. [4]
[1] Mergers, acquisitions, litigation, etc.
[2] Legal zoom-type work, some ip registration, etc.
[3] Hourly billing rewards inefficiency. If an attorney can generate enough business to keep themselves and their billable staff busy for as many hours per day that they care to work, cutting the time it takes them to perform their tasks by 20% means they bill 20% less. Which means they need to go scare up 20% more work to merely maintain their previous revenues. And as generating new business is not itself billable, Attorneys tend to treat "increased efficiency" as "more work for the same money".
[4] They have some experience, less 'pride' clouding their vision, but sufficient revenue to fund experiments in innovation.