Reinventing The Law Business: The Importance Of Failure

Columnist Bruce Stachenfeld explains why failure is sometimes necessary, and should ultimately be praised, in the law firm environment. After all, the bin full of seemingly stupid ideas is where the brilliant ideas are hiding.

Do you think that the first person who tried to put fire in front of the cave thousands of years ago got burned? I bet the answer is yes! I wonder what happened after that. I bet everyone else who saw what happened didn’t dare try this again for a long time. Yet, of course, in the end it turned out to be a really good idea and maybe even the difference between life and death.

In recent years I followed Ron Johnson’s attempt to revamp JC Penny. He was running a company that had only one certainty and that was that if they kept on doing what they were doing the company would slowly and inexorably die off. It was a dead husk of a company that was slowly succumbing to irrelevance and everyone knew it. So Johnson, who had previously started the incredibly successful Apple store, joined up as CEO to try something completely different. He “upscaled” the stores and brought in brands and created a completely different shopping experience. The idea ended up backfiring. Customers were lost and it just didn’t work, or at least it didn’t work quickly enough. Johnson was fired in April 2013. After that everyone jumped on him. I don’t think anyone had a good word to say. The media was relentless. The guy who had created the half trillion dollars of value in the Apple stores had now blown it with the JC Penney stores.

Fortune wrote an aftermath article — writers Marty Jones and Susan Kramer. They ended the article with these words:

“It’s impossible to know if Johnson’s reforms could have succeeded but he does leave one legacy: Nobody will be attempting something similar for a very long time.”

Wow. Think about this. The company was dying. Someone had the guts to try something new to save it and it didn’t work out. So let’s not only damn him for eternity but let’s publicly humiliate him and, for good measure, make as sure as possible no one ever tries anything like it again.

Consider this basic emotion we have, which is fear of failure and maybe even worse, fear of being humiliated and laughed at. Every time we try something new we have this fear. It is a natural emotion. And if this is what happens when you fail, there is good reason for this fear.

So how would it work in (most) law firms if someone has a new idea that no one else has done before?

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First, she would bring the idea to her partners. What would they say? Well, if you are a partner in most law firms, you know exactly what they would say. They would come up with every possible objection. Lawyers are awesome at that. They would poke holes and say, “But what if this happened as a result of your idea?” We could be laughed at — we could lose clients — we could have a recruiting problem. The list of concerns would be endless and the more the idea was outside of the lawyers’ comfort zones, the worse it would be.

Second, if she had major guts, she would fight her partners on this. She would point out that the issue is not whether there was a risk of failure, but whether the rewards outweighed the risks coupled with the probability of a successful or failed outcome. Maybe after a great deal of back and forth, expenditure of political capital, and alienating the most fearful partners (maybe permanently), she would finally get her way.

Keep in mind that she doesn’t know if the idea will work. It is a new idea and by definition, risky.

Third, she tries out the idea and — bummer — it flops completely! Now what? You know what happens next. All of the partners have different versions of “toldyaso.” They bring it up again and again, forever. They roll their eyes. They say they “knew” it was a bad idea. They were naysayers and triumphantly proved right. The humiliation is complete and never-ending. The partners she confronted along the way are pleased, although they might not publicly admit it. Those who supported the idea are chagrined and think “that’s the last time I do something like that.”

Fourth, it gets worse. The partner who brought up the new idea will certainly not bring up another one. Even if she had the guts to take a risk of the foregoing kind again — and how many of us have that much fortitude — she would likely never again have the political capital to make it happen. So, she is out of the new ideas game for good.

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Fifth, and to make it worse yet, the other partners who are watching from the sidelines, how are they going to feel about trying out something new? I think we know the answer to that too, and that is that there is no way they would make such an attempt, because the downside of a failed idea is obviously so high.

Now, the firm has created a culture of no one ever doing, or even suggesting, anything new! No one ever innovating or trying things out. Certainly no “reinventing the law business” will go on at this law firm.

Let me throw out something completely different for a well-run (reinvented?) law firm. If there is a new idea, maybe timidly, put forth by a partner, or an associate, or a staff member, treat the idea with respect. Thank the proponent heartily. Recognize that the bin full of seemingly stupid ideas is where the brilliant ideas are hiding (i.e., grabbing hold of fire to protect the cave certainly must have seemed stupid at first).

While the new idea is being evaluated, consider the risk and the reward of the idea, rather than everyone ganging up to poke holes in it.

Then when the idea is ultimately tried out and turns out to be a complete flop, throw a party for the partner, associate, or staff member who had the guts to try the new idea and make it clear how thankful the group is that the partner really took one for the team.

And maybe — just maybe — your law firm will become one of the great law practices in the world. Maybe — just maybe — you will always be on the cutting edge and out ahead of your competition, with new ideas that are rewarding to your clients, your lawyers, and your staff.


Bruce Stachenfeld is the managing partner of Duval & Stachenfeld LLP, which is an approximately 70-lawyer law firm based in midtown Manhattan. The firm is known as “The Pure Play in Real Estate Law” because all of its practice areas are focused around real estate. With 50 full-time real estate lawyers, the firm is one of the largest real estate law practices in New York City. You can contact Bruce by email at thehedgehoglawyer@gmail.com.