Last week I had the privilege of attending the unveiling of the Financial Times US Innovative Lawyers 2011 awards here in town.
This is an award they’ve been doing in the UK for many years, and I was glad to see it imported across the pond; this was Year 2 of the US awards.
The research methodology is designed and conducted by RSG Consulting, a specialist legal research group (disclosure: Reena SenGupta, the founder, is a friend). Here’s how it works:
Each law firm was permitted to submit up to three entries in each category, which were subjected to client and third-party review. Each entry was scored against three criteria:
• The originality of the legal work or business situation
• The rationale behind the work, encompassing strategic input, levels of proactivity, commitment and leadership
• The impact of the work on the client’s business, on the industry or on business more broadly, or how it transformed a legal field.
In her introduction, Reena explains a bit more about the methodology and announces the winner. The methodology is actually more rigorous than Reena lets on below, as it includes in-depth interviews with hundreds of clients about law firms’ submissions, oftentimes revealing that such-and-such a transaction that a firm submitted as “innovative” is viewed by the client as garden-variety good counsel.
More importantly, it reveals different emphases in the way clients view firms. You cannot win any points in the following parlor game, but you might enjoy guessing which AmLaw 25 firms have their names attached to consensus characteriziations such as:
- superb implementers
- gentlemanly; very empathetic
- cookie-cutter
- quirky, but exceptional
- high initiative, unorthodox, total commitment
- nobody loves them; no warmth
- bland
- elegant
- hold their own against surprising competition
- did what we paid them for
Here’s Reena’s summary (emphasis mine):
The recent death of Steve Jobs was front of mind for several of the law firm managing partners interviewed for this year’s US Innovative Lawyers report. In the context of a conversation about how their firms were innovating, their own endeavours did not appear to bear comparison the efforts of Apple’s founder.
But innovation in law firms is different from that in corporations. Compared with a company chief executive, law firm managing partners are rarely inventors or even entrepreneurs. Their managerial functions are different and their roles tend to be more that of leaders or figureheads.
In the US, law firm management is particularly light touch. As the business of law section in this report reveals, few top US firms are seriously experimenting with operational or management innovation.
Most US managing partners see their role as enablers of their lawyers’ innovations. The two main challenges cited were in the recruitment and retention of top legal talent and allowing individual lawyers the space to solve clients’ problems.
Michael Blair, presiding partner of Debevoise & Plimpton, says: “We have many small teams of lawyers working on many different projects, so the creativity has to come out of those teams and be directed into those projects. What you have to do is create an environment that attracts and motivates people who like to think about things in rooms with other smart people.”
As the FT report shows, this smart thinking is crucial. Whether it is helping companies survive or helping the banks create liquidity, legal innovation and the efforts of lawyers to be creative plays a central role in the success of US business.
This year’s US Innovative Lawyers report received submissions from 53 law firms in the Am Law 200 [including] most of the largest 50 US law firms. The research team reviewed 272 submissions and interviewed more than 300 clients and lawyers in the hunt for outstanding innovation.
…
The FT’s Innovative Lawyers project was conceived as an alternative way to measure law firm success. It breaks with the traditional method of looking at fees and profits as the measure of success. As the category rankings are based primarily on client reviews, the awards show firms that were consistently found to be creating transformative solutions for clients.
Heading the 2011 ranking is Davis Polk & Wardwell. It was a consistent performer across the legal expertise and operational categories of the report. Tom Reid, the firm’s managing partner, says: “Every innovative business has to be focused on how to deliver yesterday’s solution for less today. Today, clients can enforce the truism of ‘more for less’. When the advice you deliver is truly unique you can charge premium prices, but it is not all unique - our business model is about driving a higher percentage of the inventive, unique work.”
In second and third place, respectively, were Skadden, Arps, Slate, Meagher & Flom and Cleary Gottlieb Steen & Hamilton. Both firms were responsible for significant innovations for clients from Burger King, the hamburger chain, to AIG, the insurance group.
Both firms talk about the importance of culture and human capital to their ability to innovate. Eric Friedman, chairman at Skadden, says: “We recognised from day one that our culture was our advantage.”
The firm has a history of diversity in terms of background, approach and personality, which Mr Friedman believes directly benefits clients. He says new associates are “Skaddenised” and taught the values of the firm, which combine business orientated, client-centric problem solving and a strong public interest focus.
At Cleary Gottlieb, Mark Leddy, managing partner, says the firm’s compensation model facilitates and encourages collaboration among partners on a global basis. “The model sweeps away internal competition and tension, and drives internal collegiality so that we can concentrate on being outward-facing to clients.”
He adds that Cleary Gottlieb does not perceive itself primarily as a US firm but rather one that operates globally.
For all the firms, culture is of the utmost importance to the promotion of innovative lawyering. However, this culture does not have to be homogenous.
The ranking’s top 10 contains three firms that originate from the west coast: Orrick, Herrington & Sutcliffe; Latham & Watkins; and Paul Hastings. All three have cultures that are different from the east coast firms, but are strong innovators in their own right with a growing international footprint. Also notable are the Chicago firms of Seyfarth Shaw, Kirkland & Ellis and Mayer Brown, which bring a different but powerful style to their innovations.
Since you’re reading Adam Smith, Esq., of course, you’ll surmise that I turned immediately to the section on innovations in the “Business of law,” which, tellingly, was subtitled: “Forced to innovate.” ‘Nuff said.
Actually, there may be signs of change on the horizon.
It is an idiosyncrasy of the US legal market that while American attorneys may be on the cutting edge of advice to clients, their firms are among the most traditional in the world. As a general rule, management style has not changed much in 30 years. But the worst financial crisis in a generation has changed things.
Cited among the pressures to change and the results of those pressures are:
- AFAs
- Outsourcing
- Including non-lawyers in client pitches and client work
- Giving clients financial “dashboards” to enable them to track the progress of matters in real time from their own desktop
Yet overall, I was reminded of nothing more strongly than the results of a separate survey we did here at Adam Smith, Esq. asking clients what they thought was “innovative” about their primary law firms’ business models, and the most common answer by far–amounting to about 4 out of 5 respondents–was “nothing I can think of.”
I highly commend to your attention the entire report, which is available here.
My fervent hope is that serious-minded and creative journalistic efforts such as the FT’s Innovative Lawyer awards will actually begin to help move the market, as it were, towards greater, and genuine, innovation. We have all had our fill of numerically-driven rankings, which are fundamentally unimaginative, albeit necessary. But the promise of efforts such as this by the FT and RSG is to inspire behavior to change. Future years should get more and more interesting.
Then again, it’s not really up to the FT, is it? It’s up to us.
