Growth Is Dead? for Who?

“Looking out for Number One is the conscious, rational effort to spend as much time as possible doing those things which bring you the greatest amount of pleasure and less time on those which cause pain.” Looking Out for Number One-Robert J. Ringer

I recently attended a wonderful evening hosted by Above the Law with key comments provided by Bruce MacEwen, a well known law firm strategist, commentator and lawyer who runs the consultancy and blog titled Adam Smith, Esq. Not surprisingly, Mr. MacEwen rightly has a large American following and an immense level of credibility among the AmLaw200 firms. His comments largely emanated from his excellent and seminal book, “Growth is Dead: Now What?” 

There was pithy representation on the panel from the Canadian perspective from larger firms and the CBA, but noticeably absent was the voice of solos, smaller firms or alternative providers (“NewLaw”). Okay, the focus was meant to be what is commonly referred to as BigLaw, but that is beside the point.

One can be forgiven if they have adopted a pessimistic outlook for the business of law especially for those just graduating with daunting levels of student debt. However, MacEwen has also caught the attention of the established senior ranks of BigLaw. Many managing partners look to MacEwen to help determine how best to keep BigLaw prosperous in the face of complex pressures driven by economic, technological and globalization forces well beyond the control of anyone “managing” a law firm.

The message from MacEwen that should resonate loudest is that the future will be owned by those who invent it, which means organizations need to experiment.

The most salient point of the entire evening, however, came in the form of a comment from an audience member who astutely counted the number of times reference was made to clients during the panelist dialogue. It was less than you would imagine and any objective observer would wonder—why is it so important to “save” the growth of BigLaw firms anyway?

BigLaw is actually acutely focused on client experience, but the definitions have changed. As an in-house counsel, I paid for excellent advice and certainly BigLaw delivers. However, the advice doesn’t get better from a beautifully adorned boardroom overlooking a stunning cityscape whilst dining on delectable catering for a meeting that lasts 45 minutes. Smart business people know that they are paying for the extras and it’s actually perturbing to be served in opulence if my company is resource conscious, freezing salaries or shedding employees. Alternatively, for a less established company on the rise, it’s more desirable to obtain great advice from providers who understand the bootstrap experience that launched the business not so long ago.

Wait a minute.

Growth is dead? For who?

Growth is not dead for those that can innovate and be cost effective. Its just that BigLaw does not hold an edge over NewLaw which tends to be smaller in cost base and remains unburdened with past expectations.

Innovation Requires Experimentation Which Means Inevitable Failure(s)

Innovation is failure, many times over, capturing the learnings as you go, making pivots, and building iteratively toward a new reality in the form of a product, service or process. Edison had 10,000 tries at the electric light bulb. While he never saw the prior attempts as failure, imagine if he had to report to the partnership committee on his progress every month.

Failure, or experimenting with unknown outcomes, can be death when the whole market watches what you do and constant visibility is your primary marketing strategy. BigLaw only reports (with great marketing aplomb) on the monster deals and big cases. Perhaps BigLaw and failure simply can’t live in harmony. NewLaw and smaller players get to make more attempts, failing often, without much notice.

Change Management Requires Both Desire and Ability to Execute

The ability to experiment, take risks and drive cultural change and essentially turn around an oil tanker is the fundamental issue for larger firms. Firstly, they have to want to change. Creating that desire is in itself a formidable task. Even if the firm leadership and brain trust are the most forward thinking, agile, change management focused individuals—they are but a fraction of the wider organization and not determinative.

When my brain tells my leg to step forward, it does (and for that I am very thankful!). However, the brain of the large firm could be thinking all of the “right” thoughts and translating into cogent communication, but that doesn’t necessarily direct the arms and legs of the larger body. In BigLaw, the various parts of the body go in the direction that serves the interest of the respective body part. If my practice area or clients aren’t being supported, or I don’t like the direction being messaged from the brain and there is little differentiation anyway, why wouldn’t I move my practice if it suits my interest? Let’s not forget that partner movement is at an all time high. Imagine if your leg decided to go snowboarding while your brain was thinking of bicycling.

