Quality marks - a patchy partnership always bodes ill
As Dewey & LeBoeuf this week officially became the world's largest legal failure, it seems an appropriate moment to return to a theme touched on often in this column: the difference between success and failure in the high-end legal market. Years of covering the profession have made me believe it has surprisingly little to do with business models or market positioning. Though law firm leaders and commentators often belabour the 'right' strategy or shape for a firm, the global legal market offers a bewildering array of successful outfits operating wildly different models. What have Latham & Watkins, Skadden Arps Slate Meagher & Flom, Freshfields Bruckhaus Deringer, DLA Piper, Quinn Emanuel Urquhart & Sullivan, Clyde & Co and Travers Smith got in common? Not much. There is also often confusion between correlation and cause. Is Freshfields successful because it is magic circle, or magic circle because it is successful? That isn't semantics (though there is no clear answer).
May 17, 2012 at 07:03 PM
3 minute read
As Dewey & LeBoeuf this week officially became the world's largest legal failure, it seems an appropriate moment to return to a theme touched on often in this column: the difference between success and failure in the high-end legal market.
Years of covering the profession have made me believe it has surprisingly little to do with business models or market positioning. Though law firm leaders and commentators often belabour the 'right' strategy or shape for a firm, the global legal market offers a bewildering array of successful outfits operating wildly different models.
What have Latham & Watkins, Skadden Arps Slate Meagher & Flom, Freshfields Bruckhaus Deringer, DLA Piper, Quinn Emanuel Urquhart & Sullivan, Clyde & Co and Travers Smith got in common? Not much. There is also often confusion between correlation and cause. Is Freshfields successful because it is magic circle, or magic circle because it is successful? That isn't semantics (though there is no clear answer).
If all that's too vague to be of much practical use, here is a major underlying cause I would argue is evident at almost every large law firm that has either gotten itself into a profound funk or outright collapse over the last 20 years: a partnership lacking quality control. That's not about how good the top quartile is – in competitive professions like law, the best partners at large firms will usually be good – I'm talking about across-the-board quality.
How good is the bottom 25% of your ranks? Because firms with sloppy quality control are far more likely to falter. Uneven partnerships breed instability and lead to factional behaviour. It works against cross-selling and nurturing firmwide relationships as partners naturally fret about referring clients to weak colleagues in other offices or teams. For obvious reasons, firms with deep benches find it much easier to retain clients and win new business and are far less vulnerable when they lose a few partners (they are also less prone to senior departures, as competitive alpha-professionals are loath to leave an institution packed with talented colleagues).
By a similar token, firms with rigorously high standards tend to breed coherent cultures, as partners feel they have more in common with their fellow shareholders.
Performing well with regard to strategy, back office and governance – these are all important. But I'm not sure that, even combined, they outweigh the huge competitive advantage enjoyed by law firms able to attract, retain and promote good people with real consistency. That's why the emergence of a star lateral market has at times had such a poisonous effect on the profession. By all means, recruit great partners who will add to your business.
The problem is, many firms become so fixated on such stars that they become blind to what is happening among their mid-pack partners. Well, what separates the best law firms from the rest isn't having great partners – it's a great partnership.
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