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.
II. Gorillas
As in, you have too many gorillas—and you tolerate, or worse, indulge them. Even one gorilla is too many if he’s sufficiently obnoxious (and yes, they always seem to be “he”‘s).
What’s so bad about gorillas?
Where to begin?
- They are living, breathing embodiments of the proposition that the firm exists to serve their personal self-interest. By extension, anyone else who doesn’t treat the firm the same way is a chump.
- They wilfully repudiate any notion that being together in a common enterprise should be expected to create bonds of mutual obligation and responsibility.
- They adopt a posture of conspicuously poking their thumb in management’s eye and daring you to do something about it. This achieves two goals for them:
- First, they make it undeniably clear to the rest of the firm who’s really in charge; and
- Second, they unilaterally deprive you of one of your greatest sources of power in a conventionally organized law firm—moral suasion with your partners.
- The very fact that you continue to tolerate them exposes anything you might care to preach about “collaboration,” “collegiality,” and so forth as a transparent Big Lie to everyone in the firm. People have acute antennae for hypocrisy, and they’ll know what’s hot air and what’s reality. The gorilla is reality; you are hot air.
- They demoralize the good citizens, and the less powerful people are the more demoralized they are. Imagine yourself an associate in the office of a gorilla: Do you have a fighting chance to have a real conversation or learn anything constructive?
About this time you’re probably thinking, well, they’re gorillas for a reason; they have a huge book of business. This matters if your time horizon is measured in terms of this fiscal quarters; it doesn’t matter if your time horizon is measured in years, decades, or generations.
This is where it comes down to spine and backbone. If you care to solve the problem, you need to take the biggest one out back and shoot him. It will deliver the most powerful message you can imagine, and you won’t have to do it again any time soon.
Or don’t.
III. Weak leadership
Weak leadership, as with our first indicator, fuzzy strategy, may seem obvious or even vacuous. Permit me to dimensionalize it.
Weak leadership as I use it in this context means deference to the lowest common denominator, the partner(s) with the reflexive opposition complex. You know who these people are: Without needing any prompting whatsoever, they can spin out far-fetched objections to even the most commonplace suggestions, and their resistance is immune to any sense of context or proportion. Unfortunately, in far too many firms their opinions carry the day for fear of “offending anyone” or in order to “preserve our culture.”
Sorry if I’m about to offend anyone here, but indulging the irrational reservations of the minority is to preserve a “culture” which is more deserving of euthanasia than reinforcement.
I’ll give you an example.
This past week I was a moderator and panelist on a webinar about entry-level associate recruiting practices, and I’d presented information about the percentage of the Fortune 500 that use objective testing as part of their recruiting process—90%—and the attrition rate at Google, which has notoriously rigorous, some would even say laughable, recruiting practices. And even though the turnover rate at Google is relatively high—we’re talking about a lot of 20-something’s with rich opportunities at their feet—job satisfaction, at 84%, is among the highest in the Fortune 500. Given this broadly positive track record across corporate America, I confessed that I was perplexed that the legal industry, obviously a high-stakes recruiting environment, hadn’t embraced testing as well.
A question came from the audience: “But what other firms are doing this? We don’t want to be the first.”
My answer was that 90% of your clients are doing it, so it’s a bit too late to be the first. Nevertheless, my heart sank; I knew that person’s mind had slammed shut on the concept.
In the management literature, you occasionally—not often enough for my taste—see reference to the syndrome of “planning for failure.” That’s exactly what the naysayers with their far-fetched hypotheticals are doing. They have already decided that nothing we’re not already doing could possibly work, so why risk it? They’re planning for failure.
This actually illustrates another slightly different dimension of weak leadership: Not just catering to the lowest common denominator, but adopting a default posture of following the herd—no matter where it may lead you astray. At the very least, following the herd guarantees mediocrity.
Great organizations are not created by consensus. Committees don’t create.
What do all three of these conditions have in common?
They all reinforce, or at best do nothing to oppose, the inherent centrifugal forces innate to a loosely governed law firm partnership. I started this column by talking about firm failures; here you are staring at the very ingredients that increase the odds on that sorry and grossly unnecessary outcome.
If you diagnose any of these conditions in your firm, take a harder look.
There better be a compelling reason why you have an exception on your hands.
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