A revealing piece of research into the management of law firms was published recently by Deloitte, the management consultants. Commenting on the bonus schemes introduced by the UK’s top 100 law firms, it reported that roughly one third of them were "not delivering value". By contrast, the report said, fee-earner plans that rewarded individuals based on targets such as billable hours had been more successful.

Implicit in the report was that a significant minority of leading law firm managers are making stupid decisions and frittering away the firm's money. Inspired no doubt by their City neighbours or clients in the banking field, they have jumped on the bonus bandwagon in a crude, ineffective way. And even when they have got it right – the bonus linked to billable hours – they have exposed themselves to criticism for fostering a culture of long, stressful hours.

So there is plenty of sense in the question posed by Laura Empson, of Oxford University, and Stuart Popham, of Clifford Chance, in their new book Managing the Modern Law Firm: “Some parents dream of their children becoming lawyers. None ever dream of their children becoming law firm managers. Why would anyone want to manage a law firm?”

The signs are that the challenges of running law firms are becoming greater by the day, at all levels. “We are at a pivotal moment in the evolution of the modern law firm as law firm managers struggle to develop new ways of organising lawyers,” Empson and Popham claim. “There are terrible costs for getting it wrong.”

George Bull of consultancy Baker Tilley is one of the leading experts on the economics of running a law firm. His view is that in the UK there are is a Top 100 of very respectable, profitable firms, then a second division of "noteworthy" firms. But beyond that there is a long, attenuated tail of firms who are increasingly struggling to survive and for whom life is likely to get worse as High Street work diminishes and the prospect looms of Tesco and the RAC move into "commodity" work.

“The traditional model of law firm’s finances,” Bull says, “was that one third of expenditure went on direct costs, one third on overheads and one third was left available for partners. However, amongst the smaller firms that final third for partners has been eaten away by growth in direct costs and overheads. In many of the smaller firms it now needs just six months of bad trading and they will go under.”

Bull envisages a scenario in which large numbers of High Street firms will disappear, going the way of the butchers, bakers and small pharmacists. Those who survive will only do so through good management skills because traditional professional skills will be available - cheaper, more accessible - elsewhere. “If you go back to the start of the recent Clementi Review the question was put to consumers, ‘What do you want?’ And the answer came back: ‘More choice’. What that is likely to mean is that larger supermarkets will start to offer legal advice in the same way as they run an in-store pharmacy.”

Is there any possibility of survival against this onslaught?

“Now is the time that threatened firms should be sharpening up to prepare for the future, “Bull says. “Unfortunately, however, I am not seeing the kind of efficiency improvements which are essential.”

When pressed about what needs to be done, Bull reels off a litany of potential actions that firms should take ranging through better risk management, strategic planning, tax arrangements, mergers, reorganised finances, improved use of information technology and so on. In other words, even for quite small firms there are management decisions to be taken which mirror those which are debated amongst the cream of the Magic Circle.

All of which shows why the publication of Managing the Modern Law Firm marks something of a seminal moment in the development of management theory in this market. For the first time, at least in the UK, academic and professional heavyweights have faced up to the scale and unique complexity of law firm management. While London’s leading firms have become global enterprises over the past 20 years through relentless drive and ambition, that is not sufficient to ensure success. Instead they must become much more sophisticated and professional as managers and business strategists.

The agenda of issues is bewildering – from the cultural and social challenges of embracing diversity through to the mathematical complexities of alternative fee structures and price setting. There is also the tricky question of professional ethics with increasing tensions emerging, according to Royston Greenwood of the University of Alberta, between professionalism and commercialism.

But the number one priority is to sort out the future of the partnership structure. As Laura Empson points out, “While the partnership form of governance continues to thrive in the highly regulated and protected legal profession, its survival within other professional sectors is looking increasingly precarious. The legal profession is not immune to the pressures that other professions are experiencing and lawyers would be foolish to take the on-going health of the partnership form of governance for granted.”

Already that "regulated and protected" status is under threat (or at least facing the prospect of major change). So the lesson for every lawyer is that their professional skills are no longer enough. In the words of Tony Angel, the managing partner at Linklaters: “Management means constantly re-evaluating the vision and resetting the goals.” And never more so than now.

Managing the Modern Law Firm – New Challenges and Perspectives is published by Oxford University Press

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