The Mid-Sized Full Service Commercial Firm “Playbook”
I work with as many “Mid-sized” commercial law firms as I work with large regional, national or global law firms. As the industry continues its multi-decade embrace of operating scale (bigger is better, or at least more efficient!), what does this trend mean for commercial firms that don’t choose to anchor their success to hiring more lawyer bodies across which to allocate their fixed costs?
First of all, what do these firms look like?
- A full-service commercial firm with a diverse set of both transactional and litigation practices, and a complement of select regulatory practices
- A firm typically operating out of a single office in a tier I, II or III city. Multi-office firms anchored to a particular city or single state could also fit the profile
- A firm that is often a member of a national law firm network in an effort to punch above their geographic weight via a network of member firms
- A firm that enjoys modest or negative lawyer leverage where working partners are deeply involved in matter delivery
As firms combine, get larger and are seduced by the opportunity afforded by cross-border markets, it would be easy for smaller firms (relatively speaking) to feel inadequate . . . and those feelings may be valid . . . to a point. Not all companies should feel compelled to be clients of McKinsey, Accenture, Marsh, KPMG . . . or DLA Piper/Dentons/Baker McKenzie. Unpacked below are some of the reasons why the time is now for Mid-sized commercial law firms and why your value proposition is optimized for successful companies (client search) and recruited lawyers (talent recruitment and retention).
#1 – Only Your Firm is Built to Serve Privately Held Companies
Issue:
“Larger firms have so many capabilities to meet the needs of all businesses, including privately held businesses. Why should sophisticated private companies take their business to my Mid-sized firm when they can have all of their needs met by a BigLaw competitor?”
Answer:
Most privately held businesses consume only a small subset of practice areas and legal capabilities BigLaw offers; in short, you have plenty of tools in your toolbox to become the “go-to” law firm for most Mid-sized and larger private companies. In fact, you should lean into your market. Family business owners and other privately held business executives are VERY different from public company law departments. Business owners do not want to see work pushed down to junior lawyers. While the “doers” of public company law departments are more junior in-house lawyers who are fine working with junior law firm lawyers, your owner-operator clients want to work with their peers- senior law firm partners. Your firm’s neutral or negative leverage structure means your senior partners couldn’t push down work to junior lawyers if they wanted to- that’s a structural feature on which clients can rely and not just a soft sensibility.
Finally, BigLaw exists to keep as many junior lawyers as possible producing billable hours, and to redeploy those same junior lawyers to other matters rapidly once they run out of work to do; in short, “utilization” is the profit generating KPI to which BigLaw pays attention. Law firm clients don’t care about their law firm’s utilization, and they don’t want to see more nameless, faceless bodies cycling through their matters just so law firms can sustain their profit generating metrics!
#2 – Only Your Firm Enjoys Unique Credibility with Certain Force-Multipliers
Issue:
“A BigLaw colleague knows so many people at money center banks, strategy consulting firms like McKinsey, risk management consultants like Marsh and Big Four accounting firms like KPMG- I don’t really bring those kinds of relationships to the table.”
Answer:
While you likely do not bring those relationships to the table, you do bring those types of relationships to the table in a different form. Accounting firms, investment banks, insurance brokers, executive recruiting firms and other business advisers see their markets in terms of public/mega-private corporations vs. privately held businesses; in fact, their sensitivity to market positioning through this lens is so keen that they get uncomfortable when they start to capture projects outside of their lane. CPA firms like Eisner Amper and Cohn Reznick view their markets very differently from KPMG, BDO or Grant Thornton; investment banks like William Blair (Chicago) and Carl Marks & Company (New York) view their markets very differently from Lazard or Morgan Stanley. These force-multiplying business relationships can supply impressive leverage to your own prospect generation efforts, but you must hang out with the advisory firms that focus on your market!
#3 – Only Your Firm Can Commit the Natural Act of Transparency
Issue:
“As a Mid-sized firm we don’t want to feel compelled to share more than we would like to share about how we run our business and the financial benefits that accrue to partners as a result of those efforts. Senior lawyers generally appreciate this luxury but junior lawyers are resentful that they’re not included in the informational inner circle of the firm.”
Solution:
BigLaw firms often get credit for being more transparent than do smaller firms- and in the main that may be true. BigLaw reports to AmLaw, and BigLaw’s compensation structures and incentives tend to be conventional and conforming. Mid-sized firms (i.e., “non” BigLaw firms) apply a wider range of approaches to splitting up profits, overall compensation, firm revenue growth, capital contributions and the like- it’s therefore very difficult to presume what those levers look like at an individual Mid-sized law firm. Leadership of these firms can go to great lengths to conceal this information from recruits and junior lawyers- sometimes because they don’t want junior lawyers to know how well they are doing, and other times because they don’t want junior lawyers to know how poorly they are doing.
(Some) Mid-sized firms’ commitment to financial opacity comes at a price. When junior lawyers know little about what their compensation potential may look like as a partner, or how their firm’s financial performance translates into distributable profits, it’s easy for those associates to be focused on the here and now. “What will you pay me today?” “How much of a raise can I expect next year? “I wonder what competing firms will pay me today?” If you want to encourage your younger lawyers to make long-term commitments to your firm, then your firm has to be long-term transparent. Junior lawyers who are able to link long-term earning potential about which they know to financial needs that have yet to ripen are capable of being committed lawyers; they are lawyers who will give your firm credit for supporting their long-term growth and control, and behave less like short term mercenaries!
