In our third and final installment of the Maroons/Grays segmentation analysis, we presented this:
Here’s a simplistic way of thinking about the two types of firms and the consequences for each of strong or of weak management.
| Maroons | Grays | |
| Superbly run | Steady as she goes; don’t screw it up. | We call this quadrant that of the “Splendid Grays.” A fascinating and powerful business model and quite sparsely populated territory at the moment. This could provide tremendous value to clients and staff alike. Maybe our favorite quadrant in this table. |
| Poorly run | How long do you plan on being a Maroon, again? | You better have very forgiving, or very loyal, clients. Absent those (wasting) assets, a slow slide to irrelevance. |
Now we’d like to talk about that top right quadrant, the land of the “Splendid Grays.” What does it take to get there and stay there and why might you want to?
A few brief prefatory remarks on why this column will focus on the top right quadrant as opposed to any of the other three.
First off, the strategic and leadership questions facing firms in two of these four quadrants (the “poorly run” bottom row) are of potentially tremendous intrinsic interest. Poorly run Maroons (SW quadrant) are living off seed corn and stored reputational capital. Marketplace perceptions notoriously lag reality, both on the way up and the way down, so they have a brief and sure-to-expire window of opportunity to reinstate their gold-plated performance and rescue their reputations, but, because Internet, it’s not as long as it used to be.
Making matters worse more urgent is that clients who’ve had a bad experience remember it far more vividly, and tell many more of their friends, than clients who’ve had the (anticipated, normal, and unremarkable) good experience. The SW quadrant is, in short, a crisis in the making.
The demand on leadership is simple to state but as perilous as defusing a bomb: It demands prompt and decisive action to jettison under performers while keeping everyone else not just present and accounted for but more enthusiastic and hard-charging than ever. You have to take the firm apart and rebuild it without blowing it up–all over the strenuous objections of those getting the short straws.
As for the poorly run Grays (SE quadrant), the good news is they have much more breathing room. The bad news is it’s without doubt the weakest and least rewarding of the four market positions.
There’s little to add to the prediction of slow demise at the hands of wasting assets. Escaping this quadrant alive (or, more accurately, staying relevant in the marketplace) will probably require more energy, capital, and plain old management courage than many of these firms have available or are used to deploying. If you’re in the business of indefinitely re-setting expectations lower, you have found your home.
Then of course we have the well-run Maroons (NW quadrant). They are apex predators and should by rights be able to remain so no matter how many pretenders try to mount a challenge from below. Yes, they strongly challenge and compete with each other; but they can remain serenely indifferent to the Grays and simply will not face head to head tussles with NewLaw (although they better be hyper-efficient and reliable in their daily operations, including all matters related to digesting massive datasets of documents). And even within the competitive set of great Maroons, you know who everybody else is, and it’s quite a short list. You will see them coming, as it were.
Indeed, the only real threat, but it’s potentially existential, would come from within themselves: Complacency, and its more insidious evil twin, arrogance. The price of remaining a superb Maroon is, as someone said in another context, eternal vigilance. But it can most definitely be worth it.
This brings us back to the “Splendid Grays” in the NE quadrant and our favorite sector, because perhaps the most complex to manage and the most sparsely populated on today’s market landscape, of all four.
Business professionals who “run the place”? To me, that implies those people would have some measure of control over the assets of the business and how they are used. And there is really one source of hard power in a law firm. Control over comp. So unless you are talking about turning that over to the business professionals, those C-suite roles above are not going to be “running” anything in a practical sense. Administrating? For sure. Equal voice at the table on issues that really matter? Under the most progressive and dynamic managing partners, perhaps. Having at least partial control over lawyers’ individual destinies within the firm? Nope, not happening under current partnership structures, and probably not under any structure short of outside capital coming in and dictating that kind of change. Almost sure career suicide for any managing partner who tries it.
Dear Skeptic:
Thanks for your contribution; I fear that you have gone straight to the heart of the matter.
If I may essay a distillation and re-ordering of your thoughts:
Do I have that right?
For readers who agree with my paraphrase of your thoughts, the inescapable conclusion is to extend my observations (permeating the column) that being a Splendid Gray is (a) hard, and (b) very rare to a more radical conclusion, namely that it is (a) impossible and therefore (b) must tend towards the null set.
