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Can the Traditional Pyramid Law Firm Structure Meet Today’s Price and Service Pressures?

Following the deep economic recession of 2008, more and more corporate legal departments and general counsel have demanded concessions on hourly rates, volume discounts, and alternative fee arrangements. While the traditional law firm pyramid model is far from extinct and likely will never go away, questions exist whether it is flexible enough to meet these demands. To be sure, technology and economic pressures to the pyramid model are driving dynamic change in the legal field and in how law firms are structured in particular. This article addresses potential solutions to these challenges.

In the traditional pyramid law firm model, the base is broad and comprises a pool of associates that generally narrows as they advance toward partnership. Depending on the firm, this narrowing continues through senior associates and income partners to the much narrower top of equity partners only. As you move up the pyramid, compensation and hourly rates generally increase. In a true pyramid model, an attorney either moves up or moves out if they do not make it to the next level. This model is used in other professional services businesses as well. While this model has been extremely successful for over a century, it can exclude mid- to highly-experienced level attorneys that are qualified to provide legal services, but do not want the additional demands of the traditional law firm.

For example, an attorney that is a parent with young children may want to work a 30-40 hour week, but cannot handle the demands of a heavy litigation load. Or, a partnerlevel attorney that prefers providing legal services over developing new business. In many firms, the top of the pyramid can only be reached by an attorney that generates millions of dollars in origination.
Not all attorneys want this demand as part of their professional life. Another model—referred to as the “Diamond” model—focuses a significant portion of the attorney work force on the middle. This includes senior associates and partner-level attorneys that are experienced and capable, but do not want to be on the traditional equity partnership track. Staff attorneys as well as para-professionals provide additional staffing opportunities.

By controlling the overhead load per attorney, a “diamond” law firm theoretically can provide legal services at lower costs to clients. Additional efficiency can be gained by focusing the firm’s business on one or a few practice areas, e.g. a “boutique” model. While the future of the diamondshaped model is yet to be determined, they present interesting potential solutions to lowering the cost of legal services

Darin M. Klemchuk

Darin M. Klemchuk is the Managing Partner of Klemchuk Kubasta LLP and an intellectual property (IP) trial lawyer located in Dallas, Texas, with significant experience enforcing patent, trademark, copyright, and trade secret rights. More information about Mr. Klemchuk can be found at his bio at http://www.kk-llp.com/attorneys/detail?id=3.

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Filed Under: Business ManagementFeatured Stories

About the Author: Darin M. Klemchuk is the Managing Partner of Klemchuk Kubasta LLP and an intellectual property (IP) trial lawyer located in Dallas, Texas, with significant experience enforcing patent, trademark, copyright, and trade secret rights. More information about Mr. Klemchuk can be found at his bio at http://www.kk-llp.com/attorneys/detail?id=3.

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