We recently returned from London on business, and this will be the first of a few installments presenting our thoughts given the benefit of 17 meetings in five business days.
As you know, we work globally with firms of all sizes in a wide variety of markets with every permutation of office footprint and practice mix. That said, from our base in New York and as regular travelers to London, certain themes seem to emerge with special clarity when we step into the UK. These change and evolve with every trip, but here are some of those emerging from our visit concluding last week. In no particular order:
Business models:
The global financial crisis commencing in 2008 prompted more hunkering down than serious re-evaluation of Law Land business models, in our opinion, which struck us as a crisis profoundly wasted. But now that we’re emerging from the tunnel and oxygen appears to be coming back into the market, we see an increasing attitudinal segmentation among firms we encounter between those that are simply relieved that life as they once knew it seems to be returning and those that have decided business as usual is no longer the future.
In particular, savvy firms are increasingly focused on defining, articulating, and putting into practice (“executing on,” in MBA speak) who they are. Strategy matters, and it matters more than ever: A crystal clear and differentiated statement of identity and purpose that explains both to your clients and your lawyers and staff who the firm is and what you stand for.
In this vein, we cannot emphasize too much “clarity” and “differentiation.” We come across far too many law firm strategic plans that amount to statements of the self-evident. Statements along the lines of (we paraphrase, but not by much): “Providing superb professional quality, delivering top value to clients, and being responsive through our collaborative and collegial culture.” Perhaps your firm plans instead to deliver mediocre, careless, overpriced advice thanks to your divisive and dysfunctional culture?
You take our point. A strategic vision that sets you clearly apart from the competition, in ways that matter to clients and your firm internally, are no longer luxuries or nice-to-have’s. They increasingly segregate those pulling away from the chasing pack.
In our conversations and meetings this week, we heard increasing focus on, and frank anxiety about, this very issue.
Compensation:
Debates about the relative merits of lockstep vs. the eat what you kill model have long been with us, and often come up as conversation starters in US/UK “compare and contrast” chatter, but more of our engagements and conversations have focused on the issue of compensation this year than ever before. That focus was particularly prominent this past week.
The lockstep/EWYK extremes have always been partial caricatures, in that their purest forms have virtually vanished in the wild, but the emotional heat generated by what they symbolize seems to us more pronounced than ever. We heard several spirited—nay, impassioned—defenses of each just this week. On the one hand, lockstep-leaning firms deliver the single best lawyer to the client at every point of an engagement without internal squabbling and without fail, while on the other EWYK-leaning firms can penetrate new markets with agile client-responsive instincts and unflagging energy.
So who’s “right?”
We suspect the debate is actually about something else entirely: You might call it collaboration vs. motivation, or the firm vs. the star. If you think about it this way, as we do, the question almost answers itself: You need both. Internally, you need intense collaboration among highly motivated people; and externally in the client-facing dimension, stars without firms are homeless; while firms without stars are nowhere you want to be.
We suggest changing the subject to another dimension of compensation entirely, that of the ratio of the highest: lowest paid partner. We believe this is a far more telling and critical metric for the compensation process. If the high-low ratio is in the double digits, we strongly suggest you think about what message that’s delivering about the concept of partnership itself.
If you have one or a few extreme outliers, we would be happy to talk through with you how and if that’s justified and if everyone in the firm understands it. But this is a topic it can be dangerous to make reassuring assumptions about.
This series will continue.
