The principle is simple. Law firms are concerned with just two audiences: clients and potential clients on one hand, and staff and potential staff on the other. But while commercial firms can bore you to tears talking about ‘client focus’, the plain fact is that the interests and sensitivities of the latter constituency usually trump those of clients. After all, law firms are people businesses and the talent they sell is expensive, highly-mobile and well-informed – in short, a highly efficient and liquid market for labour. In comparison, the market for legal services is slow to adapt to events, often poorly informed and rife with cultural and structural barriers to exerting its influence.
As such, there’s little mystery why law firms, during a 15-year period of unusually steady growth, responded to a competitive labour market with high salaries, which were then passed on largely to clients. Sure, clients moaned on the conference circuit about high leverage, the cursed billable hour and clueless junior lawyers (all linked phenomena), but for years they did very little about it and law firms, quite logically, continued on their path.
