I am normally considered a capitalist, but on one point, I am beginning to wonder. Is big always better?
Mergers are supposed to be good for business, with economies of scale and all that, but are we finding only diminishing returns from them now, or worse, negative returns? I'm not talking about for the "insiders"; I am talking about everyone overall, including society at large.
I see evidence all around me that mergers are producing some really negative results. It seems that prices go up or at least do not go down as touted and service certainly does not improve and usually gets worse.
Take an example that maybe not everyone would think about on first blush - law firms. Do clients really benefit when a firm goes from 40 to 4000 lawyers? If you think so, please explain that to the rest of us. The results I have seen are higher hourly rates/uncontrolled overhead and an alarming trend to poorer quality work and less accountability.
Some firms appear to be responding to these charges by employing "contract" lawyers - too many parallels to the tenant farming system to make this justifiable if you ask me. Of course, firm associates live in a tenant farmer-like world too, albeit a better paid one. The work is suffering in both cases as the tenants are not happy campers.
Even if the tenant farmer analogy does not fairly fit a particular firm, I don't think you will find the lawyers there saying they are so much happier than they were 5 years ago. And we all wonder why the legal system is such a mess.
Is an avaricious legal oligarcy to blame? Maybe the profession needs to rethink where it is going. Smaller firms would probably result in the average lawyer making more money, do a better job and be a lot happier. The legal system and society is a winner in such a case too. Does anyone feel sorry for the few "kingpins" who would make less money under this plan?
Think about it.
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