As we come to the final installment of the Growth is Dead series, I hope the challenge I’ve laid out for us is clear.
- Excess capacity
- Stagnant demand
- Cut-throat or “suicidal” discounting
- Unprecedented pressure on prices, from all directions, including who clients will pay for, and rates and realization
- Exhaustion of cost-cutting as a tactic to keep profit margins intact
Among other things, I’ve suggested the new landscape will require:
- Law firms to restructure their “demographics” in profound ways, from pyramids to cylinders
- And far savvier and nimble readiness to draw upon “the cloud” of virtually available talent, be it alumni networks, your own onshoring operations, or even third parties
- (Think of all of this as just-in-time supply)
- Astute, targeted, knowing focus on clients’ businesses so that they come to see you as partners in solving their problems and not the “outside counsel vendor”
- Willingness to invest for the long run and not feel compelled to strip-mine the balance sheet of cash within weeks of the conclusion of each fiscal year
Note that last point.
My greatest fear for the industry at this juncture is that short-term imperatives will override sound judgment and prudence, and that a few firms may be tempted not only to short-change the long run but to mortgage tomorrow to juice up today. I for one do not presume we’re too smart to know better; why should we be? Dewey beyond a reasonable doubt did it, and whether or not you personally believe them to be an outlier, governments, financial institutions, corporations, and households around the world were (we know now) doing it throughout the first decade of this century. I would not be shocked were some law firms to fall into the same beguiling trap.
But that’s actually for another day.
Let’s put this into larger historical perspective.
Not sure what the online equivalent of giving a speech a standing ovation, but that’s the feeling I wish to convey at the end of this series. Superb.
And I’m not sure what the online equivalent of toasting you for that kind remark is, but that’s the feeling I have at the moment! Sincerest thanks.
Bruce,
I read all 12 installments of your series with great interest….twice. This is an extraordinary body of work that reflects enormous insight and ought be required reading by every managing partner of every law firm, or professional services organization, in the world. You do a very effective job of challenging the status quo and your series is something between a call to arms and a much-needed wake up call for our profession. As always, I plan to share many of your insights with my partners. And I plan to cogitate over many of your proposed initiatives.
Brad
Brad:
As always, your thoughts are deeply appreciated. Your comments are frankly quite touching.
I’m quite passionate about these things so very glad, and ever so slightly relieved, to know others pick up on that.
All the best,
Bruce
(Editorial note: Brad Karp is the Chair of the Firm at Paul Weiss.)
Great read. I feel the transformation of the status quo begins in law school. There are groups of law students that acknowledge the industry’s course must change. These students desire to work for and start firms that embrace “change.” However, connecting with these types of firms is another challenge entirely, because even mentioning this “legal renaissance” immediately puts you on a type of interview black list–for most firms.