Recently in Business Models Category

Copious have been the articles about BigLaw partners decamping to start their own firms, but when the story migrates from the legal press (among which I count law.com (comprising The American Lawyer, the National Law Journal, etc.) The Lawyer, LegalWeek, the occasional non-salacious news from AboveTheLaw, and a few other sources) to Slate, of all places, attention must be paid.

Under the headline Leaving Big Law Behind, we read that:

Lawyers often enter the profession because it's a safe bet, and they're paid handsomely to be risk-averse. But increasingly, Big Law partners like Marc Zwillinger and Christian Genetski--who started their Internet-focused firm in March and have since doubled the client roster--reach the pinnacle of success only to leave it behind.

After a career of being coddled--and drained--by esteemed institutions, these high-achieving lawyers, hardly naturals for entrepreneurship, find themselves choked, financially and otherwise, at the top of the heap. As the Big Law model--in which the nation's largest law firms turn the top law students into billable-hour-crazed associates and, sometimes, partners--evolves to accommodate global entities, companies below the $100 million-revenue level that can't or don't want to pay Big Law rates are being squeezed. And this presents a window for partners, fed up with the Big Law model, to strike out on their own.

True enough, right?  Well, yes, but there's more to it than that, shall we say.

There have been many high-profile stories of lawyers leaving blue chip firms, notably Peter Chaffetz, global head of litigation for Clifford Chance, forming Chaffetz Lindsey in 2009, so this doesn't exactly qualify as new news.  (Disclosure:  I knew Peter when he was at Clifford Chance, although we haven't spoken recently.)  Indeed, that firm's website succinctly states the case for abandoning BigLaw:

Conflicts
Conflicts have always been a problem at large firms. That problem became dramatically worse following the economic downturn, as so many of the resulting disputes involved firm clients on both sides. We saw a need for a top-quality firm that did not have those conflicts.

Costs
Even before the downturn, the large firm cost and fee structures made it difficult for clients to hire us on small to medium sized cases. Today, our clients face relentless pressure to reduce legal expense, even on the largest cases. With low costs and no excess overhead, our new firm provides the value clients require.

In short, the Chaffetz Lindsey team delivers the same quality legal work as always, but with the freedom to serve a broader range of clients and the economics to help those clients with a broader range of their needs.

The Slate piece also cites, as motivations to decamp from BigLaw:

• The organizational overhead "tax" imposed on everyone (not just partners, although they're the only ones Slate mentions); big organizations require care and feeding.  This is inelucatable.
  
  
• Oddly, they also cite boutiques' relatively greater freedom to deviate from hourly billing, citing the example of an Sonnenschein spinoff that offers monthly "all you can eat" retainers covering everything except litigation.  "Oddly," I say, because there's nothing remotely unique to the boutique model about this pricing structure.
  
  
• Another strange argument that makes an appearance is that "partners are expected to cross-sell" in BigLaw.  This is criticized on the grounds that a client might be steered towards someone who "isn't necessarily best suited for the job," or, conversely, that the lawyers receiving the cross-sold client "may be so busy that they don't give the inherited client the attention he or she deserves."   If you can explain to me how either of these scenarios serves the interests of anyone at the hypothetical BigLaw firm being critiqued, I welcome your insights.
  
  Don't misunderstand me:  Could it happen?  Yes, of course.  Could cross-selling be a sustainable strategy if these scenarios were typical, and not exceptional?  You, and clients, be the judge.

But I don't want to dwell on deconstruction of any specific article, or firm.

For one thing, I have also had conversations with people at many of the BigLaw firms from whence folks have loudly decamped, who have said the alumni were about to be pushed.  Or that conflicts were a figment of their imagination.  Or that their new rates are not materially different from their old rates.

The last thing I have any interest in is refereeing those debates. Just to note that there are always two sides to every story.

Instead, I want to suggest that's what's going on here, while it makes for great content for the celebrity-centric aspects of coverage of our industry (oh, you hadn't noticed that there is such coverage?), is the natural evolution of an industry under economic stress.

A year or two ago, I began to receive, periodically, emails from various partners and former partners in BigLaw, all of them requesting anonymity, which I scrupulously honor, who had either left to set up their own boutiques, had just seen a colleague do it, or were thinking about it.  I can assure you that these emails were far "hotter," emotionally, than is typical for my inbox; these folks were passionate about whether this is what they ought to be doing, or, if they'd already done it, about why BigLaw was structurally broken and attending its wake would only be a matter of time.

