When the New York Times features the efforts of law firms to snatch or retain “rainmaking” partners, it’s the sign of something. Yesterday’s article went into great detail on this fascinating subject.
First, it’s a sign that it’s easier to attract one lawyer than buy an entire practice group, or “merge” with another law firm. Mergers between large law firms within the continental U.S. are basically dead in the water. (Oops, did I speak too soon?)
Second, it’s a sign of a clear business focus for law firm advisors, due to the lack of merger work mentioned in sign #1. Witness this quote from Peter Zeughauser:
â€œWe have entered the era of the superstar megarainmaker.â€
That new moniker doesn’t roll off the tongue too easily, but we will take it. Times reporter Peter Lattman does a great job of focusing on one particular megarainmaker, Madoff Trustee Irving Picard.
Third, it’s a sign of how poorly most law firms market their key people, but will roll out the red carpet for a total stranger. More on that another day.
But none of those really interests me. The pursuit of “rainmakers” is reaching a bubble-like pitch because large law firms have no other ideas about how to adapt to change. The notion that one person or a small team is going to magically transform a 1,000 lawyer firm is borderline laughable.
Let’s quickly dispatch with the ardor for someone like Baker Hostetler’s Irving Picard. Being selected as the Madoff trustee means you are a well-regarded lawyer. Since it also involves one of the largest Ponzi schemes in U.S. history, this engagement is also akin to winning the legal lottery. It reminds me of the Enron fraud work that went to Alston & Bird. Sure, it’s a boatload of billings for many years, but it’s not clear that it leads to more of the premium corporate work that firms salivate over. It defines outlier work not in the ordinary course.
The fact that Mr. Picard was seriously thinking of leaving Baker Hostetler for a much smaller firm in New Jersey to get “more resources” shows that this work can go almost anywhere. Sort of gives the lie to the notion that only 1,000+ lawyer mega-firms can handle major cases like this.
If anything, as Mr. Lattman points out, some of this dream work may conflict out some financial institutions or anger clients that were tangentially caught in the Madoff web.
The romancing of Mr. Picard strikes me more like how baseball teams go after an Alex Rodriguez or Albert Pujols. Will law firms find that some of these legal “free agents” are really beyond their prime? That you just overpaid for past performance that is unlikely to be repeated?
Now that we have those things out of the way, here is why I think that rainmaking may be reaching bubble-like status:
“Rainmaking” is an antiquated concept, one that treats clients like cattle and their work like chattel.
Let’s go one-by-one:
1. Rainmaking is an antiquated concept. This is partially the term and mostly the concept. The term is from another age, when clients were sending more business outside and sometimes had a hard time finding firms to do the work. That’s clearly not the case any more. “Rainmaking” sounds to clients like “bill high bill hard bill often.” Nice marketing message, that.
2. Rainmaking treats clients like cattle. Just hire a top-billing lawyer and the clients move on command, proceeding like you know what heading to you know where. That visual says it all.
3. Rainmaking treats legal work like chattel. A rainmaker is presumed to be a legal puppeteer over his or her clients, pulling some strings and getting more work out of them on command. This involves cross-selling and multi-office platforms and other tired bromides. The calculus that permits the soliciting firm to pay more to induce the rainmaker to jump is based on squeezing more work at higher fees out of the book of business. News flash: clients get this.
That clients gets this makes the financial assumptions inherently flawed since they cannot predictably produce the required rising level of billings like they once did. For 80% + of legal work, clients want to pay less on a unit cost, and less for the total matter. “But we are a premium shop and Rainmaker X will give us more premium work!” All I can say is practice that line a number of times in the mirror before rolling it out to your executive committee when seeking approval for Rainmaker X’s package.
Here’s the situation in a nutshell:
For large law firms facing relentless change and almost limitless legacy costs, romancing a rainmaker is very appealing. You get to meet interesting people over expensive meals, sometimes in exotic locations.
The ironic thing is that the law firm losing a “megarainmaker” may ultimately get the last laugh. It will be forced to support existing partners and the clients who stay. Loyalty may not be everything, but it’s often worth more than you think, and you really miss it when it’s gone.
And the “winning” firm in the megarainmaker sweepstakes often gets performance below plan, and a wave of resentment from existing partners. Such a deal.
Tomorrow, what I think law firms are really searching for.
(Rainmaker X, after jumping, before telling clients about how his new firm offers better service and lower costs).