If you’ve traveled this far in this series, you may be wondering what I think you actually ought to do.

Recognizing that diagnosis is eaiser than prescription, the remaininig installments—starting with this one—will try to address that. One other caveat: Not all of what I’m going to suggest will be advisable, or even appliable, to all firms; this is where your judgment and knowledge ofthe particular historic path and current capabilities and limitations of your firm come into play. But if you’d like to talk about any of that, you know where to find me.


Mindset change #1: You do have competition

Countless are the times I’ve asked firms or individual partners who they perceive their competition to be, and the odds are about 9 in 10 that the response coming back is, “Well, no one, really.”

False and double-false.

And no, I do not care how high up into the stratosphere of prestige you care to go, you have competition.  (Even David Boies and Ted Olson have each other, after all.)

So stop pretending otherwise and begin to figure out what you’re going to do about it.

Other firms are going after your existing clients all the time. And if you’re not going after theirs, why not? Even in the good old days, there was no entitlement to incumbency—be it in a client relationship, an AmLaw ranking, or a recruiting bakeoff.  In today’s world of one great big battle for market share, there’s almost negative entitlement to incumbency.  If you’re not fighting to expand your share, you’re probably sliding backward.

The Econ 101 type of competition comes from other firms who are basically doing the same thing you do: Camrys and Accords, Corn Flakes and Wheaties, Benjamin Moore and Sherwin Williams, AT&T and Verizon, AmLaw XX and AmLaw YY.  You fight these types of competitors largely on the dimensions of price/value, quality/expertise, and service/responsiveness.  I hope you know how to win your fair share of work from what are essentially “me too” competitors. (If you don’t, I need to be writing another column than this one.)

But you also need to understand something slightly more nuanced—and enormously more threatening—about competition. This is the concept of “substitutes.” Substitutes are an indirect, subtler form of competition, because a substitute for your services is not exactly equivalent. It’s something that, given the right tradeoff between price and quality, can be equivalent or better in the eyes of the client.  Classic examples are tea and coffee, margarine and butter, or heating oil and natural gas.

You can watch this play out from home.  During shortages caused by war, crop failures, or other abnormal circumstances, coffee drinkers may be driven to tea or tea drinkers to coffee.  Some who switched may find they actually prefer the substitute.  Similarly, if “fracking” ends up vastly increasing the recoverable reserves of natural gas in the United States, we can expect it to displace heating oil in many uses—some of which will be permanent changes. This is the reason substitutes can be more threatening in the long run than classic competitors: The client may come to prefer the substitute and never return to the original good/service even when circumstances revert to normal.  The client is gone forever.

Among other potential substitutes for the expertise of AmLaw XX are technology, bulked up inhouse departments (composed of lawyers and nonlawyers such as compliance and risk management professionals), legal process outsourcers, and “doing without.”  (Don’t underestimate doing without as a viable choice; does every corporation have to sue every potential patent, trademark, or copyright infringer, for example?)

 

Change #2: Treat your business like a business

Many law firms are now globe-spanning, billion-dollar a year enterprises. This presents a sophisticated management challenge. Heck, even a $10-million/year firm has a respectable client base that has come to rely on it, not to mention providing all or a substantial component of the support to dozens of families. Treat it as the complex and dynamic organization it is.

Floating around in the management literature (I’ve tried to find the source but can’t) is a rule of thuimb that the complexity of managing a professional service firm is something on the order of 5X that of a conventional company in (say), retail or wholesale trade, manufacturing or construction or transportation.  If you believe that’s at least directionally correct (I do), then your $10-million/year law firm presents challenges equivalent to (say) a $50-million/year retail chain, and running a $1-billion/year law firm requires as much sophistication and expertise as running a $5-billion/year general economy business. (For perspective, Xerox is about a $20-billion/year business, and Hollywood ticket revenue is just over $10-billion/year.)

We can debate (and I invite readers to do so among yourselves) whether the proper multiple is 5X, 3X, 7X, or some other number, but what matters is something I think we can all agree on: It’s >1X.

Don’t shortchange what this requires.

To begin with, take a sober second look at whether you as Managing Partner can maintain a serious, active practice caseload and manage the firm.  Your primary job is now management, not practicing. In what other industry with similar-sized enterprises is management pitching in on the assembly line as well?

Specifically, it requires accomplished senior-level people running the business side. I’m referring to specifically to your “C-Suite:” The firm’s COO, CFO, CIO, CMO, head of HR, and maybe more.

If you or your partners think of these executives as “non-lawyers,” stop reading. Not only is that demeaning to them, it reveals a fallacious and unattractive sense of superiority. For reasons that escape me but appear to be effectively widespread, lawyers are inclined to assume they can do anyone else’s job but no one else could possibly do what they do.

Stated that way, it sounds absurd, no? But admit it: The thought has crossed your mind. Exterminate it.

