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.
A friend, fellow Princetonian, and loyal reader writes:
A profound intellectual and ethical connection of the highest order. I invite you all to reflect.
Bruce
The good news amongst all the bad news is that competition in various forms is gaining more and more in legal services – and that includes competition for larger matters or cross-border work that BigLaw was perhaps once the only choice for. The days of amateur lawyers getting involved in business strategy because they own the firm – are coming to an end over the next few years or decades. But before that happens the problems enumerated above will continue. But I believe it will be the millenials or the generation after them that will inherit the legal services world that has transcended these problems.
Super post, Bruce. To the first comment, what are the opposite virtues of brutality, violence, and inumanity? We can’t ask these folks directly, but for some clues we can study:
Martin Luther King
Nelson Mandela
Mother Teresa
See also Coolidge:
“Nothing in the world can take the place of persistence. Talent will not; nothing is more common than unsuccessful men with talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent. The slogan Press On! has solved and always will solve the problems of the human race.”
Dear Nathan and all:
At the generalized level of morality and ethics (using the “thin” – “thick” distinction), we certainly can look to such heroes, and also to various ethical traditions we may know. But considering the behaviors that Bruce is talking about amongst “gorillas” in the firm, what would we mean, and how would we implement such ideas?
In my business, the way one understands the values of a firm [and also its strategy, I think] is by looking at the criteria that are used to determine compensation and advancement. In mining, that is traditionally summarized as “putting rock in a box.” But it can certainly include other factors, so long as they can be measured. For example, in one major international mining company, the responsibility for professional development lies not with the supervisor, but with the manager-once-removed. So his/her performance in that component of a multi-component can be measured and his compensation measured. Surely, we all see proper advancement of the next generation as a positive virtue and critical to any long-term strategy for a firm.
Working out what a multi-dimensional basis for compensation might be is a lot harder than counting up hours billed, fees booked, or something else that is related obviously to short-term cash flow. But it sets the path, as well as the tone, for what we might mean when we talk about “collaboration” or “collegiality.” It shows in the most convincing way possible what it is that the organization and its leaders value. And it provides the antidote to the bad and boorish behaviors of the gorillas.
Mark L.
Bruce: Great commentary. Your reaction to the question from the audience reminded me that whether you are dealing with a corporate executive or a law firm partner, upon first hearing a new idea or strategy will respond with the very same question, “Please tell me who else is doing this?” The question is the same BUT the motivation for asking is very different. The partner needs to be reassured that some other law firm out there, that they may have a modicum of respect for, has done this and most importantly, experienced success. Heaven forbid that we would take a risk. For the corporate executive’s motivation in asking . . . they just want to know because if someone else has already done this, they aren’t interested. It’s already been done!
Patrick:
You captured my thoughts perfectly, even better than I could have.
This also relates to an earlier thread on Adam Smith, Esq., about whether lawyers in practice are or can be “entrepreneurs.” (My firm answer was no.) Since writing that piece, I came across this:
By contrast, lawyers abjure change, shun it, and fear it as posing difficulties.
Great analysis: point 1 I think is critical for any enterprise to be successful. You did a great job describing what strategy isn’t, but what is good strategy for a BigLaw firm? Can you point to a firm that has a sound and clearly articulated strategy?
Wait for the next installment, 3 leading indicators of success!
Bruce