Can Traditional Pyramid Law Firm Structure Meet Price and Service Pressures?

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Following the deep economic recession of 2008, more and more corporate legal departments and general counsel have demanded concessions on hourly rates, volume discounts, and alternative fee arrangements. While the traditional law firm pyramid model is far from extinct and likely will never go away, questions exist whether it is flexible enough to meet these demands. In the pyramid model, the base is broad and comprises a pool of associates that generally narrows as they advance toward partnership. Depending on the firm, this narrowing continues through senior associates and income partners to the much narrower top of equity partners. As you move up the pyramid, compensation and hourly rates increase. In a true pyramid model, an attorney either moves up or moves out if they do not make it to the next level.

While this model has been extremely successful for over a century, it excludes mid- to experienced-level attorneys that are highly qualified to provide legal services, but do not want the additional demands of the traditional law firm. For example, an attorney that is a parent with young children may want to work a 30-40 hour week, but cannot handle the demands of a heavy litigation load. Or, a partner-level attorney that prefers providing legal services over developing new business.

Another model — referred to as the “Diamond” — focuses a significant portion of the attorney work force on the middle. This includes senior associates and partner-level attorneys that are experienced and capable, but do not want to be on the traditional equity partnership track. Staff attorneys as well as para-professionals are additional staffing opportunities. By maintaining the overhead load low, a diamond law firm theoretically can provide legal services at lower costs to clients. Additional efficiency can be gained by a diamond shaped firm by focusing the firm’s business on one or a few practice areas, e.g. a “boutique” model.

In my next blog post, I will analyze the diamond law firm model more thoroughly and provide additional thoughts on how it can possibly be transformative to the legal market.

Read more blogs by author: Darin M. Klemchuk


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