Have lawyers been seduced by success?
You may be so busy billing hours that you won't have time to read Robert Herbold's new book Seduced by Success. That's too bad, because it's probably a sign that you need to spend fewer hours billing and more hours planning for the future.
If you like money, it's a great time to be a lawyer. In Citigroup's Law Watch survey of "153 US law firms broadly representative of the industry," law firm revenue has gone up 9.8% per year since 2001. But as Bill Gates put it: "Success is a lousy teacher. It seduces smart people into thinking they can't lose." We know lawyers are smart people. Do some think they can't lose?
Herbold's book starts with the history of General Motors, the leading auto manufacturer in the world for nearly half a century. GM was the first company to hit $1 billion in sales, and they did it back in the 1950s, when a billion dollars was a lot of money. As late as the 1970s, nearly half the cars sold in the US were made by GM. Then the world changed and GM didn't. High gas prices, foreign imports, escalating labor costs, globalization and other factors started them sliding downhill through a series of losses. These days, GM's share of the US market is closer to 20% than to 50%, and its future is uncertain.
The book does not predict whether GM will bounce back or go the way of Britney Spears. But it does explain why GM and other large companies have declined in terms of "three destructive behaviors that are created and nurtured by success."
The first destructive behavior is "lack of urgency." As a business development consultant, I spend a lot of time talking to lawyers about the threats from other firms. Some law firms are aggressively increasing efforts to satsify current clients and find new ones. They are taking business away from the conservative firms that are acting as if the world has not changed since Nixon left office. But in the firms that most need to deal with competitors, the reaction is often exactly what Herbold described: lack of urgency.
I am reminded of a conversation a few months ago with the Chief Marketing Officer at an Am Law 100 firm that is currently flying high. She was complaining about her lawyers' lack of support for marketing. They simply would not take the time to do some very basic things to protect their position, even with the one big client who accounted for a sizeable percentage of their revenue. She kept telling lawyers that if they ever lost that client, the whole house of cards could start to tumble. But most lawyers were too busy doing today's work to spend time planning for tomorrow. They had a lack of urgency.
The other two destructive behaviors Herbold describes are are "a defensive attitude toward any kind of new thinking" and an "entitlement mentality." Do those sound familiar?
Most of Herbold's book describes the details of nine "success-induced traps" and how to avoid them. The first trap is "Neglect: Sticking with yesterday's business model." As Herbold says: "You believe that what enabled you to become successful will enable you to be successful forever." Anyone who believes that will be wrong. The only question is when.
As jazz great Miles Davis said in his autobiography: "The world has always been about change." And each time the economy shifts, there are winners and losers. The winners are the ones who were shrewd enough to plan for the future, and lucky enough to be right.
When will the law firm business model change? Many experts believe the answer is quite soon.
According to the 2007 Hildebrandt/ Citigroup Client Advisory (p. 11), a number of factors "clearly suggest that many aspects of the traditional model for structuring and operating law firms may be changing." These factors include more systematic approaches to client relationships and business development, two tier partnerships, the use of contract lawyers and other types of outsourcing, and a new emphasis on "people issues" to retain the most talented lawyers. Put them all together, and as Business Week (9/18/06, p. 43) said last fall, "Few industries seem more ripe for radical restructuring than legal services."
Admittedly, Herbold's book does not discuss how his ideas apply to law firms, and some of his nine factors don't seem particularly relevant to lawyers. If you buy the book, you may tire, as I did, when the details mount in his corporate histories of Microsoft, Fidelity, Sony, DEC, Kodak, Nissan, IBM, Southwest Airlines, and many others.
But I believe that every lawyer should invest in this book and review Herbold's fundamental argument. If you're one of the Am Law 100 partners that earned an average bonus last year ($1.2 million, according to The American Lawyer, May 2007), the book's $27.95 price shouldn't bother you. The critical concepts can be skimmed in less than an hour. Is it worth an hour to consider how to protect your future?