Cocktail parties inside and on the perimeter of the legal industry will buzz for months about Brobeck’s late January announcement of its dismantling. Some firm leaders might whisper, "But for the grace of God go I," as they quietly noodle about what led to this fateful decision.
Other industry insiders might be willing to make Brobeck iconic again, by pointing fingers at what they interpret as the visible steps leading to its failure. There will be legendary lessons to be learned. However, there are several lessons that—at least when viewed individually—don’t rise to parable status.
Lesson 1 not to learn: Strategic focus is bad
Brobeck bet on the come of the technology industry and shadowed the industry’s meteoric rise and fall.
Corporate America has proven for decades that putting a positioning stake in the ground works. It not only pays-off in customer and employee loyalty; over time, it builds into measurable, quantifiable shareholder value. Law firm positioning programs are still in their relative infancy, but there are some notable successes: Howrey’s In Court Everyday—Womble Carlyle’s beloved bulldog, Winston—Haynes and Boone’s Are you Changing?—Kirkpatrick & Lockhart’s Challenge Us—have all proven to raise the firms’ profiles and can be linked to increased revenue. There are others, but in most cases, it’s too early to measure the impact of strategic focus.
The success of positioning and branding programs isn’t measured in days or months, or even years. Corporate strategy leaders say, "decades." If a firm focuses its strategy, it can focus its spending. This is defensible business planning in good economic times and bad. Over time, it will pay off.
Lesson 2 not to learn: Branding doesn’t work for law firms.
Brobeck invested millions on television, print and other advertising and look where it got them.
Brobeck’s advertising investment catapulted the perception of the firm from a middle-of-the-pack San Francisco-regional to a national—even global—player virtually overnight. Brobeck is a brand name. There are disputes as to the effectiveness and appeal of its advertising campaign; however, the sheer volume and reach of its media buys dominated any perceived shortcomings in its creative execution.
Branding in law firms works—as long as firm leaders have (1) the courage to distinguish their firms in memorable ways, (2) a commitment to a long-term strategy, and (3) the financial investment to repeatedly and consistently appear in front of the decision-makers in their target audiences.
Lesson 3 not to learn: Growth is bad.
According to the American Lawyer, Brobeck’s non-equity lawyer ranks grew by 163 lawyers, or 30% from 1999 to 2000. They laid off at least that many when the tech-boom took its nose-dive.
Growth on its face isn’t bad at all. Planned growth—growth that results from an increase in client demand or that is driven by a five-year strategic plan is a solid business blueprint.
Sometimes the desire for growth is driven by arrogance—the "if we’re rich at this level, think how invincible we can be if we’re twice as big" thinking. This is problematic, because an arrogant mindset never seems to tolerate any contingency or scenario planning—for economic downturns, foreign wars, terrorist attacks or industry meltdowns.
Lesson 4 not to learn: Leverage creates more problems than it has benefits. Building profitability through growth in leverage can’t be sustained.
Leverage (the number of a firm’s lawyers divided by the number of equity partners), if part of a much larger plan to manage client relationships and service delivery, can dramatically and positively affect a firm’s profits. If not part of a more comprehensive plan, however, leverage results in one of two things—in boom times, it increases profits and, in bad times, it reduces profits. (The firm is making less revenue, but it still has all these mouths to feed.)
Brobeck and other San Francisco/Silicon Valley firms increased leverage from 0% to 45% from 1999-2000, according to the American Lawyer. Not surprisingly, these are the same firms that had the highest lawyer lay-offs, starting in 2001 and continuing two years later. This was predictable.
Strong cases can be made for and against leverage as a management strategy. As long as its part of a bigger client relationship management program, leverage can be a valuable firm asset.
Lesson 5 not to learn: The CEO-model of leadership doesn’t work in a law firm.
As chairman, Tower Snow led Brobeck’s growth, including its geographic diversification, expensive lease commitments, etc. Then he left. Because law firms are flat structures, consensus building is the best way to "manage" partners and keep the trust.
Articles will certainly be written about Tower Snow’s legacy at Brobeck. A strong, visionary leader can inspire loyalty among employees and clients, but these leaders aren’t always best for the long-term health of the organization. In fact, for all their charisma, frantic gesticulations and change programs, these "leaders," according to Jim Collins in his 2002 best-seller, Good to Great, "can’t lead their companies out of the fog."
Collins describes the type of leader that both leads and sustains the health of an organization. Level 5 leaders, above all, have "extreme personal humility with intense professional will. They channel their ego needs away from themselves and into the larger goal of building a great company."
The problem with Brobeck wasn’t its CEO-leadership model; it was that the CEO loomed larger than the firm.
Deborah McMurray is a strategic marketing consultant for the legal industry. She can be reached at 214.351.9160 or firstname.lastname@example.org.