I recently had the chance to sit down with Jay Zimmerman, Chairman of Bingham, to discuss the changes he’s seen over his career, and to
talk about the future of the legal industry and Bingham. Herewith a synopsis.
Jay (Harvard, Harvard Law) started his career in New York at Debevoise, but
within a couple of years moved to Boston and joined what was then Bingham,
Dana, and Gould. Making partner in 1986, he relocated with his family the following
year to London to manage what was just about then the tiniest office imaginable
for Bingham–one partner and one associate–and ended up staying seven years.
(Since Jay’s transatlantic stint, the London office has grown to 45 lawyers,
focused on financial restructuring and financial regulatory practices.) Enjoying
the quintessential ex-pat experience, Jay got to the point where he never
expected to return. But of course he did, to lasting effect.
"Are you sorry in any way that you left London? Obviously there’s a school
of thought that London has or will overtake New York as a financial capital."
"Well, I wouldn’t write New York’s obituary quite yet!" Nor,
he volunteers, would he worry about the "New York elite" firms
who haven’t yet invaded London to a material degree. They have the resources
and the will to do so when they see fit, he opines. "It’s a problem
lots of firms would like to have."
The firm he returned to relied on Bank of Boston (founded in 1784) for fully
one-third of its business, and the comfortable relationship engendered complacency
(my reading, although Jay would probably be more politic). Sure enough, in
the recession of the early 1990’s the Bank was challenged: Its share price
hit a low of $3. In 1996 (we now know) it was to merge with BayBanks, then
to be acquired in short order by Fleet (1999) and finally by Bank of America
(2005).
Although Jay and his partners had no inkling of that subsequent history, it
was clear that with such extraordinary over-reliance on one key client, and
with essentially all of its 200 lawyers based in Boston, Bingham had what was
not exactly a business model for durability in a world of change.
In 1994, Jay was elected Chairman and embarked on nothing less than a concerted
transformation of Bingham, with no fewer than nine mergers since 1997, and
the following results:
Increasing the number of offices from one with three small satellites to 13,
across the globe;
- Quadrupling its size and then some to nearly 1,000 lawyers;
- Growing revenue eight-fold; and
- Increasing revenue per lawyer from about a third of a million dollars per
year to nearly $1-million.
Last year was Bingham’s best on the financial front. As for 2008, Jay reports
that the firm is experiencing an even stronger first half compared to last.
How did Jay do this? As he observed drily, "fear is a great motivator."
Other firms have tried to move from a metropolitan or regional base to a national
and even international platform, with varying degrees of success. How has Bingham
done it?
"Well, for starters, Boston was, second to New York, perhaps the most
sophisticated and highest-rate legal market in the domestic US. If you want
to try to build a global firm, it helps to begin in what’s a relatively high-end
home market."LA has produced some absolutely terrific firms, Latham, Gibson Dunn,
etc., but when you think about it the LA market itself is an uncommon place
for very high-end law firms to come from: It’s not a powerful financial capital,
it doesn’t have a lot of Fortune 500 headquarters, and its industries are
widely dispersed. But then again, when you look at where other nationally
prominent firms have come from (the Midwest, for example, and I say that
as a St. Louis native), Boston wasn’t the worst place to start."
It’s clear to me, I observe, that Jay personally has been a large part of
the driving force behind Bingham’s decade of expansion. "How do you deal
with the challenge of leading notoriously autonomous and independent-minded
lawyers? Obviously this is a challenge for any managing partner or Chairman,
but when you embark on a course of, essentially, transformation of the firm–not
a ‘steady as she goes’ strategy–you’ve really upped the ante."
"It’s probably a cliché, but it’s communicate, communicate, communicate.
I’m constantly traveling–in fact I just got back from London and Tokyo–and
I meet and talk with as many partners, associates, and staff as I possibly
can. I do videotapes. [There’s a nice sampling on the firm’s website–Bruce] In fact I just did a videotape for the summer associates, who are just starting.
But there’s no question it’s a challenge. You need to be out in front of
your partners, but not too far out in front."
And the message is?
"The message is two-fold:
"Number one, this firm is ambitious, and our lawyers need to be ambitious.
They need to understand that. When I talk to people we’re thinking of recruiting,
I try to get a sense of their level of ambition. People want to fit in, and
we as a firm want them to fit in. So ambition is part of what we’re all about."Number two, we love change. You don’t hear that often from a law firm,
but the fact is that the status quo is good for incumbents, and we’re not
an incumbent. In change we have opportunity; in stasis we don’t. So people
here need to be prepared to embrace change."
I observe that law firms can be fragile institutions. Is that something he
worries about?
"Of course. We’re all here voluntarily. And when you’re in the business
of assembling a bunch of highly talented people, one of the consequences
is that those people have options. The only reason they come back up in the
elevator in the morning is because you’ve presented them with, and continue
to present them with, an attractive career proposition. But yes, I pay a
huge amount of attention to that. It goes back to communication, and to having
people here who fit in and want to fit in."
Is "work-life balance" part of that equation? Part of the task of
retaining talent? And how different is "Gen Y?"
"Well, they’re really hugely different. The original IBM PC was introduced
in 1981 and our new associates were born after that. They’ve grown up digital;
it’s not news. But I don’t think the term ‘work-life balance’ is helpful,
descriptive, or informative. If you’re going to make it here, you need to
be committed. What has changed is that commitment takes a different form.
When I started at Debevoise, it was all about ‘face time.’ You needed to
be seen in your office at 7 or 8 or 10 pm, and the same on Saturday mornings.
