Have Kirkland and Latham Taught Us Nothing?

Throw Paul, Weiss in this group too.

You would almost think these firms were the hottest high-tech IPOs. Their growth and margins are stunning. They developed a competitive moat with strategies and approaches few firms use – or even try. The spoils go to the disruptors – and these firms are changing the rules like few others.

Every firm stares at their profits and growth – but few dig deeper to look at what they do below the surface.

Law firms of all stripes can learn and apply the lessons to their firms. They offer a path to outsized performance for any size firm. Here are 7 behaviors these firms adopted – and live by – all size-agnostic:

Recognize the Cold Hard Facts

These firms stare down the uncomfortable and the unknown. They deal with these issues head-on. No deferring nor waiting to see. These situations demand actions – and they act decisively.

Unrelenting in Meeting Goals

No dabbling here. Look for big and bold actions. They commit and act. And – they put serious resources behind their strategic decisions.

Industry, Industry, Industry

No window dressing here.

Latham, Kirkland and Paul, Weiss have deep industry programs. Kirkland’s first private equity symposium for these clients and prospects was held in 1984. Kirkland staked out a market position before most anyone knew PE was an industry. Paul, Weiss is embedded in Media, Sports and Financial Services.

Latham is highly focused on growth industries, global industries, and industries with large-scale and complex needs. It fits their market approach to deliver high-end integrated sets of legal services.

These industry programs aren’t window-dressing. The industry programs are fully funded and spare little expense. Kirkland has a partner in charge of making sure business intelligence finds its way through the firm and to clients.

Read more on industry programs here.

Break the Rules and Make the Rules

Paul, Weiss plucked an M&A star out of Cravath in Scott Barshay. Cravath partners didn’t leave Cravath – until Paul, Weiss made an unrefusable offer. This started the end of the unbreakable firm/partner bond.

Kirkland grew their ranks by picking up associates and partners from top-tier private equity practices – all before taking practice groups and conducting lateral raids were a thing.

Latham redefined comp to keep the partners at Latham.

Put Capital at Risk

Unafraid to pay potential market value for top laterals – these firms went and grabbed the best of the best. Like most savvy financial decisions, the payback was clear and obvious. No ROI calculations needed.

These firms changed their comp and decision-making processes to enable them to make these market-breaking offers. (Note: also another case of bold decision-making.)

Embrace Rigorous Decision-Making

These firms know the decisions they need to make – and make them. They understand their risk tolerance and goals – these provide the guide rails for the decisions. Knowing your risk tolerance – and the upside of your decisions – before issues arise enables fast decisive action.

Client Centricity

Clients sit at the centerpiece of their strategy. They are also working to improve the client experience, understand their clients, and educate their clients. They want to own their clients’ top spot. These firms embrace feedback, bring an unmatched commitment to help – and clearly put themselves out on a limb for clients. Clients know this – and pay their market-setting rates for this combination of better outcomes and superior client experience.

What to Do

The market offers room for more firms to adopt this emboldened approach. It starts with the next decision, the next lateral, or the next proposal. These recommendations and observations can help you get started:

• Play to win – don’t dabble or hop. Pick fewer and better shots with upside.
• Compare the cost of a lateral partner to the 3-year return they can bring instead of impact on current profits per equity partner.
• Define – in writing – the key risks the firm is willing to take and avoid. Assign risk value for deferring decisions. Put these to a leadership committee vote for adoption.
• Start an industry group – fund it and make a partner accountable for quantifiable results.
• Don’t hire laterals you think you can afford – hire laterals who can add exponential value.
• Act – law firms will experience more change and volatility in the next year than they have in the last 5 – the only thing worse than a bad action is no action. Law firms can recover from mistakes – but rarely recover from omission.
• The field is still open to be the Kirkland, Latham or Paul, Weiss in your market. This goes for industries – where smaller firms can thrive on industry knowledge, regions, and new markets.

Tomorrow’s law firm market leaders aren’t waiting for markets to develop – they’re shaping them. Whether it’s AI litigation or another emerging industry, the question isn’t if your firm should act. The question is: will you act fast enough?