This requires balancing the pros and cons of what these firms have going for them.

Pros:

  • They have a desirable, upper/upper-middle-market client base—and a base that is not super-aggressive or, frankly, sophisticated, in putting pressure on rates.
  • They know themselves, their home turf (if they’re regional), what they do and who they do it for.
  • Being (by hypothesis) in non-global metropolises, they have a built-in cost advantage.

Cons:

  • They’ll never work on the biggest, sexiest deals or litigations and will never attract superstars.
  • They’re in a perpetual battle for market share, with the corollary that they have no choice but to maintain high-caliber talent without pushing their rates into uncompetitive territory.
  • For most, their client base is slowly eroding (think the US Rust Belt, the UK outside London), with no obvious brake handle available.

I said at the beginning that I find this category the most problematic. Why so?

I’m afraid it could become a self-liquidating group: That is to say, I’m not confident there’s any available long-term equilibrium strategy available to these firms to grow or even to stay even where they are. They can pin their hopes on their clientele being desirable on the one hand and (ironically) unsophisticated about exerting market power in terms of rate pressures on the other, and that can sustain a good long run, but my intuition, and economic history, suggest that this niche has a finite half-life. To put it bluntly, relying on your clients to be both rich and ignorant doesn’t strike me as an informed and winning long-run bet.

Yet this category continues to trouble me, because clearly an impressive number of successful firms would stake a claim to being here. We must be missing something, no?

This brings us to the heart of the matter when we put Corporate Centric Firms into the larger taxonomy context: They may be a residual category of firms that don’t obviously fit anywhere else. They’re not global, not capital markets centric, not category killers, not traditional boutiques and not super-boutiques. They’re what’s left over.

I don’t know about you, but for a classification system to have intellectual and real-world integrity, I find this a dubious way to populate a category.

I am more than prepared, indeed eager, to be proven wrong.

What am I missing about these firms? What gives them strategic legs? What is their unique value proposition to clients?

Experience teaches me that—although comments here on Adam Smith, Esq. are always open—our readership tends to be shy and retiring about putting their names to anything published online, so we will have a snappy alternative at the end of this series: We’ll be offering an anonymous survey posing a very few basic questions about the law firm taxonomy and your thoughts on it.

In the meantime, if you’d like a more immediate non-public dialogue, just email me.  Don’t be shy.

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