I think it's fair to say that one way to encapsulate the feelings most of these people were expressing was the heartfelt, "This isn't the firm I joined!"

And you know what?  They were right.

I won't rehearse for you the staggering statistics on the growth of the AmLaw 50, the AmLaw 100, the AmLaw 200, or the NLJ 250, over the past 20 years, but we've been on one heck of a sleigh ride, friends.  Those aren't just statistics; those are living, breathing organizations.  Firms have changed, some unrecognizably so.

What we're witnessing now, I believe, accelerated but not caused by the Great Reset, is people sorting themselves out into the firms they belong to be in.   BigLaw is not for everyone. But its global reach, its wide and deep expertise across practices, its ability to handle the Big Deal at the drop of a hat, all serve clients' needs in ways for which there is no substitute.  Boutiques, likewise, will always be with us:  From Cartier to Ferrari to single malt scotches, every industry worth its salt welcomes, and is improved by the competition from, boutiques.  But query whether they will ever be the main event.

What we're seeing, I suggest, is greater diversity of business models than we had in, say, 2006.  This can only be healthy.  We'll even give Slate the last word:

Ultimately, while Big Law is definitely not dead, the increasingly diverse models ensure an end to the days when clocking time as a Big Law partner is the best measure of success in the legal profession. 

In other words, don't read Chaffetz Lindsey as a precursor of the demise of Clifford Chance.  No more than you should read the success of Boies Schiller as implying fissures at Cravath (David Boies' alma mater).

What all this "means" is far simpler:  May the games continue.

Technology can be a blessing and a curse and, while my feet are firmly planted in the former camp, that's not why I'm writing what, I hope, you are about to read.  Because it is about technology.  I'm writing it for two reasons:  I hope it provides an overview of what some of the smartest thinkers on technology that we have going these days are saying and, love it or hate it, technology is something we all spend a lot of money on.  So that gets my attention in and of itself.

Our basic text for today is McKinsey's Ten tech-enabled business trends to watch, which is addressed, as per McKinsey's standard operating procedure, to "senior executives [who] need to think strategically about how to prepare their organizations for the challenging new environment."  I hope that audience would be you.

Here are a few headline statistics:

• Facebook has 500-million users, five times more than two years ago.
• More than 4 billion people worldwide have a cell phone, and more than 10% of those are fully web-enabled.

I could cite more, but you get the drift.  McKinsey lists the ten trends as follows. 

Not all, by any means, apply to law-firm land, but all are worth reflecting on and those that do apply squarely to us deserve some comment:

• Trend 1: Distributed cocreation moves into the mainstream
• Trend 2: Making the network the organization
• Trend 3: Collaboration at scale
• Trend 4: The growing 'Internet of Things'
• Trend 5: Experimentation an big data
• Trend 6: Wiring for a sustainable world
• Trend 7: Imagining anything as a service
• Trend 8: The age of the multisided business mode
• Trend 9: Innovating from the bottom of the pyramid
• Trend 10: Producing public good on the grid

We realize, and apologize for, the fact that this is cast in the unfortunate, hostile to English, and un-euphonious argot of consultant-speak, but we place a higher value on quoting sources accurately, so there you have it.  (It could and does get worse, by the way, but we'll try to spare you.  For example, a little further along in the piece you encounter this positively remarkable demolition derby of words:  "Because some of the most powerful applications of these trends will cut across traditional organizational boundaries, senior leaders should catalyze regular collisions among teams in different corners of the company that are wrestling with similar issues.")

What to make of this?

Their trends ##1, distributed cocreation, 4, the Internet of Things, 6, wiring for a sustainable world, 9, innovating from the bottom, and 10, producing public good from the grid, we can pretty much write off for present purposes.

But #2, making the network the organization, speaks quite directly to the challenge of outsourcing.  McKinsey puts it this way:

We believe that the more porous, networked organizations of the future will need to organize work around critical tasks rather than molding it to constraints imposed by corporate structures.

What they mean by that is that we need to define where work can optimally be done, and get it done there, not necessarily within our four walls.  This need not be frightening, as I've written before:  For example, drawing on external expertise could involve tapping into your firm's alumni network and even its retiree network--imagine the energy that a recent retiree would deliver to answering an inquiry in his/her area of expertise. 