#4 – Only Your Firm Still Sees Law as a Craft Business
Issue:
“BigLaw can support scale- and scale is comforting and appealing to junior lawyers. How do we compete against the confidence that is inspired by firm size?”
Solution:
Most lawyers think of themselves as right brain artists who develop bespoke creative solutions rather than left brain process authors who master complex yet repeatable tasks. The under-leveraged structure of Mid-sized law firms means that more senior lawyers get to spend more time practicing their craft with clients rather than managing people and moving around the deck chairs on a massive matter generated by a Fortune 500 company. If you’re not selling this feature of the “signature career experience” you deliver as a Mid-sized law firm, you are not getting credit for delivering career self-actualization and stickiness. And you can’t just talk about these features; rather, you must promote, document and support these experiential elements so that your junior lawyers see them and touch them before they actually experience them. Define/Document/Promote/Manage/Reward/Prioritize=Culture!
#5 – Only Your Firm Enables You to be a Convenor
Issue:
“BigLaw seems to be better positioned to confer value to clients in many different forms- how do we compete against that?”
Solution:
The above premise isn’t necessarily true- we do know that BigLaw = larger number of lawyers but that doesn’t necessarily mean ↑ value being conferred. I know well a practice group head of a non-BigLaw Mid-sized law firm that convenes owners of technology businesses with other owners of technology businesses and other providers to/customers of technology businesses. His ability to convene so robustly is a creature of all of the senior executives and owners he knows, and he would never know nearly so many of these people running these businesses if he were a partner at a BigLaw firm. While BigLaw is more of an institutional, systems level business, Mid-sized law is much more of a “people” business, and convening depends on knowing well many people.
#6 – Local, Small and Intimate Beats Global, Large and Arm’s Length Every Time!
Issue:
“BigLaw has the resources to deliver to me a better career experience than does a Mid-sized law firm . . .and that begins with BigLaw’s ability to pay me more $ today!
Solution:
Different client types see value in different firm formats. As we’ve discussed, some BigLaw firms are built to meet the needs of many public companies while some Mid-sized law firms are built to meet the needs of private companies. However, most all lawyers appreciate the experience of working in the “large enough yet intimate” size of a Mid-sized law firm rather than a BigLaw firm environment. You can deliver career control and success for junior lawyers tomorrow in ways that BigLaw generally can’t support. The best mentoring is delivered by internal coaches who more directly control the levers of firm management; their impact and influence on the enterprise are projected through you as their mentee, and they don’t get bogged down by BigLaw sclerosis and bureaucracy.
#7 – You Can’t Go into Business with a Law Department!
Issue:
“Public company law departments (i.e., clients that are attracted to BigLaw) soak up legal operations like a sponge and want to partner with their outside law firms to hear about innovations in legal ops and LegalTech. Isn’t BigLaw a better candidate for ‘partnering’ with their clients in this way?”
Solution:
Yes, BigLaw may be a better fit for public company law departments in some cases because of its ability to bring to the attention of those law departments certain forms of innovation- this kind of “partnering” does in fact go on within this cohort. However, this example begs the question, “how can I be a self-actualized partner with my client such that our collaboration goes well beyond delivering legal work; how can our relationship look much more like a joint venture?”
After law school I worked as a business litigation associate with a Mid-sized firm in Atlanta. I was always impressed with the degree to which the partners in general, and the founding partner/patriarch in particular, were involved with their clients. In fact, the senior partner was more than just a consigliere to his clients- he was a business partner with many of his clients and he was an entrepreneur with his law firm partners. The partners owned our office building that had many third-party commercial tenants. A number of partners were involved in real estate and other business investments with firm clients. These activities were not accidents but rather were predictable involvements given the profile of the client base. The accounting firms, banks, and capital raising resources client businesses engaged were deal flow machines to which a BigLaw partner would never be exposed. For recruited associates who want their legal practice to expose them to a steady diet of really interesting private commercial opportunities, BigLaw simply cannot measure up. For Mid-sized law firms that struggle to express a differentiated recruiting value proposition, the gold lies here!
#8 – Your Firm Can Get Credit for Differentiated Value before Your Prospects (Clients) and Talent (Recruits) Experience Your Value
Issue:
“This is all marketing puffing and promises! We know our clients and lawyers feel our differentness when they actually work with us, but it’s unrealistic to expect them to appreciate that ‘differentness’ before they actually experience it.”
Solution:
Document/Define/Promote/Manage/Reward/Prioritize! Culture and the organizational bias that make your firm different (therefore inferentially “better”) need not be implicit “I know it when I see it” firm features. Commit to documenting “the XYZ firm Way” in a Signature Career Experience Playbook and a Signature Client Experience Playbook. McKinsey, Goldman Sachs, Brown Brothers Harriman and other iconic professional services firms are explicit, holistic, and chronic in how they message and support their “different-in-kind” attributes. Is there any reason your “different-in-kind” law firm shouldn’t behave like this winning cohort?