The Death of the Giant Firm?

I believe that Eben believes that the cheap exchange of information will abolish the ownership of symbolic representations: when the “exclusive” right to use becomes unenforceable, the right itself becomes a __. . Then the brokers and networkers of creative thought will become obsolete. Blogs broke the media conglomerate’s monopoly on distributing news. Recording companies will go the way of switchboard operators. Middle Management is being crushed by flattening corporate hierarchies. The continental investment banks ceded power to an archipelago of hedge funds, run by irreverent geniuses like my three college classmates who started trading currencies together as second semester seniors.

But creative work will never be socialized, at least until someone invents mind-reading or artificial intelligence. Hedge fund managers will still need intuition to predict capital flow from commercial data; managers will need insight to market and innovate; reporters will always rely on pluck to formulate questions, anticipate the scene of the crime, and research non-symbolic facts; songwriters will always daydream and smoke pot.

So I must rephrase my original question: what is essential to corporate legal services, and what structure and scale will generate that most efficiently?

Some legal products are not valued for being “good,” but for being “better” than the competitor’s. When the litigator’s client is committed to reaching a final verdict, or when the lobbyist or appellant proposes to reform the law for the indefinite future, his mandate is to produce a binary outcome (winning). Legally educated persons have a monopoly in the production of these decisions, because their future creative product is inalienable. The demand for a given litigator will be proportional to his or her relative ability to deny the opposite outcome to the competitor’s litigator.

Eben writes (and I add emphasis):
Your generation, unlike all previous generations of lawyers in New York City, will be competing for daily bread against well-trained lawyers in New Delhi and Bombay. The savagery of leverage will soon make corporate finance practice and large litigation support--in general, in fact, the back office practice on which large firms currently thrive—a practice you can't afford to be in. The legal industry is going to look in future more like the garment industry, and more so at its top than it will at its bottom. The jobs that have been considered elite for two generations, and for which your institution is best equipped to train you, are about to globalize elsewhere, leaving a steeper pyramid with much less room at the top for people like you.

The marginal return to transactional work of an investment in legal education will certainly diminish. The mandate for transactional work is not binary: it is to maximize income through contract negotiation [?]. Ivy-educated lawyers will be only slightly more valuable, and much more costly, than graduates of third-tier schools, lawyers in India, and software.

But lawmaking by litigation, unlike transactional negotiations, does not produce value that is easily measured and compared to the costs of production. It implicates the very existence of a stream of value for the indefinite future. It rallies powerful opposing interests. It is war by other means. War leads to arms races, and arms races get out of control. Corporations with immeasurably large interests in changing the law will continue to pay unconscionably large sums to control the “best” possible sources of creative legal ideas.

Law firms, congress, and law schools blaze the path of the law. But when the temptation of corporate money influences the direction they choose, it is only incidental that the partner signs our paychecks, the congressman signs the bill, and Schizer signs our diploma.

1] better is all that’s needed 2] social values are also [high value—uncomputable value? Invaluable? Priceless?]. Whether the pursuit of vast financial value or the pursuit of immeasurable social value is a stronger temptation for the lawyers, legislators, and educators who blaze the path of the law is a question ultimately in their hands.

may reduce the law firm’s comparative advantage over the law market in brokering and networking legal ideas.

Those other innovations were in distribution channels—_ _ . The lawyer’s “distribution channel” is the neurons in judges’ and jurors’ brains. Those other innovations could be objectively measured: compare _ to the market __. But every legal case is unique

Sandor: PROBLEM:Reputation / black box SOLUTIONS: break open black box How much of our profession will be “opened up” in this way?

cf. Coase: market or firm? An innovation (here, internet) doesn’t just lower cost of market—it lowers cost of firm. And so firm may become consolidated (e.g. internal Wikis ...)