A third dimension which will make you a destination is at least as challenging to create, but digs its own moat of protection around your castle and ramparts if you can build it: That’s providing a global platform. Rome, famously, wasn’t built in a day, nor was the British Empire, nor is a global law firm. As with the firms known for impeccable quality/reputation/pedigree, assaulting these cliffs is a long, tough, expensive, drawn-out slog, with no assurance of success and plenty of obstacles in your path, not least the dissension of partners in your own ranks who don’t think they’ll be around to enjoy the fruits (if indeed you can ever pull it off) but who meanwhile are bearing the costs.
But again, I didn’t say a criterion for being a “destination” was that it’s easy; to the contrary, any destination worth pursuing has to create sustainable competitive advantage, and Industrial Structure 101 tells you that any advantage that can be readily copied will be—and is unsustainable by hypothesis.
Now, what do all three of these “destination-driven” approaches have in common?
All are designed, developed, and implemented from the point of view of responding to what the client wants, not from the inward point of view of the law firm creating some Platonic ideal of what a law firm ought to look like.
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.