**5. Existing Proposals for Reforming Large Law Firms: The Rocket Firm, and Beyond**

As noted above, what used to be the bread-and-butter of the junior associates in large law firms—and, consequently, their ticket to be trained and become partners—is now being (or will be) automated or outsourced. This calls for a reformation of the organizational structure of large firms, which, to a certain extent, is already taking place. In relation to this, several proposals for reforming these firms have been recently published. One suggestion came from a combined study conducted by the Boston Consulting Group and the Bucerius Law School.<sup>96</sup> This report argued that large law firms must change their value proposition and offer diversified services to remain competitive in the present market. This chiefly means that, in addition to the more classic legal services, these firms should provide their clients with other services, such as legal project management, outsourcing management, and advanced legal analytics. More specific to new technologies, the report argues that large law firms should turn into "master legal-tech vendors" and/or "legal-tech consultants". The first role entails that law firms would take upon themselves the role of guiding clients to the right legal outsourcing partners for handling standardized and low-skill tasks. In this way, law firms would retain control over entire mandates and thus strengthen their business ties.<sup>97</sup> In the second role, law firms would become intermediaries between their clients and the tech providers, guiding the former to the right legal-outsourcing partnerships.<sup>98</sup>

Most importantly, the report maintains that the new technological developments are pushing large law to modify elements of their organizational model. In particular, it is argued that the traditional pyramid model (with few partners at the top and many junior lawyers and associates at the bottom) will likely be replaced by an organization shaped more like a rocket.<sup>99</sup> In this new configuration, each law firm would be able to reduce the ratio of junior lawyers to partners by up to three quarters of the ratio seen in the current pyramid model. Another consequence will be that other types of employees who are not lawyers, such as project managers and legal technicians, would join the ranks of the firms.<sup>100</sup>

the elite firms, especially the lack of diversity within firm leadership, rising associate attrition rates, and an over-reliance on the billable hour. The "professionalism" that dominated elite firms in the middle of the twentieth century undoubtedly encouraged civility and trust between lawyers. But it also operated as a mechanism for shielding the narrow financial interests of big-firm partners and for marginalizing lawyers based on religion, race, and gender". (Bruck and Canter 2008, p. 2088.).

<sup>95</sup> See, among others, (Theis 2010).

<sup>96</sup> (Vieth et al. 2016, p. 7).

<sup>97</sup> Ibid. p. 9.

<sup>98</sup> Ibid.

<sup>99</sup> Ibid. p. 11.

<sup>100</sup> Ibid.

The rocket law firm is not the only possible approach to reforming large law firms. Others have argued that, instead of a rocket, the present pyramid of large law firms is increasingly turning into a diamond.<sup>101</sup> More than a proposal, this is an interpretation of the existing drift of American large law firms in the last decade. Backed up by statistics on the numbers of junior and associate lawyers hired, George Baker and Rachel Parkin argue that the pyramid that for more than a century characterized the organizational structure of large law firms is unraveling into a diamond (and not into a rocket as argued by the other report discussed above in this section). This is characterized by a relatively small number of entry-level associates, a growing amount of non-equity ranks, an important group of permanent staff attorneys and a smaller number of equity partners who control client relationships. This is, however, likely less a product of a careful strategy of law firms, but rather a the consequence of a series of short-term decisions to navigate a harsh and unfamiliar market, characterized by legal and tech savvy clients increasingly asking for more efficient and cheaper services and an increased complexity of legal work.<sup>102</sup>

These approaches provide a sensitive first stab to analyze the situation concerning large law firms in the present market of legal service providers. Yet, understanding these new developments as a mere passive or even coincidental reshaping of large law firms from pyramids into rockets or diamonds is, however, in my view not taking the developments and innovations that law firms these days face far enough. To see the true potential of the emergence of these new technologies for law, one has to look beyond a mere description of organizational structure toward the question: how may law firms deliberately reshape their organizational structure and business models in order to maintain and develop their competitive edge? In what follows I shall make an attempt to answer this question

## **6. The New Law Firm**

In this section, I outline three core features of my proposal for reforming large law firms in the light of digitalization. These are: (I) the traditional form of the partnership should give way to a more corporate organizational form; (II) the importance of multidisciplinary practices; and (III) the centrality of outsourcing strategies to legal tech companies and other actors.