#3, collaboration at scale.

This means things as simple as investing in high-capacity, high-resolution videoconferencing and shared online workspaces.  At one (unidentified) "high-tech enterprise," the "savings on travel were four times the company's technology investment [while] contacts per salesperson rose 45% [and] 80% of the staff reported higher productivity and a better lifestyle." 

Where you can trip yourself up, however, is in assuming that technological tools per se will enhance collaboration:  They won't, necessarily.  What will enhance collaboration is if technology enables human interactions that people were already engaging in, or wanted to engage in.

#5, experimentation and big data.

No, we will never be as web-metrics, analytically savvy as Amazon or eBay, not to mention Google, who determine empirically everything from where to place buttons on web pages to the sequence of content the visitor sees, but we could at least be a little smarter about analyzing our clients' spending patterns with us.  Such as:

• What is your firm's "share of wallet" of a client's total outside counsel legal spend?  Growing, or declining?  In what practice areas?
• What factors are correlated with client attrition and with client retention?
• Do "acorn" clients grow into oaks?  (Anecdotally, I'd be shocked if they do, but you might want to find out based on actual data and not simply partners' lobbying for their acorns.)
• Which cohorts of your clients are the slowest and fastest to pay?  Which complain the most about billing and provide the lowest realization and which complain the least and provide the highest?  What can you learn from this?

Etc.

The point is not that we can't figure these things out.  A decade ago, to be sure, we probably could not have. But now is not then. 

Now we can at least take an educated guess at figuring these things out.  And not to do so is, I submit, tantamount to managerial malpractice.  (But then, you know that I'm a data junkie at heart.)

#7, imagining anything as a service.

We are, of course, one of the quintessential service industries, so this is easy:  We sell knowledge, and knowledge classically lends itself to digitization and zero-marginal-cost reproduction. 

That's not the point.

The point for us is that "cloud computing" should enable us to really get serious about alternative career paths and attorneys who want to work from home (or from the totemic South Sea Islands), or only a certain number of hours or days per week, or intensely on a particular transaction or litigation and then be "on the beach" for x months. 

You may be thinking that all of this (a) has been tried and failed; (b) won't ever seriously be tried because it couldn't possibly work; and/or (c) will be shown to fail as soon as it is seriously tried.  I am not here to argue for or against any of those propositions.

Merely to point out that, pregnantly, McKinsey writes:

Business leaders should be alert to opportunities for transforming product offerings into services, because their competitors will undoubtedly be exploring these avenues. In this disruptive view of assets, physical and intellectual capital combine to create platforms for a new array of service offerings. 

What's "pregnant" about that observation is the warning that "competitors will undoubtedly" be trying to exploit the ability to deliver legal services from a distributed platform.  Even if we're not. En garde.

#8, the "multisided business model"

Apologies, first and foremost, for the opaque consultant-speak.   Perhaps even McKinsey can't help themselves.

But a "multisided business model" is nothing more than a business that has more than two counter-parties:  More than the buyer and the seller or more than the law firm and the client.   Wildly familiar examples are the newspaper, magazine, and television industries, where the publisher/broadcaster delivers content to the reader/viewer, sometimes for free and sometimes by subscription, while a major portion of the publisher's revenue, and the consumer's time, comes from advertising--the third party to the industry model.

Or Google.  Their sponsored ads subsidize our free searches.

What might that look like for law-firm land?

I submit that we have not begun to capture, analyze, and re-package the vast amounts of data we have on litigation or on corporate transactions.  For example, what if a firm with a significant management/employment practice began to systematically try to capture what the underlying characteristics were of cases that led to expensive and horrific claims versus the characteristics of cases that were benign and settled quickly and cheaply?  Or if a corporate-centric firm analyzed what clauses in prospectuses, 10-K's, and other disclosure documents were the most frequent subjects of litigation?  Or if an IP practice could analyze, on a geographic or time-series basis, where challenges to patents were rising and where they were subsiding?

Don't you think that non-clients would be willing to pay a fair amount of money for that information?  If so, welcome to the multisided business model world.

Your view may be that some, all, or none of this is going to come to pass, or that however much of it does won't affect us. 

