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Maroons |
Grays |
| Organizational structure | More closely aligned with the classic partnership model. | More corporate, top-down. |
| Talent recruitment and retention | Pick “first round draft choices” out of the super-elite law schools; be extremely judicious in lateral hiring | Somewhat opportunistic; less if any emphasis on home-grown pedigree |
| Professional development | Lavish resources on lawyers and business professionals | “Just in time” task-specific instruction |
| Resource allocation | Delegated largely to discretion of individual partners and practice groups | Programmatic, highly structured, minimal individual discretion |
| Pricing | Not a terribly challenging issue; “what’s market” for the caliber of the firm’s work | A KPI. Data-driven with human judgment applied. A target of continuous R&D and relatively heavy investment of professional resources. |
| Compensation | Keeping PPP competitive with peer group may be the #1 KPI. Indispensable to have the firepower to attract/retain the most coveted talent. For associates, top of market rates, and the equivalent for business professionals | PPP not top of mind; paying lawyers and staff “enough,” and fairly, is the primary goal. While legal talent is not quite fungible, gaps from departures or otherwise can be filled quite readily at manageable expense. |
| Mix (in number and seniority) of lawyers and business professionals | The “psychological” orientation of the firm almost invariably orbits primarily around lawyers, but senior business professionals operate side by side on engagements with high-profile client-facing roles. Maroons with a taste for it can be incubators for some of the industry’s cutting-edge forays into applying technology to the practice. | Superb business professionals equally if not more critical to success than legal practitioners: Need experts in pricing, process optimization, project management, data analytics, organizational dynamics, competitive intelligence, and more. That said, investments in process and tech more operationally oriented than blue-sky. |
| Strategic client management programs | Key clients are an extremely well known and small group | Highly structured, programmatic, and intentional 365-day/year effort to communicate with, learn from, retain, and build key clients |
| Client and matter intake | A highly strategic exercise (from the viewpoint of the maroon firm, not client): Rigorous focus on matters core to the firm’s marquee “destination” practices. Minimal “one off” client matters. | A strategic but also a tactical exercise; is the matter something (a) the firm can execute to a successful conclusion (b) using its existing systems and processes (c) at a profit. Does it fit our pricing model? Is it something we’ve done many times before or, if not, does it represent a new or adjacent area we need to expand into? Are there competitive reasons to take this beyond the economics of this one transaction (a rival’s displacement, e.g.) ? |
| Marketing and business development initiatives | Expertise and consummate “go to” reputation need to be continually demonstrated, not asserted. Continual and close client communication essential—especially “off” matters. | Ideally the firm should develop a distinctive “why us?” positioning, but short of that consider staking out a thought leadership position. Invest in client-specific initiatives (CLE’s, secondments), structured and regular client interviews, and heavy feedback (one on one, electronic, and otherwise). Consider using the NPS. |
| Geographic footprint | With the exception of firms known for global presence, not highly germane; 90+% of lawyers in a single office can work splendidly. | “Follow the client.” Plant no flags for the sake of planting flags. Ask of every office: What can we do locally that we could not do remotely? and If we opened in X city, which clients would abandon their current firms for us? |
| Practice area mix | “Keep it simple:” Be a true short-list contender for everyone, with a global reputation, or abandon the practice. 3-5, tops. | Ask what your clients need, not what a law firm “does.” Design practices to fit what around your chosen industry/sector needs (hint: high-tech doesn’t need real estate law). |
Thus concludes Part 1 of what will be a 3-part installment.
In the upcoming segments we will discuss, among other things, what happens if you apply Porter’s Five Forces to this model, what the implications are for those of you running or in a leadership position at each type of firm, and whether one firm can actually do both.
[1] Where did we get these titles?, you might ask.
To begin with, our premise was that the two names could not under any circumstances have secondary inferior/superior or sociopolitical connotations. Out went alpha and omega, chess and checkers, left and right, north and south, red and green, up and down, heads and tails, sun and moon, black and white, etc.
We started first with the “shirts” and the “skins,” referring to the classic streets-of-New York division of teams in stickball or pickup basketball. We thought that was just nifty until someone objected that they had a vision of “bare-chested lawyers.”
.We then switched over the “blues” and the “grays,” but almost immediately someone (in Europe, no less) objected to overtones of the North/South Union/Confederacy divide in the US Civil War. Finally, Bruce recalled that the eight-week summer camp he was dispatched to in Maine at ages 10 and 11 divided all the boys into two teams, the “maroons” and the “grays,” who competed as only young boys and adolescents can for merit badges and achievement level points all summer long. There you have it.
Greetings Bruce,
As always a great article. I always enjoy reading your posts. There is one area in which we might play ping-pong.
You like to analyze, categorize and segment different law firms as though they compete directly with one another. I take the view that they don’t! It is only their respective business units that may compete – which makes for a whole different view of the marketplace.
By way of a corporate example, Coke and Pepsi don’t compete. Their respective beverage businesses compete, but each of those companies has numerous subsidiary operations that play in completely different industries.
We also tend to think and categorize law firms as being comprised of only lawyers. That is changing. There is one law firm out there with a $100M in revenues practice group comprised of lawyers . . . and consultants – almost half and half and treated absolutely equal, right down to their compensation.
I believe that one of the more interesting categorizations may be those that (1) believe their firms are all about “solving legal problems” versus those that (2) believe that their firms are there to “provide business solutions.”
To me, this defines a completely different type of segmentation, or categorization, or let’s call it diversity, that is so badly needed . . . Cognitive Diversity!
Just my thinking out loud.
Patrick: Thanks as always for your insight. Yes, the question of whether law firms compete qua firms or rather as practice areas or even as individual lawyers. This really gets to the heart of corporate or organizational structure, and poses the question made famous by Coase of why firms even exist.
My answer is that law firms do provide more than shared overhead, a website, some malpractice insurance, etc.: they provide a brand name which has meaning in the market. If a lawyer moved from (say) Patterson Belknap, a perfectly capable NYC firm, to Paul Weiss, a powerhouse among powerhouses, that person’s “value” would change. To push a sports analogy probably further than it can bear, Giancarlo Stanton was the “same” baseball player when he was with the Marlins as he is now with the Yankees, but the Yankees provide a rather different platform and brand. (Yes, yes, I know baseball is a team sport and many lawyers think they’re solo gunslingers, but the lawyers are just flat wrong, so let’s not give them credit for their delusions.)
In any event, I’ll talk more about this in the third and final installment.
Neat. A quick thought is that “Scalability” might be interesting to add to the list in future iterations.
So is your thought that the Grays are intrinsically more scalable than the Maroons; that, indeed, scale may be an advantage for a Gray? Such would be my instinctive reaction, but then what does one do with a Kirkland or a Latham which at least appear from the outside to be Maroons of rather impressive scale?
Yes, my instinct is the same as yours.
As to the examples you give, perhaps the exceptionally high financial stakes and complexity of PE deals may partly explain the exceptional size and profitability of the firms in question?
As lawyer numbers rise into the 1000s, I do think something has to give in the “classic partnership model” – at least as I understand that phrase.
Possible approaches might include
(a) Increasing control, i.e. becoming more top down / “corporate”.
(b) Relaxing control, either by maintaining smaller partnerships within a branded confederation or by greater individualism.
I fear that approach (a) risks turning Maroon into Gray, whereas approach (b) may have its own risks (see e.g. this week’s FT article on point –
https://www.ft.com/content/13696928-86d5-11e9-a028-86cea8523dc2).
I don’t have any easy answers to this.