The great business dictums hold true ever the more ardently in most of BigLaw. To wit: culture always eats strategy for breakfast.

Even if the big firms wanted to innovate, they are shackled by legacies. Legacy of infrastructure, established talent with entrenched work flows which have proven to be lucrative for those at the top, and absolutely no positive incentive to change. Not to mention a palpable disdain for non-lawyer professionals including very impressive IT, e-discovery, knowledge management and project management professionals who unlock immense value in the new economy.

The mind may be willing, but the body is… if not weak, at least incapable of following the synaptic direction proffered by enlightened leadership (if it exists in the first instance). Similar sentiments were recently espoused by Pam Woldow. The Canadian climate is considerably more conservative than other legal markets so leadership teams are confronting a tough hill. And it’s not a climb, it’s a push (sometimes of a rock) uphill when trying to execute on a change management vision. It’s tough in corporate structures and considerably more difficult in law firms.

Clients Decide Quality and Price is Not a Proxy

What are the advantages of a large organization? Typically, large organizations enjoy supply chain, manufacturing and distribution networks that smaller players simply can’t match without significant capital investment. This would tend to drive economies of scale lowering unit costs which can increase margin or keep prices in alignment with client requirements. Does BigLaw produce more efficiently than lesser resourced smaller players imbued with experienced lawyers? When (or if) BigLaw does manage to lower its cost base or drive efficiency, does it pass the savings on to its clients?

And let’s assume for a minute, rather than debate, that price is not a proxy for quality. Who has the ability to truly drive client satisfaction in a non-differentiated market? Is it the dedicated artisan who understands the client having taken the time to learn their true requirements or the other guy? Do artisans flourish in smaller or larger environments?

Even the most well intentioned partner can service his client brilliantly based on a deep relationship spanning years, but if the firm decides to pursue other directions or put resources toward different strategic imperatives—the partner is left in the worst position imaginable. One might be left feeling embarrassed for their inability to truly honour the client or charge less (and that IS often the request). The Vancouver partners of a national firm required to charge the Toronto rates for real estate work are simply not market aligned on price. Advantage to the smaller players or those that service multiple geographies from low cost operations.

Thinking is the Enemy of Action and Reality

What else does it take to innovate, make change, and forge new paths into the unknown future? Actions. A lot of actions. Non-billable actions. Any success guru, or better yet—“been there done that” entrepreneur who managed to make himself wealthy—will tell you one unwavering universal truth is that it takes massive amounts of action to manifest the reality you desire. It also requires a number of missteps along the way which need to be celebrated rather than berated. Ready, fire, aim is the mantra of the innovative. Not plan, check list, gather approval, recalibrate, fine tune, get on the board calendar, mind map, send to Project Management Committee, adjust project plan etc. To an innovator (and many clients), done is much better than perfect.

BigLaw leadership knows these fundamentals and believes in them—but consensus building can be a killer. And if equity partners don’t like non-billable actions or those that partake in them, who can blame them? Like most people, they are rational pleasure maximizers and pain minimizers who have paid a price (measured in time) to achieve their success. That makes them human. However, people also like to have value for value exchanges. But alas, time spent is not value exchanged to the client. Under the current system, thinking is not only the enemy of action and reality, it’s also a billable item, regardless of outcome.

If we are agreed that law is a business, than client satisfaction is the end game which leads to prosperity. Clients get to decide value and soon enough, if not already, they will be speaking with their wallets among the widest selection of alternatives in history. The person who logs and charges the most hours will not be the winner, and that is a good thing.

Isn’t it at least possible that the best time to be in law, particularly for the open minded, efficient, risk taking, client centred, value giving realist is only just beginning? Growth is dead? Long live growth.

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Comments

  1. 1. Did clients pay EBW because of their satisfaction or because they needed him?

    2. Consider http://bit.ly/14gGKRZ

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