But today of course you can work from pretty much anywhere–so long as you
do the work."But again, the commitment hasn’t changed. Look at young investment
bankers starting out. They get told, ‘Look, you’re going to make a lot of
money, but you need to be on call 24/7. We’re not going to need you 24/7,
but you need to be on call.’ For our associates, what I tell them is that
it’s all about realism. If they’re realistic about the commitment this profession
demands–as well as the rewards, intellectual, professional, and otherwise,
that it can provide–then they’ll be fine. If they’re not realistic, they’re
in for a rude awakening."
I ask if he’s familiar with the industry structure I call the "hollow
middle," where consumers gravitate toward either the high-end, high-quality
providers, or the mass market, value providers, but not in meaningful numbers
to any middle-market providers. This industry structure is remarkably common
and seems to be stable–an "equilibrium," as economists would put
it. For example (think about whether these don’t represent your own buying
patterns):
- Apparel (you want Armani or Gap)
- Cars (BMW, Lexus, Mercedes, or Toyota and Honda)
- Alcoholic beverages: Beer, wine, and liquor (fill in the blank)
- Groceries (Roquefort or a dozen eggs)
- Financial services (free checking for life or Bessemer Trust)
- Etc.
Jay thinks it may hold lessons for the legal industry. And we know where he
wants Bingham to be.
I realize that I don’t have a firm grasp on Bingham’s international strategy,
so I pose the question bluntly: “Tell me what it is.”
Jay says he likes to use the phrase “global relevance.” By that he means
Bingham attempts to offer a practice focused on one of their core strengths,
which is global restructuring and financial regulatory work. They strive to
offer this in London, in Tokyo, and increasingly in Hong Kong. “There are
a lot of opportunities out there which are very real–they’re just not opportunities
for us.” In other words, Bingham doesn’t need to have a dozen offices across
the EU, or any offices in mainland China until the financial systems there
mature a bit more.
“What makes this strategy work for you?”
“Well, first of all, there are spinoff benefits to other practice areas,
including litigation, corporate, and finance work itself. But secondly, we’re
benefitting–as we have in other areas–from changes and even relative turmoil
in the markets. I’ll give you an example. Ten years ago in London everything
having to do with restructuring distressed companies or distressed assets primarily
involved banks: They had extended the credit, their covenants that were being
violated, and they were in the driver’s seat. Since we didn’t have old-line
relationships with those banks, we didn’t have the connections necessary to
attract that kind of work.
“But today lenders are all over the lot: They’re hedge funds, maybe private
equity, other sources of capital, and bondholders are no longer passive–they’re
aggressive. This gives us many points of entry, and they’re not all the traditional
institutional players. As I’ve said before, it’s a different world, and that
creates opportunity for us.”
And what of the future?
“We believe that as globalization accelerates and the world becomes a more
complex place, there will be increasing demand–both in absolute terms and across
geographical regions–for sophisticated restructuring capabilities, again, with
all the financial regulatory authority interfacing that goes with it. We don’t
think this practice focus is at any risk of obsolescence.”
Regular readers will know that one of the “evergreen” topics here at "Adam
Smith, Esq." is what can possibly explain the fact that for the past
30 years essentially 50% of law school graduates have been women and for
almost the same period of time only about 15% of BigLaw partners have been
women. Neither number is budging. Why, I ask Jay, is this?
“As a father of two grown daughters, I think about this often, so I’d like
to take some time to share my thoughts on this. The unfortunate reality
of today is that you can’t defy gravity, but I am optimistic things will
change.
By ‘you can’t defy gravity’ I mean that graduates of our elite law
schools, for the most part, marry people with equally promising career prospects.
So you have all these couples composed of a pair of high-achieving people
starting off."When it comes time to have a family, it often makes economic sense–putting
aside any emotional issues–for one spouse — and it is usually the woman
— to focus on raising the kids. If you assume that many of these couples
are in a position to live on one income, it’s probably not so surprising
what we see happening in the workplace."This scenario is not unique to law firms. We
need to do a better job as a society to ensure that there are equal opportunities
for women to pursue their career ambitions — and not be automatically placed
in a position of choosing between starting a family or building a successful
career. Ultimately what we can do, and I do believe that we do this at Bingham,
is to provide the opportunity for all our lawyers — men and women — to
succeed."For women, we encourage flex- and part-time schedules. It is not uncommon
for us to elect women partners who are or have been part-time. We provide
an environment where women are encouraged and are given every opportunity
to succeed. Our efforts have not gone unnoticed internally as well as externally.
We’re consistently noted for our positive and supportive work environment
by FORTUNE in its ‘100 Best Places to Work For’ issue (for five straight
years), and by Working Mother and several regional publications where we
have offices."
As we’re preparing to adjourn, Jay recommends to me a Harvard Business Review
article that has been influential in his thinking, "Strategy as Active
Waiting" [only available for a fee, but I’ve bought it and look for a
column about it here soon]. The concept is essentially:
- Keep your priorities clear, but your roadmap fuzzy;
- Test the future; examine your assumptions; keep an eye on the horizon;
- While you’re watching, keep the pressure on your day to day competitiveness;
don’t let up; and - When you see an opportunity opening up, focus on it with urgency.
As I’m about to get up, Jay asks abruptly if I think leaders can be made.
“No, I don’t,” I say. “You can ‘make’ managers, and you can expose people
with leadership potential to career-broadening environments (say, sending
them to Hong Kong for 3 years), but no, I don’t believe you can ‘make’ a
leader out of whole cloth.”
“I agree; nope, you can’t.” (I’m relieved to have provided the right answer.)
There’s little doubt Jay has managed Bingham with urgency and focus. The challenge–scarcely
unique to Bingham–is now maintaining their strategic focus as they expand internationally.
And besting the hollow middle.