The point of all this is different:  Think about what it might mean for your firm if any of it happens.  Use these possible scenarios to broaden your conversations with your partners, your clients, and your associates and staff.  If a competitor or peer firm of yours decided to embrace one or more of these potentialities, how would you respond? 

The abrupt resignation of Mark Hurd as CEO of Hewlett-Packard this past week over a seemingly trivial expense account peccadillo or non-harassment sexual harassment charge may have many people scratching their heads, but the smart analysis is that, as brilliant as  he evidently was at delivering operational results by cutting costs, he also demoralized and insulted employees and staff left and right, and cut R&D to the bone, which is why HP was caught flat-footed by the Apple iPad. 

Consider that a cautionary tale.  After all, a larger form-factor iPhone could not exactly have been a shock to anyone paying attention to Apple, or to the evolution of technology in general.  Yet HP was unprepared.  Evidently, they weren't thinking about the future.  You better be.

Don't wind up as HP did in this case.  And please don't end up as Mark Hurd.

In times of accelerated turmoil such as those we've been living through and which appear likely to continue, to the eye's visible horizon, it can be useful to return to first principles.

So, herewith, a quick precis of Joseph Schumpeter's famous analysis of capitalism in Capitalism, Socialism, and Democracy (1942), and in particular his exegesis of his powerful and original concept of "creative destruction."

The opening up of new markets, foreign or domestic, and the organizational development from the craft shop and factory to such concerns as US Steel illustrate the same process of industrial mutation--if I may use that biological term--that incessantly revolutionizes the economic structure from within [emphasis original], incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism. It is what capitalism consists in and what every capitalist concern has got to live in.

Following on this, Schumpeter observes that it's "useless" to analyze a large firm's behavior at a single point in time, since the behavior of a firm is "on the one hand, a result of a piece of past history, and on the other hand, an attempt to deal with a situation that is sure to change presently--an attempt by those firms to keep on their feet, on ground that is slipping away from under them."

Every piece of business strategy acquires its true significance only against the background of that process and within the situation created by it. [Strategy] must be seen in its role in the perennial gale of crative destruction; it cannot be understood irrespective of it or, in fact, on the hypothesis that there is a perennial lull.

This also implies that the popular concept of perfect competition is, by and large, meaningless if one wants to grasp the world as it really is--although it has the academic virtue of being highly susceptible to mathematical modeling.

The primary flaw in perfect competition is that it "is always suspended whenever anything new is being introduced" because buyers and sellers cannot possibly have complete information about a potential market. Indeed, Schumpeter believed that most quasi-mature industries (law certainly qualifies) more closely resembled oligopolies, where "there is in fact no determinate equilibrium at all and the possibility presents itself that there may be an endless sequence of moves and countermoes, an indefinite state of warfare betweeen firms."

The type of competition that overturns everything familiar is not that based on price or quality, which are, after all, continuums, but "the competition from the new commodity, the new technology, the new source of supply, the new type of organization [since this] strikes not at the margins of the profits and the outputs of the existing firms but at their foundations and their very lives."

And this looming threat is ever-present: "It disciplines before it attacks." Ignoring the potential impact of a spasm of creative destruction upon an industry is nothing less than ignoring a characteristic of capitalism which is intrinsic and endogenous.

So where does this leave us?

Were we to resurrect Schumpeter (1883, Czechoslovakia-1950, Connecticut) from the dead, and ask him to comment on this train of thought vis-a-vis law-land, here's my supposition as to what he would say:

• The threat to the industry of BigLaw as we know it is not the next Skadden, the next Latham, the next Wachtell, the next Quinn Emanuel or Boies Schiller or Bartlit Beck.
  • These are fundamentally familiar business models, indeed so profoundly familiar that to outside observers they surely appear indistinguishable from the largest and most prestigious firms with the longest pedigrees.
    
    
• Instead, the threat will come from unforeseen competitors currently outside the tent, and who have no interest in being inside the tent.
  • Some of these competitors, perhaps most of them, don't exist at the moment, or if they do exist, have only begun to find their sea legs.
    
    
• You can't foresee what these new competitors will do; indeed, they themselves can't even foresee it yet in any clearly articulated or planned way.
  
  
• And they won't look at all like BigLaw as we know it; if they did, they wouldn't be "creative destroyers."

Now, this is nothing to be afraid of.

