Unsustainable Trends Tend to Come to an End

You would think the lead of this Legal Times article, which follows, would be irresistible info for me to comment upon.  But sometimes, no news is no news:

"Law firms are back -- sort of.

"Revenues and profits were up by nearly 10 percent in 2004, a clear sign that firms have shaken off the tech bust slump. But even as the biggest legal shops are reaping the harvest of a buoyant economy, they face some difficult choices ahead to maintain revenues -- and to grow profits.

"Those are the findings of a confidential Citigroup Private Bank study of firm finances obtained by Legal Times. Though it doesn't name specific firms, the annual Citigroup study is based on the financial performance of 143 law firms across the country and is considered by law firm managers as one of the most important barometers of the state of the legal business."

The problem is, I've just given you the ball-game. For example, did you know that "there are only so many hours an attorney can bill"?   I kid you not.  Is it news that "firms face mounting pressures from clients to rein in costs"? Then we have this: "If firms are unable to continue the pace of rate increases, they will have to find a way to perform more efficiently."  This is beginning to remind me of the classic "explanation" from a corporation of why revenues were down:  "Sales were weak."  In other words, we have recapitulated the symptom and hoped to classify it as a diagnosis.

To be fair, I'm a dyed-in-the-wool critic of hourly billing, and I'm also a dyed-in-the-wool apostle of firms' collaborating with their clients to create new joint business models that deliver the package of legal services the client needs at what both sides can agree is a fair overall price.  I continue to believe that's the future.

The difference here is that after forecasting the-sky-is-falling, it turns out there's no immediate problem with the existing model.  Indeed, rest assured:  This is not yet a crisis (perhaps it's not even an "analysis"):  After all, "as the Citigroup analysis puts it: '2005 is shaping up as a busy and successful year for most law firms, although there are some clouds on the horizon.'" 

"Unsustainable trends tend to come to end" I owe to Herb Stein, a seminal academic/public sector economist and, it should be clear, a witty fellow as well.  Credit where due.  But the hourly billing/6% annual rate rise is not, so far as Citigroup would have us believe, threatened.