Less big-ticket work, lower rates, more intense competition for existing work, the need to consider unbundling and "northshoring" to lower the costs base...on one reading the Lawyer's excellent analysis of the Magic Circle's changing approach to resourcing is a reflection of the wider legal market.
These are existential questions for the solicitors' profession. How can we justify partner remuneration given our business model and the services we perform? Why do we bother offering professional training to anyone, if those services can increasingly be delivered by paralegals? What differentiates us as a supplier of legal services, if processes and management structures are more important than individual knowhow and experience?
There is also an implied question about regulation, which reflects the increasing importance of the entity in the regulatory framework. The more a firm relies on unqualified staff to deliver legal services, the more responsibility attaches to that firm's systems (and arguably the remaining qualified staff) to guarantee compliance with regulatory requirements.
To take a trite example, whereas a COLP might previously have expected her junior qualified staff to recognise when a conflict arose in the middle of an instruction (because of their professional training and personal obligations to the regulator), would she be so confident that a team of non-qualified staff would appreciate, understand and report the same issue?
Staff training, internal compliance documents, supervision and systems for picking up regulatory issues are likely to be crucial in avoiding such problems. This is unlikely to be a difficulty for the Magic Circle firms of course, who already have sophisticated risk and compliance structures. For smaller law firms however, regulatory compliance may ironically become an increasing cost of doing business as the market for legal services is progressively opened up.
Every one of these top-of-the-market firms is under intense pressure to cut costs. The bill for partner earnings is one of the biggest costs a firm has.“Partners are expensive,” asserts Hodgart. “You either need fewer of them or you need the same number doing different things and focusing on selling, not legal work.“Higher-value work is shrinking and if firms do not occupy the high end of the market they need to reduce partner numbers. The magic circle is not doing that at the moment and high-value work will diminish.”