Recent posts from Above the Law and Law360 have focused on K&L Gates, and happened to touch on an issue we’ve been wrestling with for some time. The primary focus of the articles was departures from the firm; but it also touched on the challenges that are part and parcel with building large geographically and practice diversified law firms.
The posts suggested that at least some of the departures being experienced by K&L Gates are directly linked to the fact that those leaving the firm have little, if any need for the platform the firm has developed. Their practices didn’t require the capabilities and infrastructure required by a global organization; and they were not interested in paying for something they didn’t want or need.
This post isn’t really about K&L Gates, but it is important to point out that Peter Kalis, the firm’s chairman, had an interesting response to the article. Kalis pointed to his firm’s debt free balance sheet, and the success the firm has had in importing/exporting business from region to region.
What this post is about is the cost of building an infrastructure that doesn’t create value for a super-majority of partners of the law firm.
Many firms in the legal profession continue to suffer from an all too often reckless and ill-advised bias for growth. One must conclude that there is a basic belief that adding more practice areas and more offices in more countries on more continents will somehow make the firm stronger.
As a general rule it does not.
In fact, when the steps taken to precipitate this type of growth are taken without the support of the super majority of the owners mentioned above, one must wonder whether this kind of growth is about anything more than feeding the ego of a chairperson or management committee.
The cost associated with expansion, the increased operational complexity and the varied support requirements all put pressure on a law firm. This kind of pressure can certainly be dealt with and effectively managed if it stems from a shared goal, priority or aspiration.
When the complexities of expansion are encountered in a culture characterized by splintered goals, no one should be surprised when partners elect to depart.
Any investment, and especially those that come with the consequential changes of expansion, should pass a rigid and objective test of the value associated with it. Does the investment clearly benefit the super-majority of the firm’s partners in a verifiable fashion that would pass a review by an outside analyst?
If not the investment should be passed on. Or at least sent back to the drawing board.
How are your firm’s investments evaluated?