Because if you don’t, it becomes a self-fulfilling prophecy. Your firm (say) thinks the IT function is being handled if the network stays up and you can find your documents again where you saved them, so hires the most inexpensive IT leader you can find who exhibits baseline competence. Don’t then complain if a competitor firm turns out to have far more robust and fluid collaboration tools, which clients enjoy the benefits of and come to appreciate.

Too many staffers are lapsed lawyers with little in the way of credentials (the JD does not count) or expertise in their functional areas. Partners are reassured by staffers having  JDs? Wrong question. The question must be what the individual brings to serve the business needs of the firm.

Historically, perhaps the saddest example—with dashed expectations and “I told you so’s” flying in all directions—has been the marketing function.  Not so very long ago, marketing (or “Business Development,” as it was often revealingly labeled) was too frequently staffed by junior people innocently promoted into roles they had no training for and whose job functions, truth be told, were largely those of advanced PowerPoint jockeys and party planners.

And what happened?  When partners called on “marketing,” nothing remotely transformative or strategic could possibly occur. When marketing failed to move any visible needles, partners condemned the marketing function as ineffective, which justified cutting spending, ensuring the firm could only hire the more of the greenest and least capable junior people, launching another round of marketing disappointments, and you get the idea.

That this is changing is the good news; that it ever happened to begin with teaches a lesson we’d best not forget.

Treat your business like a business.

 

Change #3: Indistinguishable strategies are…indistinguishable

Have you ever played the “Guess Which Firm’s Website!” game?  I have, and I recommend you try it when you have nothing better to do; don’t worry, you’ll get the point of the game inside of five minutes.

The rules are simple: Pick three or four firms at random, visit their websites, and pretend you can’t see the logo identifying the firm. Try to guess which firm it is.

Variation 1: since it’s awkward for most of us to ignore what’s plainly in front of our eyes (the logo), ask yourself what would have to change on the site if you were to swap in entirely different firm’s logo and identity. I’m talking about messaging, positioning, and true differentiators, not “mere facts” such as lawyers’ names and office locations.

I’ve taken a small random sample to spare you the exercise. These are paraphrases of key claims from four different AmLaw 100 firms’ sites:

  • Our lawyers share a common culture, supporting our firm-wide commitment to add value, achieve excellence, and promote professional development, as well as diversity and inclusion, pro bono service and community support.
  • We are a premier international law firm with a diversified business practice, more than XXX lawyers, and offices in A, B, C, D, [etc.]. We have over ZZ years of serving a broad range of client interests.
  • We are a global law firm with approximately XXX lawyers in YY offices. We are privileged to serve clients across the entire spectrum….
  • We are a full-service law firm distinguished by our highly collaborative, cost-effective approach…

Please do not waste time trying to figure out which firms these are or presume for a second that I’m picking on them: I’m  not. They were literally the first four that came to mind.

Before you think I tar all firms with the same brush, you can find exceptions: Firms that say something distinctive. But you have to look hard, and far and wide.

Here are two I particularly like:

Momentum. Movement. Forward motion.

That is what we do at Proskauer. It’s the foundation of any successful business. […]

It’s not enough to do good legal work. There are many firms out there and to be fair, most are capable of closing a deal or winning a case. It’s hardly surprising. We went to the same law schools, learned the same legal principles and passed the same exams.

So what do we bring to the table?

Our approach is not simply to “represent” our clients but to get into their heads.

“Get into their heads?” Fabulous.

Or this (Paul Weiss):

Statement of Firm Principles

Judge Simon H. Rifkind, 1963

Our objectives are, by pooling our energies, talents and resources, to achieve the highest order of excellence in the practice of the art, the science and the profession of the law; through such practice to earn a living and to derive the stimulation and pleasure of worthwhile adventure; and in all things to govern ourselves as members of a free democratic society with responsibilities both to our profession and our country. [And there’s more.]

Because these are so rare, they have the indelible ring of truth. Compared to the first four I cited?

Put yourself in a client or prospective client’s shoes.   How could you possibly form an opinion of the differences between these firms, not to mention which might actually best serve your needs?

I submit it’s actually worse than that. I bet partners of most firms couldn’t even identify their own firm based on unidentified excerpts from their websites.

“There’s a difference between a website and a strategy,” I hear you objecting?  Of course there is.

But without a window into the strategic planning process of a large sample of AmLaw firms, websites should represent a rough proxy for who they think they are, what makes them distinctive, and how they express their difference and position themselves.

The most important point is that strategy matters more than ever before.  If you haven’t seen these charts before (courtesy of the annual report out of the Citi Private Bank Law Firm Group), they should deliver that message more strongly than anything else I could say:

A  nice pretty concentration, no?

Now look at the post-Great Reset distribution:

Our clean concentration has dissolved. In other words, strategy now matters.

A strategy that’s a mishmash is no longer acceptable.

Loathe as you may be to admit it, I have news for you: If you can’t articulate it plainly and crisply to the world, as on your website, it’s a mishmash.

Stay tuned for Part 9.

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