Facing Widespread Disruption, These Law Firm Leaders Have Learned How to Adapt
With the legal industry facing major headwinds, BRG’s David Teece draws on his conversations with some of law’s leading minds to suggest actionable insights for the year ahead
A tight labor pool and cost pushbacks from clients have forced many in the legal industry to change the ways they operate.
The response has been swift and varied. Industry mergers have decelerated from their ten-year average as firms reprioritize depth and specialization. Meanwhile, the “Great Resignation” has forged a radical shift in retention and recruitment. Last year, Am Law 100 firms experienced an associate turnover rate of 23.7 percent, spurring some to offer a range of perks, including higher compensation, alternative payment models, workplace flexibility, and a more supportive organizational culture.
To cut through the noise, I have interviewed law firm leaders across the globe on my new podcast, Insights from the Top: Law Firm Leadership, to find out how they’re navigating one of the most disruptive eras in recent history. After a year of these discussions, I took away several distinct approaches that could be a guide for others as they head into 2023 and beyond.
At Brown Rudnick, Ownership and Entrepreneurship Are One and the Same
As law firms expand and evolve, a sense of ownership among certain attorneys can fade, leaving them complacent and passive. Some simply become content with filling their roles, rather than constantly redefining and expanding what those roles can or should be.
Former Brown Rudnick Chairman Bill Baldiga found a way to combat the “comfort” that can set in after many years working at a law firm. By fostering a culture of meritocracy and ownership, everyone—from junior staff to managing partners—is encouraged to carve out their own responsibilities and define their roles. He believes that active employee participation helps the firm constantly reinvent itself—a necessity, he asserts, because static firms fall behind.
For instance, compensation is decided based on the number of contributions to the firm over the last several years, as opposed to seniority. Those contributions can be economic but can also encompass mentorship, training of younger associates, and support of the firm’s culture. As a result, more than half of Brown Rudnick’s revenue is generated by lawyers younger than fifty.
“We think of ourselves as entrepreneurial in the extreme, in that each one of us is an owner in all respects,” Baldiga said. “Our environment is not the one for everyone. But for those who get up every morning looking forward to a new challenge, it's the best place to be.”
A Strong Partnership Model Pays Dividends for Mishcon De Reya
Most global law firms have expanded through every avenue available to them: mergers, associations with other organizations, and taking on as many attorneys as possible. But with that accelerated rate of growth comes a lack of independence and, consequently, a contentious decision-making process among firm leadership.
That’s why James Libson of Mishcon De Reya looks at growth a little differently. The UK-based firm has avoided the pull of collaborating or merging with other law firms and legal organizations altogether. Instead, it’s focused exclusively on hiring the right partners and safeguarding their interests. That philosophy has put the fate of the firm squarely in its own hands, enabling the firm to decide the best approach to the challenges encountered.
This unique ethos may seem at odds with the firm’s plans for an initial public offering, which was tabled in June. Recognizing the need to raise capital, the firm intended to list some of its shares in the public securities market. Yet by keeping the majority of its holdings among the partners, the move, which is on hold until the economy improves, would have ensured the firm wasn’t beholden to large banks, private equity firms, and other outside interests.
“We love the partnership model,” Libson told me. “People still value the partnership model and being a partner. One of the aspects––some may say downsides, but some may say attributes––of such a model is that, in relation to critical decisions, you can't turn on a penny, so you need to build consensus. That’s what we do.”
Quinn Emanuel Believes Talent Should Be Law Firms’ North Star
In today’s shifting labor market, employees are increasingly looking for better compensation, workplace flexibility, and a supportive organizational culture. The legal industry is no exception—associate turnover hit a high watermark of 14.1 percent in 2021, and over the last year midsize firms offering hybrid work have siphoned away talent from Big Law. Global law firms need to start implementing real solutions to stay competitive.
At Quinn Emanuel, John Quinn has managed initiatives to sustain recruitment efforts. Not only does the firm offer fully remote work, but it provides salaries at the top of the market. “We’re always looking at compensation, refining it, trying to do a better job,” Quinn said. “There's no one system that's perfect. There is no formula. There's nothing in the Old Testament, or the Talmud, or in the constellations that you can look at to say, this is the right answer. This is what this person should be compensated. It's a discussion.”
The firm has also placed a strong emphasis on rebuilding the social ties that bind employees together. Younger lawyers and staff members who were hired during the pandemic have paid a heavy price in terms of mentorship. To fill that gap, the firm is rolling out several educational programs and seminars on a wide breadth of subjects as part of its new Quinn Emanuel Academy. As a result, the firm stands out in a vast pool of large law firms vying for younger lawyers’ attention.
Key Takeaways for the Year Ahead
As law firm leaders head into 2023, they’ll have to overcome challenges that have dogged the industry over the past three years, while preparing for new ones. Below are three principles they should consider as they map out their strategies:
Stay true to your firm’s identity. As a law firm develops into a global enterprise, it’s easy to lose sight of what made it successful in the first place. By safeguarding the firm’s ability to reach consensus without being beholden to outside interests, law firm leaders can make smarter long-term decisions.
Cultivate a sense of ownership. By prioritizing personal achievement over seniority, leadership sends a clear message to rising talent: you are in control of your fate at the firm, and your contributions will be valued accordingly.
Find innovative solutions to attract new hires. In this competitive landscape, law firm leaders cannot afford to ignore the workplace expectations of young lawyers. Offering better compensation is a start, but they should also offer mentorship opportunities and internal resources to cultivate the next generation.
The Bottom Line
Some of law’s biggest influencers have responded to seismic shifts with agility and resilience. But this is only the beginning of a new, transformative era in the industry. To keep up, law firms must be prepared to face anything.
They can start by drawing from the valuable leadership perspectives featured in BRG’s new podcast, Insights from the Top.
Find out more about and listen to the series for an inside-look into how law’s greatest players are shaping the future of law firms today.