A Lesson From a Deli?

♫ You’re a leftover
Pastrami on rye
Succulent and delicious
Yes, the sandwich of my eye…♫

Lyrics, music and recorded by Hot Soda Apparatus.

I read an article today in Slate Magazine entitled “The UR-Deli – How Katz’s stays in business against the odds by Jordan Weissmann.”  This article is about how Katz’s deli in New York City has remained in business in the lower east side of New York since 1888 while its competitors have failed.

The business model is to deliver a hefty pastrami on rye for $19.75.  Believe it or not, that sandwich is not much of a moneymaker.  The old-style delis are facing a conundrum: the very thing that makes them loved..those wonderful stacked pastrami and corned beef sandwiches – is the thing that makes it hardest from an economic standpoint.  They don’t make much money.

Compare and contrast that with law firms:  the very thing that makes us loved – delivering bespoke legal services – is the very thing that makes it hardest from an economic standpoint.  We can’t seem to deliver legal services at a lower cost. We are facing a basic economic issue similar to these old delis…

How does Katz’s deli survive?

The reason Katz’s was able to live on while its competitors disappeared largely boils down to real estate. As Sax writes in Save the Deli, New York’s delicatessens can basically be divided into two groups: those that rent their buildings and those that own. Famous renters, like the Stage Deli and 2nd Avenue Deli, have closed in the face of rent hikes. Famous owners, like Carnegie and Katz’s, have lived on. (And when 2ndAvenue Deli reopened, it bought a building … on New York’s 3rd Avenue). If Katz’s had to deal with a landlord, it would likely have disappeared or moved long ago.

Is there a lesson here for law firms?  Could – possibly – part of the solution to the access to justice issues be that law firms start owning their own office buildings? There are a number of advantages arising from this model.  The partners of such a firm would be building equity in the property over time; that same equity could be used to retire older partners when newer partners purchase an interest in the business as well as the real estate asset.  Keeping ownership of the office space may reduce the overhead costs that could help the firm render legal services to a broader base of clients.

Certainly the issue of trying to broaden the ability of existing law firms to deliver legal services economically to a wider group of society does not have any easy solutions.  However, perhaps Katz’s and similar survivors have lessons for us today. Notwithstanding we are a leftover, perhaps we can still be the sandwich in a client’s eye…

-David J. Bilinsky, Vancouver, BC.