That pretty much cedes the market for predictable, consistent, high-quality, reliable, low-cost, process-optimized provision of repetitive and repeatable legal services to sophisticated in-house departments and NewLaw.
The only question I would pose back to Skeptic and any other interested readers is this: Will this make lawyers happy? Is elevating their immediate personal career planning preferences over the long-run success and health (alarmists will argue survival) of their firms their “revealed preference?”
Well, I would posit this, as I believe it is the key question. What’s in it for the people who are being asked to give up that control and still retain all the economic risk of the firm structure? Your prescriptions (spot on I believe) as to how to become a Splendid Gray are nothing short of an entire renegotiation of the essential social contract between the firm and its partners, as ill-conceived as that contract may be. And that sort of renegotiation requires both parties to come to the table to get to some sort of workable compromise.
Is the payoff just survival of the firm for some undetermined period of time? That alone would be a pretty tough sell in most firms unless the firm was already facing some sort of major crisis. Or is it something more? Maybe much more? How compelling is the business case for the change? Does senior leadership have the abilities to conduct this sort of comprehensive market analysis AND the charisma to persuade people to act on it?
The reality is that the vast majority of Grays likely fall somewhere between well run and poorly run. And for most current partners, basic competence (some honest mistakes balanced by some moderate successes) works OK. Not optimally, but well enough for most partners to make a good living with some say over their career paths. With forward visibility as to the firm’s prospects, say, five years hence. That’s not a bad deal. And that doesn’t mean those people don’t think about the next generation or don’t wake up every day trying to make the place better than they found it. It just means that people in that position usually require some preexisting existential problem to undertake existential change. Or they have to be properly incentivized to act.
I suspect the Big 4 – and clients, as you mention – will more-than dominate the Splendid Gray quadrant.
This is probably the most realistic/probable outcome.
Don’t you have to wonder what all the ambitious 35-45-ish partners at non-Splendid Gray’s think their management is up to?
The previous comments focus on lawyer values of autonomy and dollars. Can’t deny those are widespread. But there are those of us, at all levels of the profession, who aspire to be builders. For us, “Splendid Grays” is the ony place to be (and a great name for a fantasy footbal team). Having a marketing or finance person show us how to do things better isn’t “giving up” anything; it’s using the expertise of those who know better to help us do better. Why can’t everyone embrace that? To me that looks a lot less like “autonomy” and more like “ego,” combined with “fear.” Thanks for a wonderful, inspiring, thought-provoking series.
Bob: Bravo! (and not for your kind words). Too many
peoplelawyers, I fear, try to camouflage ego, and more than a whiff of condescension towards non-lawyers, as their hard wired instinct for autonomy. I, and I have to believe the vast majority of readers, appreciate your calling a spade a spade.At least in my career, I have always been insatiably curious and eager to learn from others who have done a lot more of XYZ than I have. It’s not just a more interesting way to live (expanding one’s horizons), it makes one a far better professional and psychologically feels profoundly liberating. Closing down one’s (mental/intellectual) shell has always struck me as childish and, yes, fearful.
I won’t even go into the clarion call for adopting an attitude of stewardship that is front and center in your remarks. That’s a very large topic undercut by firms’ very structures: The blinding visibility of PPP, structural short-termism (no non-competes, no “equity” in any economically meaningful form), consensus-as-king and supermajority partnership clauses, etc.
Thanks again.
I can definitely see a long-term future for (1) really large, well-capitalised corporate grays that can invest in all these diverse skills, make it work culturally and achieve economies of scale (2) separately-managed gray operations within maroon law firms (because of the “nature of the firm” benefits which exist despite the significant challenges – a topic for another day).
Adding in the reality that tech is more of a threat to grey than maroon models, the thing I really struggle with is to see a long-term future for modestly sized independent greys who aren’t linked to a strong maroon engine.
In other words, “go big or go home.”
Too simplistic?
On the other hand, I think the complexity of many types of legal practice is widely underestimated and that large numbers of independent maroon law firms will still be around for the foreseeable future, given the huge numbers of niche legal markets and the limited benefits of scaling maroon organisations.