Why Mega Firms Will Win

A few recent news posts have changed my thinking about the future of mega firms. This thinking was also influenced by knowledge from colleagues working with some of the big ones. Which mean this is one of my usual puzzle-piece ideas, but I think I may be on to something here.

Previously I have ranted about how these mega firms may not do well. Too many ethical conflicts, cultural conflicts and too few incentives to cross sell across the various components of each firm are significant barriers to success. However, I think they have one, more interesting asset.

By being large, these firms can rise above the individual influences of power partners. Effectively their size forces them to act like a business. Decisions about technology and other changes are made by "the mother ship" greatly limiting partners' role in such decision making. Or in other words, the business people are actually doing what they were hired to do. They assess needs, source solutions and execute.

One example that recently came to my attention was the Clifford Chance "Continuous Improvement" effort.
Continuous Improvement is more than just process mapping; it is a collaborative approach where an expert in the tools and techniques of Continuous Improvement helps a group of people familiar with the relevant task to analyse what they are doing and to find ways of doing it better. Put simply, it involves applying scientific rigour to determine the best approach to carrying out a piece of work.
Now even if you apply some level of a BS filter, Clifford Chance is still engaging in a very "corporate" sort of activity. And of course, some partners (for a period of time) can evade such an effort. But the point is: They are actually pursuing this. They have committed significant resources and are implementing new processes and tools.

Many have argued that law firm size does not bring economies of scale, but what size does bring is the ability (or perhaps I might say necessity) to act more like a business. For firms in this realm, size matters in respect to being forced to make decisions based on the business instead of the needs and opinions of partners.

Admittedly. this idea is based on only bits and pieces of market evidence. In any event, I will be keeping a watchful eye on how the mega-firms embrace and utilize this opportunity.

Who knows - the recent Dentons Dachung merger may well move beyond the known risks, and actually embrace the future.

Stay tuned ...

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mrlibrarian said...

Having been a law librarian for over a decade, I have to say that the solo lawyer is the way to go. There are people out in law land that cannot afford to hire a mega firm at $500/hr but they can afford the $50-100/hr solo practitioner who is connected to the community. That's not to say that mega firms don't have their place. I'm just saying that from my viewpoint, with so many solo attorneys in the area, solo seems to be the the way to go.

Martin Salomon said...

Really interesting article and idea Toby.

Based on the same concept of finding ways to get firms to be able to engage in "corporate sort of activities"; my experience sometimes makes me think that maybe there are two kinds of firms that will be winners here:

1. The mega firms (for the reasons you put forward), and

2. Pure lock-step firms, based on the idea that this model makes it significantly easier to institutionalise a more long term perspective and culture in terms of investments (eg to implement new tools and processes), partner buy-in (or at least less room for power partners to call the shots), etc.


Jordan Furlong said...

I've been as big a skeptic of large firms getting larger as anyone, and I'm still not convinced that past a certain point (and 6,600 lawyers is well past that point), size is any kind of real competitive advantage all by itself.

But I agree with Toby that for all BigLaw's many foibles, and as easy as it is to poke fun at their giant-in-quicksand gait, the one thing to keep in mind is that if any given BigLaw firm really does figure it out, and manages to develop enough internal cohesion to manage and enforce systemic change, then look out. A global law firm with the instincts and performance of a NewLaw startup is a terrifying prospect. CC's CI program is a perfect example.

The best parallel I can draw is back in the early 2000s (?), when John Henry bought the Boston Red Sox and hired smart, innovative, sabermetrically-inclined executives to run the shop. As a supporter of a rival team in the same division, I was deeply alarmed, because I knew that the combination of vast amounts of money and innovative management could produce a juggernaut. Three World Series titles later, I haven't changed my mind.

James Hannigan said...

It depends on the leadership at the top of smaller firms; they can act like businesses too. Large dispersed firms have a much tougher time achieving adoption of standardized ways of doing business. The CC quote sounds like a micro-implementation.


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