It was another conference where the divide between law firms and clients was being gently massaged, when the conversation turned harsh and funny. One general counsel was clearly frustrated. He'd lived through a year of deep budget cuts and layoffs. He'd smiled though the 'do more with less' lecture from his boss. He'd brought more work in-house, switched a few of his law firms, begged them for new approaches, and still felt, as he summed it up, screwed. The staffing by the firms was out of kilter, the prices too high, they didn't obey the 'supply chain' rules as other vendors did. He was tired of it, and beginning to eye his company's procurement officers as the solution. Maybe, he said with a twinkle in his eye, it was time "to let those animals at some of our service providers".

In the nervous laughter that followed, one managing partner at a leading US law firm looked across the conference table and said, "Thank God I'm old."

Retirement isn't necessarily the answer.

What the aggrieved general counsel was asking for – under the rules of the conference, all identities have to be kept private – was roughly the same message that Microsoft general counsel Brad Smith delivered this autumn when he met with some of us here – law firms, change how you do your work! It's not a trivial matter, certainly, nor is it as arrogant as it might appear.

What I understand in-house counsel to be saying is that there are some things they are willing to pay a lot for, more things that they are willing to pay a lot less for, and categories of work for which they don't want to pay anything, at least not to you. Complicating the situation is that the same engagement may contain the whole panoply of activities, from high pay to no pay.

I'm not much for business jargon. (The general counsel suggested that even if law firms didn't want to change a thing, at least they could retain supply chain consultants so they could fake the procurement-speak of value propositions, dashboard metrics, and the like.) But two buzzwords seem apt in this discussion – disaggregating and re-engineering. The first would have the various tasks that law firms do pulled apart and examined for what they are and who can do them best. The second would be harder, trying to realign the firms' workforces, their incentives, and their pay so that they could better handle some or all of those disaggregated tasks.

There are at least two reasons to embrace those concepts. One is because you believe that there has been a fundamental change in the legal marketplace, and you want to respond sensibly.

The other is because you don't believe that there has been a fundamental change; instead you think the market is getting warped by one of those painful but periodic supply-and-demand resets that come along – you pick – once a decade or once a generation.

Those in the second camp may be correct, or they may be clapping for Tinkerbell, but they share an acute problem with the time-for-a-change believers – Realisation rates have dropped below 90%. When hours are down and collections are heading south, firm managers need to do something more systematic than firing defenceless kids and clientless partners. They have to change their cost structure or watch their profits tumble, too.

This can't happen overnight, nor, except for the greedy, should it. Re-engineering a professional services organisation has serious implications for the professionals involved: their status, their roles, their compensation, and most importantly, their work. Some firms seem to have a clear headstart on this path, but it's hardly too late for the rest of the pack. One comfort for all concerned is that we are now in an era where many models are busy being born – unless, of course, you'd rather be busy retiring.

Aric Press is editor in chief of The American Lawyer, Legal Week's US sister title. This article first appeared in the magazine's January edition.