So what can the managing partner of an AmLaw 200 firm do when all the metrics that got the firm ranked are slipping? How do you change from a lumbering V8 to a turbocharged four-banger when racing down the highway?
I have recounted recently some of the key challenges facing law firms serving major corporations:
1. a stagnant market (only partially because of the economy);
2. that is bringing more work inside;
3. or shifting it to new service providers by contract;
4. and most of what remains is priced less than before; and
5. those prices will trend down over time.
To me, this is less a new normal and more a next wave.
So managing partners better dial up a new strategy, right? Since Bruce MacEwen is covering this already, I will defer to the master on the details of this subject.
It is very hard for business executives to think strategically. It’s harder still to choose the right one. And even when you do, most strategies fail in tactical implementation: too often poorly communicated, supported and executed.
But the meta-challenge for strategic success is even more basic: there is no agreement about the current state and therefore little chance of looking clearly at where things are headed.
Strategy, after all, is defining a future reality and then taking steps to get there. It was stated even more succinctly by the late Bruce Henderson, founder of the Boston Consulting Group:
Strategy is a deliberate search for a plan of action that will develop a businessâ€™s competitive advantage and compound it.
I’d really like to hear how some law firms define their competitive advantage.
And make no mistake about it: this is really hard for professional services firms to do. It takes some finesse. You are dealing with people, not products. In a manufacturing firm, the million-dollar stamping machines can’t leave on Friday and start pounding out widgets for a competitor on Monday.
Mergers are largely out of the question now. Grabbing a few partners here or a new office there is fine, but these are tactical moves.
It seems to me there is really only one strategic decision for an AmLaw 200 firm: are we going to be part of the Legal Top 40? That’s the big-ticket work, high-value and priced accordingly. Last time I checked, 200 firms can’t split up a pie barely large enough to feed 40.
If a firm sets a mark in the sand to do this, they will have to be better than the competition now and extend that advantage consistently over time.
Being the managing partner of a major law firm today requires a special set of skills. Part diplomat, part autocrat. Sometimes a lawyer, other times a leader.
Before you overhaul a law firm, you have to decide what makes you different, and then perhaps you can change where you are going.