Over the last ten years, we have witnessed advances in law practice technology, the expanding roles of paralegals, and the outsourcing of legal work. Yet despite all of these cost-cutting and time-saving advantages, many law firms, especially the large ones, remain struggling for their very survival.
Only a decade ago, law firms were enjoying remarkable levels of growth and prosperity. Firm coffers were full and firms were spending significant sums of money on promoting themselves in order to enter new markets and acquire the premium business. Some firms even began experimenting with branding. In those days, branding was mostly viewed as just another form of advertising and promotion. In truth, firm leadership rarely understood the branding process or what the concept of branding was actually intended to accomplish. But it didn’t really matter, revenue was climbing and profitability remained strong. But what so many of these firms didn’t expect was that, in just a few years, our economy would be shaken by a deep and fierce recession, one which would shake the financial foundations of even the most profitable of firms. Visit McCusker Anselmi Rosen & Carvelli
For law firms, the recession that began in 2007 had, by 2010, penetrated the most sacred of realms- the proverbial benchmark of a firm standing and achievement- profits-per-partner. For many firms, especially mega-firms, the decline in law partner profits was reaching record lows and it wasn’t long until the legal landscape was littered with failed firms both large and small.
In trying to deflect further losses, firms began to lay off associates and staff in record numbers. But the problems went much deeper. There simply were too many lawyers and not enough premium work to go around. It was a clear case of overcapacity, and it was also clear it was not going to improve anytime soon.
More than twelve of the nation’s major law firms, with more than 1,000 partners between them, had completely failed in a span of about seven years. Against this background, law schools were still churning out thousands of eager law graduates every year. Highly trained young men and women who were starved for the chance to enter a profession that once held the promise of wealth, status and stability.
As partner profits dwindled, partner infighting grew rampant. Partner would compete against partner for the same piece of business. The collegial “team-driven” identity and “progressive culture” that firms spent millions of dollars promoting as their firm’s unique brand and culture had vanished as quickly as it was created. While financial times were tough, in truth many of the big firms had the resources to survive the downturn. Instead, partners with big books of business were choosing to take what they could and joined other firms- demoralizing those left behind.
To understand why this was happening, we must first remove ourselves from the specific context and internal politics of any one firm and consider the larger picture. The failure and decline of firms was not only a crisis of economics and overcapacity, it was also a crisis of character, identity, values and leadership. Sadly, the brand identity many of these firms pronounced as their own did not match up against the reality of who they actually were. In other words, for many firms, the brand identity they created was illusory- and illusory brands ultimately fracture in times of financial stress.
Ultimately, the branding process must also be a transformative process in search of the firms highest and most cherished values. It is, and must be, a process of reinvention at every level of the firm- especially its leadership. The transformative process is fundamental to building a true and enduring brand. Without it, firms run the risk of communicating an identity that does not represent them, and this is the danger, especially when the firm is tested against the stress of difficult times.