A few thoughts about the AmLaw 100 financial reports, which came out today: law.com/americanlawyer…
First things first: I'm delighted for the law firms that had a banner 2017. Really. Revenue and profit growth in a buyer's market are reliable metrics of good work and value delivered. These firms deserve credit for running good businesses and serving their clients well.
Keep in mind also that the AmLaw 100 is not most law firms, and neither is the soon-to-be-covered AmLaw 200. These are very large organizations serving even larger companies in major urban centers in a growing economy. The physics are different here than in other markets.
So, what can we conclude? First, law firms are obviously neither dead nor dying nor even nailed to their perch. The AmLaw 100 winners are growing in all major categories. Even applying the skepticism discount to self-reported financial data, they're succeeding, and good for them.
Secondly, it would be a mistake to interpret these results as a vote of confidence in the traditional law firm business model, or that we can go back to ignoring calls for change. If anything, I'd say these rosy results reinforce the importance of those calls.
According to AmLaw, 74% of the firms that raised their PPP in 2017 did so primarily through good management, including a combination of "equity partner reductions, higher leverage and lowered cost-per-lawyer." bit.ly/2qSGKbc
More quotes from @AmericanLawyer: “The firms that are doing the best are those making the toughest decisions.” From @NicholasBruch: "I would like to see more bold action from law firms." From @RoyWStrom: "Firms have to be willing to fail."
I can tell you that these statements do not differ significantly from what I've been telling lawyers and law firms in my presentations for the last few years.
The AmLaw 100's 2017 results are the best they've been since 2007. But most AmLaw 100 *firms* today are not the same firms they were in 2007.
They pay closer attention to costs and process improvement. They employ at least some advanced technology. They're working hard to understand their clients better in order to give them better value. They can and do offer at least some fixed-fee services.
Could they do more, and faster? Sure. Are they ticking even half their clients' satisfaction boxes? Probably not. But they've done at least a few of the right things, and they're seeing the rewards. I would like this cause-and-effect relationship to get a little more attention.
I'll be honest: I was surprised by these results. The downward trend in these firms' fortunes for the past several years has been well publicized. Citi and Hildebrandt, who know this industry very well, had predicted a tough 2017: bit.ly/2qXNe8F
Their prediction's not looking great today. But you know, they didn't pull it out of a hat. The underlying concerns about law firms' profitable sustainability haven't gone away. Many people have pointed out that even the 2017 winners are poorly situated for the next recession.
And in a coincidence of timing, the AmLaw 100 results were released during the #CLOC2018 conference. Click into that hashtag and you'll see an accelerating curve of change in corporate legal demand. I can assure you, legal ops folks are reading these results as well.
What I'm saying is that business model critics like me shouldn't dismiss these results: they're real and meaningful and we can learn from them. But business model defenders shouldn't get cocky -- they should look closely at the "how" behind these results. It wasn't by magic.
ALSPs and the Big 4 aren't going away. Clients aren't going to become less aggressive and sophisticated. The AmLaw 2017 results should prove to law firms that even incremental change pays off -- but we're rapidly moving past the point where incrementalism will be enough.
@threadreaderapp unroll please
