The Wilmington-tsunami – the convergence initiatives that reduce the number of law firms retained by a law department, which DuPont so skillfully publicized – has an almost inevitable side effect: leaving higher cost firms.
If a law department chooses to find a single firm to handle matters in an area of law, say environmental, it will be tugged toward retaining a larger firm than if it stayed with several providers. The siren song of a firm that can handle the spectrum of environmental needs favors larger firms, which – all things being equal – charge higher hourly rates. The higher rates follow from more infrastructure, layers of management, higher compensation expectations, and larger matters.
On the other side of the ledger, larger firms can price services lower than can smaller firms because they can spread the risk over more matters and can accommodate more changes in how they handles matters, such as with technology, systems, delegation, and hiring.
The likelihood remains that law departments trade having fewer firms for paying those remaining preferred providers higher hourly charges.