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Top tier California law firms are facing the biggest financial challenge in their history: commoditization of high-end legal services and the plummeting fees that could surely follow. Some are in denial while others are working to differentiate with niche practices - but a few select firms will find high-trajectory growth in this new environment by going a step further. Their strategy? Power branding specialty practices while also publicizing the personal brands of practice leaders to defeat any threat of commoditization. To put a face on the peril consider the crisis, which usually starts with an apologetic call from Bob Corporate at Fortune Wannabee, a 10-year seven-figures-annually client of the firm. Bob doesn't seem to be the same jovial fellow who sipped Chateau Petrus at the firm's playoff skybox when he mentions his board wants another look at last year's legal expenses. In fact, he tells you they have asked him to put Fortune Wannabee's legal business out for bid this year - "Just for the sake of transparency." This scenario is playing out with increasing frequency as the biggest clients are addressing a dismal economy and scrutiny from their financial people who perceive legal services as just another commodity like office space or computers. In reality, many top tier California firms have indeed failed to differentiate themselves from one another; and thus become a commodity. They even look identical, plus or minus a Monet in the conference room or a Monique at reception, the big firms appear to buyers of corporate legal services as simply multi-floored hives of incredibly bright attorneys who are unfortunately little different from the incredibly bright attorneys next door. Law firms aren't the first to come under the commoditization attack, and it's revealing to look at another sector: accounting. Many remember the Big Six firms. Ernst & Young, Price Waterhouse and the rest were fee-generating machines with corporate clients paying a substantial fee premium for the cachet of being audited by the biggest and best. Then came an economic downturn and accounting industry fees were scrutinized under a magnifying glass. Corporate America discovered that auditing services, the principal revenue generator, were by definition the same at Arthur Anderson, Coopers and at any of the rest - the services were commoditized; bidding took place and Big Six partners took a bath. The least evolved firms leaned on dispirited overstressed staff to generate literally truckloads of paperwork to justify their fees; avoiding immediate fee reductions by strategic obfuscation. This worked only temporarily of course; auditing fees had already been commoditized but while the dinosaurs were fighting a losing battle, the evolved firms were creating niche practices with specialized expertise and even spinning off consulting entities. Large law firms, historically exempt from fee negotiations because of their status as top dogs of the professional services sector, now face their own day of reckoning.

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