"From pace-setter to basket case in the United States?" Shall
we all guess what firm got stuck with that donkey-tail over
at law.com?
Alas, of course, it was Clifford-Chance. The questions
du jour are (1) what went wrong? (not so we can point
fingers but so we don’t do it again); and (2) what’s to be done? My
answers are (1) a towering case of strategic indecision;
and (2) clarity of vision, and speedy and resolute execution.
First, let’s briefly review the bidding. Back in 2000,
Clifford-Chance merged with (or "took over," if you wish—let’s
not get bogged down in semantics) Rogers & Wells, then a solid
New York firm with a fairly strong form of "eat what you kill"
in place. Rather than continue with that compensation model
as it was, and rather than deciding on the strict alternative
form of imposing its own home-grown lockstep, the firm
temporized. New York was to conform to the lockstep model
except where it didn’t—with some "super-pointer" partners
paid above the lockstep scale in recognition of their marquee
value. While this might have appeared to be better than
nothing, it seems to have been received as having been
taken down a peg; and meanwhile, partners deemed enlisted-grade
rather than officer material probably chafed at being publicly
so branded.
Meanwhile, with the half-pregnant disequilibrium situation firmly obtaining
in New York, Clifford-Chance expanded aggressively in LA and
the Bay Area, famously raiding Brobeck, among other firms, and
predictably paying the lateral recruits "above lockstep." Cut
to the chase: The SF and LA offices have now been
closed entirely (Silicon Valley is still open), and New York is today at 265 lawyers down from
450 in 2002 (a 41% drop). Adding insult is that a 2003
proposal to formalize the exception made for super-pointers in
New York faced "stiff opposition" from lawyers in Britain and was voted down (although a market-weighting
form of it is evidently near a vote).
Two other aspects of the difficult-in-the-best-of-circumstances
task of integrating firms across the Atlantic also came into
play:
- Clifford-Chance’s constitutional governing framework provides
for and indeed requires far more consensus and even voting among partners than
the American model of placing most authority in the hands
of a managing partner or executive committee; and - the very far-flung nature of the office network added another
layer of delay and red tape to decision-making.
Now Peter Cornell, global managing partner, has moved to New
York to attempt to right the ship. Some doubt that he can:
“Peter is just a terrific guy, a really smart and really nice guy” said a former Clifford Chance New York partner who asked to remain unnamed. “But this is just too little, too late.”
I disagree, but only if Cornell refuses to proceed by half-measures.
The core of what got Clifford-Chance in this toxic state was
confronting the fundamental lockstep/eat-what-you-kill disparity
with obfuscation, temporizing, and pretending to look the other
way rather than with a cool assessment of their strategic objectives
in coming to the States and what techniques are best suited
to achieving those goals. That five years have gone
by is, well, too bad, but Cornell has made nothing if not a
statement by relocating to New York and I believe he can seize
the moment:
- Ditch eat-what-you-kill. The firm’s roots are solidly
in lockstep and eat-what-you-kill was a bastard graft from
the beginning. - Besides, you’ve probably lost most of the marquee names
you’re going to lose, so judging by the practical (read:
economic) impact, the worst should be over. - And last and most important by far, trumpet the virtues
of lockstep. Don’t retreat to it defensively, licking
your wounds, and in a crouch posture of lacking better alternatives:
Champion it! It can create marvelously collaborative,
well-oiled seamless machines delivering precisely the right
mix of people and offices to each client engagement. Plus,
you avoid the bloody and counterproductive battles over origination
credit, which neither burnish your firm’s attractiveness
to clients nor enhance morale internally.
Will this mean a de facto exit from the lateral-hiring
market? Indeed. I am prepared to say flatly that
lockstep and an active lateral-hiring effort are incompatible.
So plan differently. Don’t be bashful or defensive about
seeking personality types who value building strong institutional
ties to a client over time, based on practice groups that
are internally collaborative. Forget, and loudly forget,
the prima donna’s. Start now. Stick to it. There
is no alternative; this plot line has ceased to be amusing.
