II. Being a Tangible, Distinctive “Destination” for Clients
Can clients explain in 25 words or less (ideally, five to ten words) why they consider your firm the “go-to” place for one or a few particular, readily identifiable, things? Does your firm stand for the LawLand equivalent of “the ultimate driving machine?” Please, no quibbling here, folks: BMW may or may not be to your taste, that’s not the point. The point is that they claim to know who they are and you know it too.
What makes you different?
What do you excel at?
What can clients find at your firm that they can’t find anywhere else?
Think this is impossible? Here are, in my personal opinion, a few examples. Other firms do these things as well, of course, but here are the names that probably are on the tip of your tongue if you think of each of these practice areas:
- Labor and employment: Jackson Lewis, Little, Ogletree Deakins
- Private equity: Schulte Roth, Simpson Thacher
- Debt and equity issuance (capital markets): Cleary, Davis Polk, Sullivan & Cromwell
- Litigation where the stakes are deadly serious: Paul Weiss, Quinn Emanuel
- High tech IPO’s: Cooley, Fenwick, Wilson-Sonsini
- Hostile takeover fights, proxy contests, M&A: Skadden, Wachtell
- Energy: Baker Botts, Vinson & Elkins
- Banking in the City of London: Any of the Magic Circle
You get the point. It may be hard but it can be done. And the rewards are tremendous.
Consumer product safety warning about attempting to gain a stand-out name for yourself in one area: Count on having to say no to a lot of other areas. If you’re not willing to do that, you’re not serious about this. Just so you know.
A second dimension to becoming a distinctive destination approaches it not from the perspective of building a practice area powerhouse but from the dimension of standing for indisputable quality or value (you cannot do both).
In today’s post-Great Reset environment, clients (and the very same clients) are migrating in two directions at once: A flight to quality, and a flight to value. Are they finding value in the middle? Not so much. Regular readers know that I like to abstract from LawLand to use examples from other industries, so I invite you to think of the last time you were in the market for, say, a shirt or a bottle of wine. I’ll bet, without knowing you, that you wanted a either a lovely dress shirt out of fine fabric or a polo for the weekend, and that you wanted either a name-brand vintage cabernet or a jug of the house white for the refrigerator. You see where this is going: The middle, not so much.
Note what I have not said: I have not said staking out a clear identity as providing quality or providing value is easy. The high bluffs of quality are quite well-occupied, thank you very much, and a reputation for prestige of the very first rank can take decades to establish. Not for the faint of heart.
Conversely, focusing on delivering value instinctively rubs many lawyers the wrong way, and if they had the MBA-speak for it they would probably say something like, “I didn’t go to law school to optimize business processes.” (What they might actually say would be, “I didn’t go to law school to be cheaper than the other guy.”) Every lawyer wants to think their firm is BMW and they’re a German engineer. They’re not and they shouldn’t be. Camrys, Accords, and Sonatas provide tremendous value and fulfill a critical role in the market.
Thanks for another thoughtful, and thought-provoking article.
Your closing perspective is what gets me. Some of the paths to improvement seem well-defined; upgrading and empowering the c-suite, for example, would seem to be a relatively quick way to get a leg up on the competition. I understand that for many it won’t be “quick and painless.”
But as someone who competes mostly against BigLaw firms, the slower the better.
Bob and all:
“Quick and painless” is surely the American Disease, at least in our time. I am sure it is not part of ASE’s advice, and it seems solidly counter to most thinking of the Enlightenment that I know, so I imagine Adam Smith, himself, would have found the idea risible in any significant situation.
If lawyers were so smart at running businesses, then no Biglaw firm would ever fail.
May I quote you on that? 😉
Seriously, it is rather an accomplishment to drive a business with intrinsic gross margins of 30-50% right into the ground.
You’re welcome to quote me, though the thought (if not the exact wording) has probably crossed the mind of the management of every large business that’s seen one of its law firms close its doors.
One of the other mysteries about law firms closing is that, compared to their clients, they don’t require much capital investment. General Mills, for example, has 41,000 employees and about $23 billion of assets at balance sheet values, or about $560,000 of assets per employee. Apple Computer has 80,000 employees and $207 billion in assets, or about $2.5 million in assets per employee. By contrast, K&L Gates has about $500 million in assets (including my estimate of the firm’s A/R based on its public financial reporting) and 2,200 lawyers and legal professionals, for assets of about $230,000 per legal professional. As the reported headcount doesn’t include other support staff and administration, K&L’s assets per employee is likely around $100,000 to $125,000. It’s a lot harder to go out of business if you don’t have to sink much money into it.