Can you remember a time when there was so much talk of more BigLaw firm failures? I can’t.
Count yourself a believer or a skeptic (and there are hardcore advocates on both sides, including gleeful cheerleaders in the first camp and diehard deniers in the second camp), this is a new phenomenon on our landscape. By way of comparison, not incidentally, think of all the industries where cocktail chatter about the next firm to fail is coin of the realm: Silicon Valley, most prominently, but also broad swaths of the economy from manufacturing to service providers to small business, which features the highest mortality rates of all. I have news for you: Failure is commonplace; decades in existence is rare; survival across multiple generations is exceptional.
And no one is entitled to continued survival.
Which brings us to today’s topic.
If failure, even prominent failure, may become a more regular feature of our landscape, what might be the early warning signs?
I nominate three.
I. Fuzzy, Non-existent, or Delusional Strategy
This may seem obvious, but I have a fairly rigorous definition of what strategy means, and of how well—if at all, actually—you’ve communicated it to the rank and file. Virtually any firm you ask (I’ve asked a lot of them) will tell you they “have” a strategy, but as soon as you begin to explore matters, you all too often discover there’s no there there.
What are the ways a putative strategy can turn out, upon examination, to be devoid of content? Here are a few:
- The strategy statement actually has nothing whatsoever to do with strategy, it has to do with nebulous self-congratulatory assertions: What makes our firm distinctive is “our culture,” “our collaborative nature,” or worse, “our entrepreneurial spirit.” I have bad news: As precious as your culture may seem to you, clients don’t care a fig about it. When was the last time you saw an ad for clothing, cars, liquor, or anything under the sun, that enticed you by asserting how strong the culture of the sponsoring firm was? Sorry, but get over it. Celebrate it internally to your heart’s content; it’s not a strategy.
- The strategy is aspirational and generic, but not distinctive or concrete. “We aim to provide superior client service through the most talented professionals in each of our practice areas.” Nice. As opposed to substandard client service through mediocrities?
- Nobody at the firm has the remotest idea what the strategy is.
- (A variant on the above): You have a thorough, comprehensive, and intelligently developed strategy which sits in 3-ring binders on everyone’s shelf and has for five years.
- Increased revenue or profitability are not strategies. They are the results of a market-driven strategy executed with consistency and discipline.
- You don’t know who you are, and your strategy statement exposes that for all the world to see. The most common error in this category is along the lines of, “We [do/want to do] only the highest value work for the best clients in ‘bet the company’ mode.” Unless the name in the lobby is Cravath, Cleary, Davis-Polk, Paul Weiss, Simpson-Thacher, Sullivan & Cromwell, or their ilk, good luck with that. Know who you are.
Unless you know who you are, any client, any matter, any lateral opportunity, is as good as any other. You will be rudderless, and your clients, lawyers, and staff will know it.