This has been one of the top stories at the New York Times website for a few days now. I can give you my opinions, which you can also call a condensed version of the story.
Not enough transactional work to keep people busy.
Ebb and flow. This happened in the 90s, too, people. Granted these layoffs are bigger, but that's because BigLaw is bigger.
Salaries got out of control. I was a beneficiary of this, admittedly. Firms are rolling back these increases a bit and I htink that is a good thing for them. (Don't even get me started about how I think we should close about 2/3 of our law schools.)
To pay for everything, billable rates have become insane. Work that is not "bet the company" work going to people like me. Would you rather pay BigLaw rates for a routine deal or pay me a fraction of that for the same work? (I am busy enough to tell you what I think clients are saying.)
In some cases, greed. Per partner profits have become -- for better or worse -- the measurement of success. Just as pro athletes move from team to team, so do lawyers with books of business.
Unlike some, I do not think BigLaw is done and history. There will always, in my opinion, be a place for that kind of model. If you need the best of the best on a deal, then get it - and many times that means going to the biggest players in the biz. Also, if you are a GC at a company, boards are not likely to fire you because you hired BigLaw in the major deal or major litigation. But I think there is a trend toward finding guys like me to handle other matters in a cost-effective and efficient manner while getting first-rate service. So there's room for all.