Missteps
| Author | Randall Kiser |
| Profession | International authority on attorney and law firm performance |
| Pages | 75-104 |
4
Missteps
Once the right people are on the bus and seated in the right seats,
Jim Collins advises, leaders must steer the bus in the right direc-
tion. For law rms, the right direction usually means the direction
in which other law rms are going. Educated and trained in the
doctrine of stare decisis, law rm members and leaders are most
comfortable looking at their peers’ strategies to ascertain their own.
While this approach oers a degree of predictability and reliability,
it constrains creativity and forestalls innovation.
Law rms have a unique method of vetting new ideas and strate-
gies. Law rm consultant David Maister nds that law rms, unlike
other business organizations, do not seek a competitive advantage
by adopting ideas and strategies undiscovered by their competitors.
Instead, when presented with a new business idea, “the rst thing
they ask is, ‘Which other law rms are doing this?’ Unless it can be
shown that the idea has been implemented by other law rms, law-
yers are skeptical about whether the idea applies to their world.”1
e corollary to this rule of replication is that, once other law
rms have implemented an idea, its soundness and value are not
questioned for long periods. Precedent and widespread adoption
become proxies for merit. Ongoing testing and evaluation of ideas
and strategies, routinely performed by healthy business organiza-
tions, are considered unnecessary and arguably wasteful in many
law rms. e result is that law rms sometimes mimic other rms’
1 Maister, David. (2006, April). Are law rms manageable? e American Lawyer.
75
ideas and strategies that either lacked empirical validity from the
outset or were later proven to be of limited utility.
Because law rms tend to imitate other law rms, they risk adopt-
ing a strategic platform and nancial structure that are unimagi-
native, unproductive, and, ultimately, unsustainable. e major
components of that platform and structure currently include
growth, mergers, lateral partners, star partner recruiting and com-
pensation, client origination incentives, rate increases, premium
pricing, client relegation, leverage, and short-term planning and
protability. is chapter examines these elements to determine
whether they warrant emulation and will continue to support the
roughly 250,000 attorneys working in midsize and large law rms.2
Growth
“Expansion fever” has gripped many Am Law 200 rms during the
last 20 years.3 It intensied after the Great Recession in 2007–2009 as
law rm leaders became convinced that larger law rms were more
likely to be insulated from the nancial upheavals that aicted their
smaller brethren.4 Some leaders embraced the “too big to fail” con-
cept that appeared to save the largest nancial institutions from ruin
in the Great Recession, while other leaders thought that larger rms
would at least be “too big to fail quickly.”5 e larger the law rm, the
theory holds, the greater the revenue cushion against client or part-
ner defections. And some law rm leaders simply thought that cli-
ents would equate size with quality and prestige. As Steven Kumble,
2 See American Bar Association. ABA national lawyer population survey: Histor-
ical trend in total national lawyer population 1878–2017. American Bar Associ-
ation, Lawyer Demographics Year 2015.
3 Finkelstein, Sydney. (2003). Why smart executives fail (p.155). New York: Pen-
guin Group. (“Call it ‘expansion fever.’ It’s what a company is suering from
when it pursues rapid expansion at the expense of protability and without
controlling liabilities.”) See Harper, Steven J. (2014, October 9). A myth that
motivates mergers. e American Lawyer. Strom, Roy. (2017, June 19). ‘For
growth’s sake,’ enough already. e American Lawyer.
4 Gordon, Leslie A. (2017, June). Make me a match. ABA Journal.
5 Henderson, William D. (2013). From Big Law to lean law. International Review
of Law and Economics, 3. Indiana Legal Studies Research Paper No. 271. Avail-
able at SSRN: https://ssrn.com/abstract=2356330.
76 American Law Firms in Transition: Trends, Threats, and Strategies
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