Is mediation killing big law firms?

Maybe.

According to this blogger, one of the reasons leading to Heller Ehrman's demise (you can view its website here, which doesn't contain fancy graphics, just the firm news about its bankruptcy filing) is that within a 45 day period in 2007, Heller lost 25% of its litigation work due to settlements.

You don't have to be a managing partner to know that's bad news for a firm's bottom line (unless you are on the plaintiff's side of things and obtain a big settlement in favor of your client).

Settlements are tricky creatures. From a firm perspective, a settlement means that there are no more billable hours. So no more firm revenue. From a client perspective, settlement means certainty as to its future budget, a conclusion to uncertain outcome in court, and creativity in how the case is resolved.

This inherent, well, conflict, between the firm's bottom-line financial pressure and the client's goals has always been something that confronts me.

With the proliferation of alternative dispute resolution, and fewer and fewer cases going to trial, will we see a demise of big firms--because too many settlements in a quarter can zap the firm's cash flow?