Finance Monthly - Legal Awards 2023

INCEPTION AND GROWTH Legal education in America’s early post-colonial history was rarely formal, with most lawyers entering the sector by apprenticing to established legal professionals. The founding of Harvard Law School’s training program in 1817 providing a mould that would come to define legal education in the US, at the same time paving the way for the formation of so-called ‘white shoe’ firms in the northeastern US and the rise in professionalism that ensued. The first entities that would come to be recognised as ‘law firms’ emerged in the late eighteenth and early nineteenth centuries and generally comprised three or fewer lawyers. These grew larger by the decade, with 15 firms recognised in the US with four or more lawyers in 1872 and 210 in 1903. The number had grown to more than 1,000 by 1924, and the intervening years had seen the establishment of the so-called ‘Cravath System’ that defined the broad organisational structure that many law firms sport to this day. As laid out in Marc Galanter and Thomas Palay’s seminal book Tournament of Lawyers (1999), the Cravath System refers to a loosely pyramid-shaped hierarchy of advancement where partners are served by several partnership-track associates below them to ensure profit maximisation. The term ‘BigLaw’ itself was coined by professional advisory firm Beaton Capital in 2013 to refer to large law firms that used this pyramid structure. It is no coincidence that the rise of larger law firms coincided with the turn of the century and the ensuing boom period of US commerce, wherein names like Rockefeller, Carnegie and Vanderbilt emerged as pioneers and monopolists. This period marked the transition of lawyers from pure courtroom advocates to business advisors, with a corresponding focus on professionalism and speed of service. Formalised partnership agreements became more common during this period, along with larger premises as firms strove to keep up with supplyside demand for legal advice, taking on more staff than could operate out of the formerly common two-man offices. The evolution of BigLaw in this manner can be seen in organisations like Shearman & Sterling. Founded in New York City in 1873 with only five legal staff and a focus on litigation, the firm’s reputation for strong transactional work came to define its practice, cultivating relationships with financiers and industrialists like Jay Gould and Henry Ford that would propel it to enduring international success following the Second World War. Similar cases can be seen in the meteoric rise of White & Case and Kirkland & Ellis, both of which launched in NYC with a founding partnership of only two lawyers and rode a wave of growth to become two of the largest firms in the US and the world. BIGLAW TODAY It is worth noting that, despite the name, BigLaw today comprises only a minority of lawyers. A 2020 study by the American Bar Association found that around 22% of lawyers work at firms of 100 or more attorneys, whereas 30% work at firms of two to nine, 17% at firms of 10-49 and 5% at firms of 50-99. A full 26% identify as solo practitioners. The relative scarcity of positions at these larger firms has contributed to the culture of competition that surrounds them. In 2023, BigLaw firms are synonymous with both the quantity and quality of the lawyers they employ. The broad pool of specialisations available to these firms allows them to offer comprehensive legal services to high-paying clients across a range of industries. Associates receive access to excellent training programmes and partners enjoy some of the highest salaries in the profession, incentivising excellence at all levels. However, this excellence comes at a cost. BigLaw’s culture of perfection demands that legal professionals put ever more time and effort into the job, nurturing an environment where burnout, impostor syndrome and crises of confidence are rampant. Staff turnover rates among larger firms are high as a result, with ‘lawyer’ ranking as the most stressful occupation according to data collected by the US Bureau of Labor Statistics. SPECIAL FEATURE 24

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