Professional Services: End of Pyramid Business Model?

 For a number of years business experts have been projecting that the current pyramid model in professional services will be replaced by the diamond one. That is, instead of a lot of new hires and juniors at the bottom, there would be few. In the middle would be the bulge of seasoned players. At the top would be a limited number of leaders. 

Now, it's happening in management consulting. Financial Times broke the story. Here's a version of it in international media:

"An increasing reliance on AI is prompting the world’s largest consulting firms to freeze graduate pay and reduce new hires. This approach may significantly alter the industry’s traditional pyramid model. While the aim is to improve profitability by increasing productivity, it also threatens to limit opportunities for entry-level talent."

Essentially, chair of elite law firm Paul, Weiss Brad Karp forecast the same reduction in hiring of new graduates. Last March, in Lawyer Monthly he went on record indicating AI will significantly push demand downward for junior lawyers. In contrast the law firm's demand will surge for technologists and data scientists. 

Note that although large law firms such as Paul, Weiss have been experiencing a very profitable year and distributing generous bonuses, starting salary for junior lawyers has not gone up. That mirrors what's also taking place in management consulting. In another professional service - public relations - there is also stagnant hiring for entry-level jobs and compensation is more or less frozen. The diamond model could also take off in public relations.

At law firms staff jobs could also be in play. Those backoffice functions could be taken over by Private Equity firms. 

Professional anonymous network Reddit is an excellent source for understanding these trends. 

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