Will the new competitors come?

Given that in the US alone, the total annual revenue of private, for-profit law firms is about $225-billion, yes. We inhabit a very large industry.

So the question is what can they do that we can't?

The tremendous advantage we have over these nascent competitors is that we know our clients and we know the law: In vastly nuanced fashion. But this won't do us any good if we're oblivious, indifferent, or too comfortable and complacent to recognize what's on the horizon. Our knowledge of our clients, and our tightly bound relations with them, is the only barrier to entry that we really have; but it will give us enough breathing room to figure out how to meet the new competitors on their own ground.

Or ours.

But only if we are prepared for the fight. Because the fight is endogenous to capitalism.

For the second installment in our series on Law Firm Business Models, we turn to boutiques.

Boutiques, as a player on the landscape of industrial structure, are a familiar character. Boutiques, in fact, exist in countless industries, and seem capable of thriving in a variety of competitive environments. Consider:

• In retail, perhaps the most familiar environment for boutiques and whence the word "boutique" itself was historically derived, we have the familiar local clothing, shoe, or stationery store co-existing alongside department stores, Zappos.com, Staples, and Office Depot.
• In jewelry, it's Zales and all the other big boxes vs. Cartier, Tiffany.
• In beer, it's Budweiser and Miller vs. Sam Adams and all the other micro-breweries.
• The same for wine and hard liquor: The Gallo Empire and the Diageo's of the world vs. mailing-list-only Napa cabernets and single malt Scotches.
• The same for apparel (Gap, Lands End, J. Crew, Brooks Brothers--you name it, vs. designers--you name it)
• Even in autos, we have "boutiques" in the incarnation of Ferrari, Lamborghini, Tesla, and Maybach, among others.

The point is simply that boutiques can coexist with supposedly dominant players in many industries for a long long time, with no apparent mortal threat to their existence or profitability.

So is the same true for our industry?

I believe it is.

What, then, exactly, is a "boutique" in our industry?

As I define it, it's a firm that specializes in a single practice area virtually to the exclusion of all else, and that also has only one office (maybe a headquarters and an inconsequential branch or two).

The key characteristic is the focus on a single practice area, but the concentration in one office also part of the definitional package. Littler Mendelsohn focuses on employment law (a practice area), but because it's nationwide I wouldn't classify it as a boutique.

And just to clarify things: Wachtell, Cravath, Slaughters are all firms that have only one office that counts, but that doesn't make them boutiques. (So, for example, do the hundreds of thousands of solo and small law firms across the country: Same point.)

So what are examples of what I have in mind? Just to name a few, Bartlit Beck, Boies Schiller, Quinn Emanuel.

All of those are litigation boutiques, and I named them not by accident. That seems to be the dominant form of boutique, and IP boutiques, which used to be a classic category of boutique, have seen the sun set on them. Why did the IP boutiques fade? Because, I suspect--this is only my theory--IP used to be a valuable expertise, and it migrated in the past decade or so to a commodity. Erego firms could not sustain the high price margins they needed to continue on that one leg of the stool. Game over.

(Before I receive an avalanche of email from proud IP practitioners, let me hasten to clarify that there's IP work and then there's IP work.  Run of the mill patent and trademark applications are the commodity side of things, but certainly high-stakes litigation against patent trolls and other wannabe bloodsuckers is anything but a commodity.  Perhaps the real flaw in the IP-boutique business model's concentration was that clients failed to see the need to procure their high-stakes work from the same firm that did their routine filings.)

Litigators are facing no such risks.

At the top end of the litigation market--white colllar defense, securities and corporate governance investigations, other major regulatory inquiries (often involving "piling on" with multiple state and federal proceedings moving forward on parallel or at least tangentially approximate paths), money is no object. As far as the eye can see, it will always be thus.

So is there a fundamental threat to the boutique model?

If you're a non-litigation boutique, there could always be.

• Some practice areas (cf. IP) may move downstream.
• By hypothesis, if you're a practice-area boutique you've concentrated all your chips on one expertise. If demand for that expertise is cyclical, be prepared for the downturns. As in, really prepared. See:  Thacher Proffitt.  Be ready to cut back to lifeboat size in very short order. That's actually easier than when the curve bends up again and all of a sudden you need to recruit people who are suddenly, fashionably, in demand. Live by the sword,....
• For all boutiques, what happens when the charistmatic founder (show me a boutique that doesn't have one) retires? That's usually the inflection point at which a boutique survives as an institution or reveals itself as the court attendants at Versailles to the Sun King.

