The Long-Running Soap Opera Must End

"From pace-setter to basket case in the United States?"  Shall we all guess what firm got stuck with that donkey-tail over at law.com? 

Alas, of course, it was Clifford-Chance.  The questions du jour are (1) what went wrong? (not so we can point fingers but so we don't do it again); and (2) what's to be done?  My answers are (1) a towering case of strategic indecision; and (2) clarity of vision, and speedy and resolute execution. 

First, let's briefly review the bidding.  Back in 2000, Clifford-Chance merged with (or "took over," if you wish—let's not get bogged down in semantics) Rogers & Wells, then a solid New York firm with a fairly strong form of "eat what you kill" in place.  Rather than continue with that compensation model as it was, and rather than deciding on the strict alternative form of imposing its own home-grown lockstep, the firm temporized.  New York was to conform to the lockstep model except where it didn't—with some "super-pointer" partners paid above the lockstep scale in recognition of their marquee value.  While this might have appeared to be better than nothing, it seems to have been received as having been taken down a peg; and meanwhile, partners deemed enlisted-grade rather than officer material probably chafed at being publicly so branded.

Meanwhile, with the half-pregnant disequilibrium situation firmly obtaining in New York, Clifford-Chance expanded aggressively in LA and the Bay Area, famously raiding Brobeck, among other firms, and predictably paying the lateral recruits "above lockstep."  Cut to the chase:   The SF and LA offices have now been closed entirely (Silicon Valley is still open), and New York is today at 265 lawyers down from 450 in 2002 (a 41% drop).  Adding insult is that a 2003 proposal to formalize the exception made for super-pointers in New York faced "stiff opposition" from lawyers in Britain and was voted down (although a market-weighting form of it is evidently near a vote).

Two other aspects of the difficult-in-the-best-of-circumstances task of integrating firms across the Atlantic also came into play:

• Clifford-Chance's constitutional governing framework provides for and indeed requires far more consensus and even voting among partners than the American model of placing most authority in the hands of a managing partner or executive committee; and
• the very far-flung nature of the office network added another layer of delay and red tape to decision-making.

Now Peter Cornell, global managing partner, has moved to New York to attempt to right the ship.  Some doubt that he can:

"Peter is just a terrific guy, a really smart and really nice guy" said a former Clifford Chance New York partner who asked to remain unnamed. "But this is just too little, too late."

I disagree, but only if Cornell refuses to proceed by half-measures.

The core of what got Clifford-Chance in this toxic state was confronting the fundamental lockstep/eat-what-you-kill disparity with obfuscation, temporizing, and pretending to look the other way rather than with a cool assessment of their strategic objectives in coming to the States and what techniques are best suited to achieving those goals.   That five years have gone by is, well, too bad, but Cornell has made nothing if not a statement by relocating to New York and I believe he can seize the moment:

• Ditch eat-what-you-kill.  The firm's roots are solidly in lockstep and eat-what-you-kill was a bastard graft from the beginning.
• Besides, you've probably lost most of the marquee names you're going to lose, so judging by the practical (read: economic) impact, the worst should be over.
• And last and most important by far, trumpet the virtues of lockstep.  Don't retreat to it defensively, licking your wounds, and in a crouch posture of lacking better alternatives: Champion it!  It can create marvelously collaborative, well-oiled seamless machines delivering precisely the right mix of people and offices to each client engagement.  Plus, you avoid the bloody and counterproductive battles over origination credit, which neither burnish your firm's attractiveness to clients nor enhance morale internally.

Will this mean a de facto exit from the lateral-hiring market?  Indeed.  I am prepared to say flatly that lockstep and an active lateral-hiring effort are incompatible. 

So plan differently.  Don't be bashful or defensive about seeking personality types who value building strong institutional ties to a client over time, based on practice groups that are internally collaborative.  Forget, and loudly forget, the prima donna's.  Start now.  Stick to it.  There is no alternative; this plot line has ceased to be amusing.