The Economist recently related the story of Howrey, which two years ago was one of the world’s largest law firms, employing nearly 700 attorneys who together pulled in more than $1 million in profit per partner. Earlier this year, frayed and fatigued by flimsy profits, frustrated partners and failed merger talks, Howrey closed its doors.
Several forces are conspiring against firms like Howrey and its ilk. The global economy has been kind to no industry, but few have felt pricing pressure as much as the historically profitable (some would say profligate) legal profession. Add to that the complexities and competitive pressures brought about by rapid globalization, plus new technologies (electronic discovery, digitally-enabled research) that can perform formerly human tasks, and it’s easy to understand why new marketplace realities are causing our friends in law places to scratch their heads.
It’s about time. Oh, I don’t mean that in a mean-spirited way; it’s just that for so long the legal profession has seemed immune to what the rest of the business world has had to deal with. Respectable attorneys, like physicians, have historically sniffed at advertising, considered branding beneath them, and only grudgingly proffered “tombstone” ads to announce a new partner or a completed transaction (doing their best to keep them from appearing creative in any way).
Apparently, however, some firms have broken free of old biases and are finding ways to prosper in this new environment. Three types, in particular, are cited by The Economist as likely to thrive in the future:
–Elite, New York-based firms that cover a certain spectrum of financial center legal work. These are the all-stars, the MVPs, the icons that can be found at the top of every industry. Despite (or perhaps because of) their standing, they don’t try to be all things to all clients but instead stick to what makes them stand out. As much as every law firm might aspire to breathe the air up there, there’s only room for a few.
–Big, generalist firms that offer a wide variety of (relatively) affordable services everywhere their clients need them to be. These are the journeymen who can play any position, show up every day and don’t mind getting their uniforms dirty. Readers of the business press may recognize a name like Jones Day, a firm that has invested a significant amount in branding in its race to build market share.
–Highly focused firms that specialize in only one or a handful of practice areas. These are the specialists, the designated hitters, the “best of breed” players that command a price premium in every industry—in this case throwing off profit per partner upwards of $3 and $4 million.
Looks to me like the legal profession is shaping up just like every other, unable to escape the need for positioning, differentiation and the equity building that a corporate branding strategy can provide. The sooner any given law firm recognizes the potential of embracing this new (to this industry) paradigm, the more room they’ll have to seize longstanding competitive advantage. Laggards beware.
The magazine concludes by saying, “Ultimately, lawyering is becoming more of a business than a profession. Some lawyers decry this. Others welcome it. Few deny it. Because the American market cannot grow as it used to, firms will have to find new strategies and make use of sophisticated branding to stand out.” Just like everybody else.
Welcome to the party, counselors. We’ve been expecting you.