It used to be that big law firms were the old guard of the inflexible work day. Tied to the holy grail, the universal unit of measurement – otherwise known as the billable hour – law firms were late adopters of work-life balance innovations like flex-time and part-time schedules for working moms. But as the number of hours billed by the average associate crept up from 1600, flying past 1800, scooting by 2000 with little fanfare, and sneaking across the line of 2200, the misery quotient of young lawyers of both genders went up and so did attrition rates, particularly of female associates, who viewed life at a big law firm as incompatible with the possibility of starting a family.

A widely circulated article in the New York Times earlier this month, called “The Falling Down Professions,” documented the rising dissatisfaction and falling prestige of lawyers (and doctors), observing that more young people that ever aspired to the get-rich-quick ideals of jobs in finance, or the flexibility and creativity of entrepreneurship, without the years of arduous professional training and comparatively lower paychecks of “the professions.”

One step that big law firms in major markets have taken in recent years is to give associates raises: big ones. When the Class of 2006 was working as summer associates, they were looking forward to joining firms at the not-too-shabby salary of $120,000 per annum. After they got back to school for their 3L year, they got some good news: salaries had been increased to $135,000. By the time these lucky new lawyers started their first grown up jobs, starting salaries for first year associates had risen to $160,000. Said one Harvard Law grad upon hearing the news of yet another raise before he had logged a single billable hour, “I feel like I won the lottery!”

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I’ve been thinking about competition and how it acts as a force for change. In the bear markets we face today, I began with who the competitors in the field are, and how their roles and interactions shape the market. Recently, we have seen a trend towards consolidating the power of stock and futures exchanges and reducing competition in the market. For example, the big rivalry between futures exchanges in Chicago spawned the largest futures exchange in the world. The New York competitors, NYSE Euronext and the American Stock Exchange joined forces recently. In Canada, we see the Toronto Stock Exchange gaining control of its main competitor, the Montreal Exchange.

With all these mergers taking place in the markets, where is the competition going? The Chicago Mercantile Exchange (CME) Group admitted that the purpose of their collaboration was to compete with NYSE Euronext on that level of the playing field. In this sense, as the global markets develop so does the competition. But, as the former titans of exchange join forces to better compete on the global stage, they reduce competition within markets.

Then we have the smaller firms getting in on the action as well. To compete with the CME Group in the futures market, heavy hitting investment banks have started forming teams to compete with the future exchanges. While this strategy has had skeptics from the start, their large Chicago rival CME Group acknowledged the purpose of these in-house competitors when they upgraded their platforms to reduce the time to market for block trading as well as the time it takes to make a trade.

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