The Market's Competitive. Which Market?

"Law firms are being forced to run themselves along more 'corporate' lines than ever before," reports the FT, summarizing a PwC report on the top 50 UK firms during 2004.  This new "strategic approach" may represent a departure from how things were done, but if nothing else it also constitutes resounding confirmation of the fact that capitalism, and the competition it entails, have come to the elite end of the legal market.  Consider:

• Of the firms whose partnership agreements permit partners to be "de-equitised" or even dismissed, 80% invoked those powers.
• Of the top 25 firms, 56% reported cutting "junior lawyers" as well.
• And 61% cut support staff.

Promiscuous expansion abroad is also being dialled back.  More than half the firms reported earning less than 10% of their profits abroad, and the consensus seemed to be that global expansion has not lived up to expectations.

Lastly, the UK's common "lockstep" model is becoming increasingly precarious, "as high-performing partners resent large payouts to their less effective colleagues," as the report puts it.

When I say capitalism has invaded the elite end, let me be precise about exactly which market I'm talking about:  It is not, as one would instinctively have it, the marketplace for FTSE 100 firms buying high-end legal services; although that marketplace is surely evolving, with "beauty contests" and "panels" becoming more common, those trends are not driving the changes PwC reports.   Rather, the market that matters here is the marketplace where partners (and associates) choose law firms.  Take away that market—that is to say, take away lateral mobility—and none of this would be occurring. 

So, draconian and inhumane as some of these developments may seem, consider the alternative:  Do you really want a world where choosing a firm out of law school amounts to indentured servitude with a lifelong term?  Because if lawyers can move between firms, firms have to compete to recruit and retain them.  That is precisely what PwC reports is happening.