Arnold Kling  

Legally Recalculating

A Noble Nobel for Medicine... Twenty-One Years Ago...

Larry Ribstein writes,

I have been insisting for awhile now that the economy was only the trigger of permanent decline in the demand for Big Law's services. Indeed, the factors cited in the Hildebrandt analysis support this: outsourcing and other pressures on client demand will not go away when the economy improves. Just because clients have more money to spend doesn't mean they'll spend it on legal services when they don't have to.

I think that what Ribstein argues is true for law is in fact true in many of the occupations where job losses have been high. It is as if a lot of what otherwise would have been gradual restructuring has instead been undertaken hurriedly in the past two years. When entrepreneurs figure out how to use unemployed resources, they will be much more productive (although not necessarily better paid) than they were in the years leading up to September of 2008.

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CATEGORIES: Macroeconomics

COMMENTS (1 to date)
Hyena writes:

Outsourcing in law generally means removing the profits partners capture by billing associate time. So the reductions in pay should not be apparent to most people in the legal profession.

The major issue for the legal world going forward is technological integration. Currently firms have very little firm-specific capital and so no real competitive advantage, no productivity enhancements. Radical changes in the structure of the industry will only come when firm-specific capital becomes a significant factor.

Until then, you're just talking about how the AmLaw 200 has changed its accounting practices.

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