Thomas Hobbes famously described life in "the state of nature" (that is to say, without government) as "solitary, poor, nasty, brutish, and short," the only remedy for which was to accede to a social contract and establish a civil society.

Boutiques may all face a similar transition point upon the fading of the founder, although hopefully it's not from a plane that is "solitary, poor, nasty, and brutish"--but it probably is "short."

The challenge for boutiques, then, may not be becoming one; it may be remaining one.

Here the first in what I plan will be a series on Law Firm Business Models.

Today's topic is Regional Firms, and the focus of essentially every one of the columns in this planned series will be a discussion of whether the business model under examination is viable in the long run:

• What are its strengths and weaknesses?
• Are there characteristics or benefits it had to offer in the past that look to be less compelling, available, or plausible in the future?
• Conversely, are there reasons to believe clients will find the particular business model more to their liking in the future?
• What, if anything, is its particular appeal for lawyers?  (Remember Econ 101:  For law firms, clients are the demand and lawyers are the supply.)
• Does it have structural strengths or weaknesses vis-a-vis other law firm business models and which (strengths or weaknesses) seems more likely to grow in future?

Those are just suggestive questions, of course, and I imagine the particular discussion of any particular business model focus more on the traits of that specific model than how it fits into a Master Paradigm.  (I'm not big on Master Paradigms, in case you're wondering, and no, the initial caps were not to dress things up but to signal skepticism.)

So, whither regional firms?

Readers with very long memories might recall that fully three years ago I surmised that the merger of Kirkpatrick & Lockhart Nicholson Graham with Preston Gates & Ellis might portend something about the future of regional powerhouse firms. Specifically, The New York Times asked me what I thought or rather why I thought it might have happened, and proceeded to quote me as saying:

"Firms like Preston Gates that look to be comfortable as regional powerhouses may not in fact think that that's a very secure future, and they may want to ally with someone else and gain a bigger footprint."

I thought it might be true then and if anything has changed over the past three years it's only that I believe it more strongly today.

Why?

Fundamentally, we're no longer a regional country.

Much more meaning used to attach to "New England," "Dixie," the "Pacific Northwest," the "Rockies," and so forth. Now we're not so much a nation of scrapple in Pennsylvania, biscuits and grits in the South, baked beans in New England, guacamole in California, and bagels and lox in New York, as we are a nation of McDonald's and Starbucks and Denny's at one end and the Thomas Kellers, Bobby Flays, Wolfgang Pucks, and Gordon Ramsays at the other, all with their continent-spanning empires.

Even Times Square, for lord's sake, has become Gap-, Disney-, Toys-R-Us-, and Bubba Gump Shrimp-ified. It has turned into New York's great tourist-occupied outdoor mall mecca, with nary a local business left in sight.

Of course the well-chronicled, perhaps exaggerated, and surely overly romanticized assault of Big National Business on Small Local Merchants has been going on, as noted, for decades. 

As Exhibit A, I give you the department store industry, where Federated Department Stores, founded in 1929 in Columbus, Ohio, has been a consolidator extraordinaire.  Consider that it originally was a holding company for Abraham & Strauss, F&R Lazarus, Macy's, and William Filene's Sons of Boston, joined one year later by Bloomingdale Brothers of New York.

Here's a perhaps-incomplete list of the stores Federated has since acquired, merged with, or otherwise rolled up, all of which (with the sole outlier exception of Bloomingdale's) are now doing business under the unitary "Macy's" brand name:

• John Shillito of Cincinnati
• Rike Kumler of Dayton
• Burdines of Miami
• Rich's of Atlanta
• Foley's of Houston
• Sanger Brothers and A. Harris of Dallas
• Boston Store of Milwaukee
• MainStreet of Chicago
• Bullocks of LA
• I. Magnin of San Francisco
• Richway of Ohio;
• Twin Fair and Gold Circle (of various locales, merged)
• Lord & Taylor (subsequently divested as an independent entity)
• Famous-Barr of St. Louis
• Hecht's
• The Jones Store
• Jordan Marsh
• L S Ayres
• Meier & Frank
• Robinson May
• Strawbride's
• Kaufmann's of Pittsburgh
• And perhaps most famously and controversially of all, Marshall Field's of Chicago.

