Bradley: great post and questions. I'll offer a few of my thoughts here:
(1) Big Law rates are going up even if costs go down b/c managing partners see this as an opportunity to become more profitable rather than pass the savings down to all their clients - the same thing happens in other industries who realize cost savings but incrementally raise prices.
(2) 17,500 lawyers added to the small law market will potentially do a few things: (a) we will see small firms add a partner or two and grow from being 1-3 person operations to being 4-5 person operations allowing them to take on different kinds of work; (b) partners go solo and compete with existing solos for business, creating a more competitive market; (c) a flood of legal consultants offering their services.
(3) Small Law can definitely benefit from lean six sigma and LPO. Both methods allow the small law firm to handle more than they could with out, which means they can increase volume of work and potential profitability.
(4) The basic legal services like will drafting, contract review, etc. are becoming commoditized through LPO and the like (as they should).
What do others think?