Growth for the sake of growth is the ideology of the cancer cell.― Edward Abbey, The Journey Home: Some Words in Defense of the American West
I thought about naming this post “The Curious Thing About The Way We Define Growth” because it is so curious to me how the typical law firm defines growth compared to other businesses.
How does your firm define growth? Most law firms define it in terms of increased numbers of lawyers, offices and/or practice areas. During the last two decades, virtually every strategy session we’ve been a part of has revolved around a perspective of growth that centers on size of the law firm.
We prefer to define growth as:
• Increased value
• Increased capability
• Increased strength
• Increased influence
• And, yes –increased profitability
There are two law firms that present a compelling reference point for this discussion. Wachtell Lipton (formed in 1965) and Cahill Gordon (formed in1919) are two of the smallest law firms in the annual AMLAW listing of most profitable law firms. What is fascinating about these two firms is that one of them has been ranked number one or number two in profits per partner, every year, since 1986 (first year of the AMLAW survey). Further neither of them has been out of the top 10 at any point during that 26 year stretch.
Wachtell currently has about 200 lawyers and one office and Cahill has approximately 300 lawyers in 3 offices. Neither firm’s success has been driven by an increase in lawyer count.
There has been a good bit of recent discussion about the layoffs of 10% of the partners and other lawyers and staff at Weil, Gotshal & Manges. Commentary has ranged from the firm laying off less productive lawyers to protect their current level of profitability ($2.2 million per equity partner)to the firm being engaged in a stealth repositioning. An Above the Law article a couple days ago suggest a strategic restructuring of the firm to a smaller more focused firm ala Wachtell.
Profits per partner alone isn’t the definitive way to measure growth; but what Wachtell and Cahill prove is that you can build an enduring organization based on characterisitics other than quantity of lawyers.
This is not an argument for smaller versus larger, per se. The proposition is that something other than size will determine the success of your firm and that the obsession with lawyer count is the cause for the trouble so many firms experience. While the temptation is to relegate these two firms to some unique status, we would suggest the more productive discussion centers on what all successful firms have in common. Every successful firm we know has:
1. A clear and shared vision of what they’re working toward;
2. An executable plan to get there; and
3. Leadership capable of setting and staying the course.
How do you define growth? What do you believe is central to its success? We appreciate your feedback.