William D. Henderson

The changing economic geography of large U.S. law firms

During the last three decades, the number of lawyers working for large U.S. corporate law firms has increased dramatically. This study draws upon the economic geography literature on producer services and global cities to outline a theoretical framework for the location and growth of large corporate law firms. The framework is then applied to a dataset of large U.S. law firms (Am Law 50, 100, 200) and their principal clientele (Fortune 500). We also use network analysis to observe changes in city centrality over time. Our preliminary findings suggest that over the last twenty years, New York City has supplanted Washington, DC as the more interconnected market, particularly for law firms with international offices in Europe and Asia. Although profitability and revenues per lawyer appear intimately tied to presence in large global cities, particularly New York City and London, the network analysis reveals several firms that are following successful niche strategies. We use this network analysis and block modeling methodology to identify structural elements of the large U.S. market that are based on geographic differences, including factors related to change over time. In turn, we discuss the implications of these findings for large U.S. law firms.

Law Firm Strategies for Human Capital: Past, Present, Future

Over the last several decades, virtually all large U.S. law firms have adopted a human capital strategy that emphasizes academic performance and the prestige of the law school attended. Although this focus is rooted more in tradition than in hard empirical evidence that it produces a competitive advantage, the question has long been irrelevant for most law firms because of the perennial rise in profits. If the model is not broken, the adage runs, why fix it? Drawing upon extensive historical and contemporaneous evidence, this essay argues that the limitations of the traditional credentials-based model have been masked by a steady multidecade surge in the demand for corporate legal services. Further, various data and trendlines suggest that the growth in demand for corporate legal services is beginning to flatten out. In the coming years, many large corporate law firms will be in the unfamiliar position of competing over market share. Unlike the relative calm and prosperity of the prior era, their survival will likely depend upon a human capital strategy that asks and answers several basic empirical questions regarding the selection and development of lawyers.

What Ails the Large Law Firm? Will the Real FutureFirm Please Stand Up

“What Ails the Large Law Firm?” was written in the early summer of 2009, shortly after the completion of FutureFirm 1.0 — a “collaborative competition” in which teams of law firm partners, in-house lawyers, and junior associates competed with one another to create a law firm that would survive and thrive over the next 20 years. This essay reported the surprising results of the competition along with my own commentary on how these results could be used by BigLaw to adapt to changing times.Upon completing the essay, however, I filed it away. Back in 2009, law firm leaders had too many emergencies on their hands to listen to the unsolicited advice of a legal academic. Although I thought my analysis had merit, the timing was wrong. A better course of action was to let events play out.Nearly five years have past since FutureFirm 1.0. To our great relief, the fall-out from the 2008 credit crisis is behind us. To the surprise of some, the large law firm sector has come out the other side substantially intact. Headcounts are slightly up from 2008, and the most firms remain quite profitable. Yet, most law firm managers would probably agree with Bruce MacEwen’s sober conclusion that Growth is Dead.I am circulating “What Ails the Large Law Firm? Will the Real FutureFirm Please Stand Up” because I think most large law firm lawyers would be interested in revisiting the crisis of 2008-2009. Since that time, many short- and medium-term strategies have been tried, and many were successful. But they were also short- or medium-term. Lawyers at many firms are ready to have a conversation about longer-term ideas. Politicians may long for a crisis to make change. Prolonged ruts, in contrast, appear to bring out the best in big firm lawyers.With this brief prologue in place, it is my hope that “What Ails the Large Law Firm?” may be a useful and well-timed message.

Reconciling the Juridical Links Doctrine with the Federal Rules of Civil Procedure and Article III

Over the past three decades, the juridical link and concerted action exceptions have evolved from dicta in the Ninth Circuits decision in La Mar to an amorphous and undertheorized body of case law that has dangerously merged procedural and jurisdictional issues. Drawing on the principles of class action jurisprudence set forth by the Supreme Court in Amchem and Ortiz, lower courts should consider the issues of class certification and Rule 20(a) joinder before turning to the issue of standing under Article III. Under this approach, courts would not be able to reconcile much of the juridical links case law with the requirements of Rule 23(b)(2) and Rule 20(a). However, for a narrow category of cases involving 23(b)(3) defendant classes, courts could employ the exceptions to serve the two policy objectives underlying the class action device: judicial economy and private law enforcement. In summary, courts should not view the juridical links doctrine as a joinder device, but as a test for ensuring Rule 23(a)(3) typicality for a plaintiff serving as class representative in a multiple defendant class action.