Posted Sep 17, 2009 02:04 pm CDT
O’Melveny and Myers acknowledges problems with its business model and unveils plans to become a fixed-fee leader for high-end legal services in a confidential five-year strategic plan leaked to a blog.
Above the Law obtained a copy of the plan, released to the firm’s lawyers about a month ago, and published the highlights. A law firm spokeswoman contacted by the ABA Journal did not comment on the report.
The aim, according to the plan, is to become “the leader in providing high-end legal services on a fixed fee basis, reducing costs to clients and achieving superior economic performance through practice management oriented toward cost-effective client service.”
The plan outlines the firm’s intention to offer volume discounts and “appropriate alternative fee arrangements,” according to ATL’s account. On the fixed-fee side, the firm plans to adopt a single rate card by fiscal 2012.
The plan acknowledges that O’Melveny’s current business model has yielded disappointing financial and practice growth results. The firm’s litigation model “which depended heavily on high charge hours levels by associates, counsel and partners to offset the impact of discounted rates and increased write-offs of expenses and time, has been under pressure for at least three years,” the plan says.
Under the new plan, the firm is seeking to lower associate-to-partner leverage to “as low as 2 to 1 in some practices.” Associate work is being reduced, according to the plan, because document review and production “have been outsourced altogether or client-directed to contract attorneys.”
The plan also emphasizes O’Melveny’s core values and commitment to pro bono work and diversity, according to the blog’s summary.
Above the Law calls the plan “an impressively broad overview” of the legal market and the law firm’s position. “This is not a plan designed to allow the firm to merely hang on and weather the economic storm; instead, the firm is taking proactive steps to make itself more competitive into the next decade—and beyond.”
Meanwhile, two other law firms—Mayer Brown and Reed Smith—are planning fixed-fee structures for transactional work, according to a related post at ABAJournal.com.
Updated at 1 p.m. to include a reference to plans by Mayer Brown and Reed Smith.