Alex Novarese, Editor in Chief of LegalWeek, has a smart column this week called “Rugged Individualism–a year of firm-specific achievement in the US.”
Here are the highlights:
- Average revenue growth of the AmLaw 100 for 2010, as we’ve seen reported all over the place, was 1.4%–unimpressive, perhaps, but better by far than the negative (-3.4%) in 2009.
- Cost-cutting turned this modest revenue increase into an increase of PPP of 8.4%.
But that’s not the interesting story. 2010 was a year (as was 2009, in a different way) when averages were extremely misleading. I’ve written about this before, but I’m happy to let Alex steal my thunder here:
The story wasn’t really about trends or sections of the market. […] There’s little obvious pattern in terms of geogrpic spread, practice focus or business model to identify which group a law firm would find itself in [outperformer or underperformer].
Emerging as strong performers are those as varied as Kirkland & Ellis, Paul Weiss, Quinn Emanuel, Perkins Coie, Cahill, and Latham.
Those struggling through a tough year included Shearman & Sterling and Schulte Roth, while Weil Gotshal must be disappointed to see revenue fall in a year in which its market-leading restructuring practice was hardly short of business. […]
But overall 2010 was a year in which performance seemed defined by the drive, quality, and cohesion of individual law firms rather than industry trends.
What do the strong firms have in common? I would argue that they have extremely cohesive partnerships with strong leadership; it takes both. Finally, finally, this is beginning to matter. We are long past the ca. 1980-2006 era when the rising tide of perennial 6-8% rate increases and utilization (also known by the euphemism “productivity,” with sometimes soul-destroying consequences) was rising to the sky, and all boats rose on the tide.
It may be less about which market segment you occupy than how you execute within that segment. This may sound like harder work than aiming constantly for that top right quadrant of “bet the company” work where price is no object.
News-flash: It is.
The good news is: It’s essentially available to all comers. You can be a great litigation boutique (Quinn Emanuel), a go-to litigation powerhouse (Kirkland), a go-to litigation powerhouse with an undersung but marquee corporate practice to match (Paul Weiss), or a global player that has gotten it right (Latham).
What you can’t do is rest on your laurels or hope that reputation of five or ten years ago carries your through a fallow period.
Now, more than ever, leadership and partnership cohesion matter.
Take note.