In a word, so long, regionalism.

So it has been with industry. If the South was textiles, Detroit cars, the Great Plains agriculture, and so on, now any company of scale that has survived has gone national and most international. You can say that this has been a trend since, say, World War II, and I would hasten to agree, but the internet has vastly accelerated it during the past decade.

Physical location is increasingly irrelevant. "Headquarters" has become almost a metaphysical term, and many law firms themselves (Jones Day, K&L/Gates, Latham) would tell you they have no such thing. Sourcing (shall we drop the term "outsourcing" once and for all?) has gone global, as have clients. Talent, capital, and most importantly of all for us, ideas, know few borders and no timezones.

What, then, is the precise marketplace niche of a regional firm?

If you suggest that it's knowledge of local:

• business conditions;
• law schools;
• recruiting environments and lateral candidate prospects; and
• cultural, philanthropic, pro bono, and other "soft" aspects of the local socioeconomic infrastructure;

then I would suggest to you that role is equally well served--perhaps better served--by the office managing partner of a national or international firm.

What are the remaining advantages of a regional firm?

Without (as I posit), a matching client base or an advantage in ability to track local conditions, I would turn the question around: Please (and I mean this) do tell me what you think the remaining advantages of a regional firm are?

We're all ears.

According to the most recent fossil record discoveries, life on Earth dates back about 3,450-million years. But for about the first 85% of that time span, organisms were extremely simple, composed of individual cells, occasionally organized into colonies.  Pretty dull.

Then something striking happened, about 530-million years ago, which is now known as the "Cambrian explosion." For reasons not entirely understood--oxygen reaching critical levels in the atmosphere? more sophisticated predator/prey competition? an immediately preceding mass extinction? "co-evolution" of related species?--evolution came up with a brilliant invention: Mutli-cellular life.

Multicellular life, as expressed in the Cambrian explosion, is not just aggregate-cellular life.  It's organisms with structure, with layers, appendages, limbs conducing to mobility, eyes, ears, and dedicated noses, protective carapaces, offensive tools such as teeth and claws, and essentially the entire array of what we customarily think of as the Lego blocks that can go into making up modern-day and even prehistoric animals. (Something similar happened with an explosion in the diversity of land-based plants about 400-million years ago, in the Devonian period.)

This is a quantum leap.

A profusion of widely diverse body types and anatomical plans arose, some constituting direct predecessors to animal life as we recognize it today (for example, if it's mobility you're after, four limbs--not more, not less--turn out to be really useful). Many many other plans, almost certainly the majority, were less optimally adapted and now belong to extinct lineages--such as Opabinia, with five eyes and a nose like a fire hose, or Wiwaxia, an armored slug with two rows of protective upright scales.

Interestingly enough, the Cambrian explosion was sufficiently powerful, diverse, and creative that no design template for a modern animal post-dates it. In other words, structurally and conceptually, pretty much every animal we see had a recognizable predecessor dating to this period. To be sure, evolution can produce shockingly powerful advances given a few hundred million years, but the point is that it was the seminal moment in the creation of multi-cellular life, where "a thousand flowers bloomed." While many were proven more or less in short order to be false starts and dead ends, the point is that the intensity of experimentation led to some extremely durable and well-proven animal models.

Take a look (click to play the 25-second PBS video):

What has this to do with BigLaw?

My thesis is that since, say, around 1980, we've been living in an ecological mono-culture: We have all been one-celled creatures, in the sense that we have all had one and only one strategy: Growth.

Aside from our "mono-strategy" as an industry, we have had:

• Mono-associate career paths (8 years, plus or minus, of lockstep to partnership);
• Mono revenue models (the billable hour);
• Mono levers for increasing profitability (primarily, by increasing leverage);
• And mono techniques for gaining competitive advantage (primarily, lateral partner recruitment).

I believe we're on the cusp of our own "Cambrian explosion," where we may begin to see a wealth of experimentation with different business models.

If the Cambrian explosion of 540-million years ago is any guide, there will be a lot of false starts and dead ends, a/k/a extinct species and firms. But there will also be some far-seeing, fast-running, high-flying, incalculably intelligent designs.

Stay tuned for the next installment in this series.