Biglaw

Sense, Seek, Seize

What law firms must learn to survive.

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There’s no time more dangerous for a law firm than when business is booming.

The problem is complacency. Most of us spend the first decade or more of our careers scrabbling and scraping, trying to keep our businesses running and building our books of business. But there comes a point where many of us start to feel at ease, like we’ve reached the mountaintop and everything is suddenly running along smoothly and profitably. After so many years of hard work to get there, we have every reason to want to take a break and ease our foot off the gas.

I’m 100% in favor of attorneys taking time to recharge their batteries, reduce their daily grind, and connect more with their families and hobbies. But if you think you can ever stop the large-scale strategic work of expanding your practice, think again, because a practice that isn’t growing is a practice that’s dying. The next hungry attorney at the firm across the street will be happy to take your book if you’re not tending to it and growing it. Attorneys and firms that think they have it made are the ones most at risk for losing everything they worked so hard to build up.

It’s A Trap

If you agree with the premise that business booms are prone to create complacency traps for the unwary, your spidey-sense should be tingling in today’s market. The economy is booming, and law firms have been reaping the rewards of all that pent-up legal demand. Many firms are struggling to keep up, and attorneys on the lateral market are having gobs of money thrown at them to help bring in new work or manage the work already onboard. Want proof? Some firms are now offering associates up to $500K signing bonuses to make a move. (As an aside, if you believe that cash doesn’t come with a steep price for your life, think again.)

The problem with that kind of economy is that it becomes easy to cover up or ignore major deficiencies in how a firm operates. It’s easy to be inefficient and out-of-step with modern practices when there’s plenty of work to go around. But everything’s only good until it’s not. Economic cycles come and go, and all booms eventually bust. When the party stops, who’s going to still get the new matters assigned to them: the firm that innovated and found better and cheaper ways to accomplish their clients’ goals, or the firm that was content to keep on keepin’ on?

It’s at this time, when everything seems peachy, that we as law firm leaders need to be focused the most on expanding our firms’ footprints, preparing for the next inevitable downcycle, and finding our next great opportunities.

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Things We’re Bad At That We Still Need To Do

I’ve had the privilege of spending the last year studying at the University of Cambridge Judge Business School. I’ve finished up my course work and am now writing my thesis on, what else, how established law firms and businesses can use entrepreneurial strategies to drive innovation.

In my studies at Cambridge, I’ve learned from my professors, classmates, and course materials that there’s one mantra which repeatedly comes up with the world’s most successful businesses: sense, seek, seize. Industry-leading businesses are skilled at sensing that new trends and needs are out there, seeking out ways to improve their processes, and seizing opportunities the moment they arise.

Unfortunately, these are all things that law firms tend to be terrible at.

Sense. Law firms don’t generally have their fingers on the pulse of the latest trends and developments in their own industries, much less the larger business world. Even basic technological advances still elude many lawyers and firms. We’re a year and a half into the pandemic, yet I still see lawyers regularly struggle even understanding the concept of the now-ubiquitous Microsoft Teams. Larger trends like the regulatory reforms that are increasingly allowing ALSPs to compete directly with law firms are off most attorneys’ radars altogether. I know plenty of attorneys who will gladly spend hours discussing the finer procedural details of obscure case law, but haven’t devoted even a minute to figuring out how looming competitive behemoths like UnitedLex, Elevate, and LegalZoom might impact their very livelihood. ALSPs took in $12 billion last year that could otherwise have gone into the pockets of savvy, forward-thinking law firms.

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Our industry enjoyed a relative lack of competition for decades, but a rude awakening is in store for many.

Seek. If you think we’re bad at sensing market trends, which just requires keeping our ears and eyes open, we’re even worse at seeking out ways to improve our businesses. Improvement generally requires getting formal systems in place to test new ideas and run novel experiments. Lawyers hate experimenting, because experiments often end up being unsuccessful, and we tend to loathe anything that isn’t a win. If we can’t handle the thought of a bit of failure in pursuit of a larger sustained success, we’re going to keep plodding along doing the same old thing until our competitors have left us in the dust.

Firms looking to avoid that trap will need to build a culture of experimentation within them. For a positive example, take a look at this article about the new legal startup 10BE5. Two associates working at Cleary Gottlieb developed an idea to automate away some of their busywork. Instead of developing it in secret, they brought it to their firm, which encouraged them to launch their own company. One founder now runs 10BE5 full time while the other founder has remained at Cleary Gottlieb on a partnership track, and the firm itself is a stakeholder in the new enterprise. Rather than discourage its attorneys from experimenting and innovating, Cleary Gottlieb positioned itself to participate in the upside a new venture like that entails.

Seize. Law firms also tend to struggle with making bold, original decisions. Consider the annual dance of the associate salaries that plays out every year in this publication. The entire legal world tunes into Above The Law and refreshes until one firm tiptoes out in front with the new associate salary and bonus structure. A flood of firms quickly publish their own schedules tracking whatever changes they’ve already seen take place. The copycats certainly can’t be accused of being bold. Even the firm that makes the first move only gets partial credit, given how easily the rest of the market is willing to follow along. Is it really that bold to make a move that everyone else is willing to make, if only someone else would move first? If you’re looking to seize new, untapped opportunities, by definition you have to be willing to do things that others aren’t. That characteristic remains in short supply in the risk-averse legal world.

Seize The Day

Hard as our children will find it to believe, there used to be really good money in mailing around rental DVDs. Netflix was the undisputed leader of its market segment, and it had a great thing going. Nothing was compelling it to dip a toe into streaming video, but it saw an opportunity that no one else did, so it made a move, which by all accounts has paid off.

Things are good right now, which means we owe it to ourselves and our partners to be pushing outward and growing our firms before the next inevitable downcycle. Our industry will probably remain gun-shy and blinkered for the foreseeable future, but that doesn’t mean your firm in particular has to be that way. Those firms willing to embrace and implement the mantra of sense, seek, seize have a chance to break out of the industry’s economic cycle and thrive every day.

Find your opportunities and seize them. If you don’t, someone else will.

James Goodnow is the CEO and managing partner of NLJ 250 firm Fennemore Craig. At age 36, he became the youngest known chief executive of a large law firm in the U.S. He holds his JD from Harvard Law School and dual business management certificates from MIT. He’s currently attending the Cambridge University Judge Business School (U.K.), where he’s working toward a master’s degree in entrepreneurship. James is the co-author of Motivating Millennials, which hit number one on Amazon in the business management new release category. You can connect with James on Twitter (@JamesGoodnow) or by emailing him at [email protected].

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