Alex Novarese has written a typically robust blog about the way leading London (HQed) firms have clung to lockstep encourages partner exits to firms redder in tooth and claw. It’s a sign of the way in which firms are locked into their markets – only able to mitigate, rather than overcome a race to (what I see as) the bottom. Legal services are valued predominantly, perhaps purely, by profit. Quality is measured in bills delivered, weighing down any balanced-scorecard. Financialisation rather than professionalism is the commercially aware mindset.
There is decent data on in-house lawyers that shows that incentivisation (giving in-house lawyers higher, equity-based rewards) increases the conduct and compliance risks of their host organisations (see here). We should be as worried about the impact of incentives on lawyers in private practice. They burnish their claims for independence without always knowing what that means. The roll-call of private practice firms in (fairly) serious trouble with professional regulators is growing – although one can’t help but be darkly entertained by the thought that a fine of Clifford Chance, or even White and Case, proportions is going to prompt serious re-thinking. The reputational damage? Maybe, that’ll make a difference to some. But we need to remember that even large firms can be heavily dependent on small circles of clients. Many (all perhaps) of those circles are inhabited by banks and those in their shadows; they like lawyers who are keepers; and they know quite a bit about the costs of doing business.