From the 1980s to Today: Blurring Boundaries Among Business Sectors

 In the early 1980s, it was a pivotal time for large corporations in America, just like now for large law firms. Corporate America was no longer the top dog in international trade. The Germans and the Japanese were learning new tricks. So, the Father of Management Peter Drucker entered the scene. He asked those corporations: If you weren't already in the business, would you enter it today?

That kicked off the blurring of boundaries. Today Amazon, whose initial parameter was the digital selling of books, has crossed sector lines into films, television production, grocery shopping, logistics and cloud computing. Ford has moved into providing mobility solutions. The drug store has become a primary healthcare center, along with patients' insurance being taken care of. 

Now, the traditional-bound sector of Big Law firms is also being forced to ask what business they should be entering. The major driver is the new face of competition.

The Wall Street Journal fingers the Big4 as a primary threat. Those firms can package comprehensive business services for clients. Among them currently are legal ones. The advantage of the Big4 is access to those needing legal guidance through cross-selling. Those businesses had already entrusted the Big4 with their accounting needs. 

Another kind of threat - indirect - comes from businesses which demand more from lawyers who view their challenges only through the lens of legalities. If they don't get a wholistic approach they will leave that law firm. That same coverage in the WSJ notes that in response to a changing competitive environment law firms such as Dentons have already blurred their boundaries. Dentons has expanded to a broad range of consulting services, including public affairs.

I would add that in a sense Wilson Sonsini has evolved into a technology company. And Paul Weiss has crossed the line from guiding the legalities about ESG to facilitating and funding research and education. 

More about Paul Weiss. Its Chairperson Brad Karp articulated on a macro level what is going on - or should be going on. That occurred in an interview with Leaders Magazine. 

Essentially, Karp declared stand-alone legal services an anachronism. Explicitly he said:

"We need to approach each matter more commercially and focus on providing solutions, not just presenting advice. We need to deeply understand our clients’ business goals, professional culture, key stakeholders and risk tolerance." 

Obviously, law firms have to enter new businesses. What I envision is that will be bundled as a kind of management consulting, with elite legal services as the core competence. In some ways the law firm will be standing toe-to-toe with McKinseys and Bains. In addition, it could have neutralized the threat from the Big4. 

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