What distinguishes a firm is a combination of factors, including size, profitability, quality, culture, attorney satisfaction and practice strengths, a group of legal recruiters and consultants told Law360 Pulse. Size isn't the most important element, they noted, citing a variety of midsize shops and boutiques that specialize in certain practice groups and industries, and are in turn seen as go-to venues from certain clients and prospective lawyers in those areas.
The key distinction among those firms is that they are not "trying to be too many things to too many people," said Kent Zimmermann, a legal management consultant at the Zeughauser Group. "The key is that relative to the firms you're going to be up against for the best people, clients and matters, you're competitive."
All signs point to more industry consolidation in the years to come, according to legal consultants. Many firms are also facing pressure to grow, as they experience huge surges in demand in practice areas like corporate transactions in response to a frenetic deals market. Still, growth alone won't separate one firm from another, experts said.
What's more important is where firms are placing their focus. Several small litigation and regulatory boutiques, for example, win the best work from clients because they have top experts in those practice areas and track records of success, consultants noted. The areas they're focused on also don't demand a 1,000-lawyer firm across 10 offices, they said.
Advancements in technology have also lowered the cost burdens of litigation and discovery that once separated BigLaw firms from smaller shops.
"There are a number of firms, certain FDA or white collar boutiques that are not large, but they're taking work from the larger firms because those clients don't need a global footprint and some of the other things that come with sheer size," said Dan Binstock, a partner at recruiting firm Garrison & Sisson.
Smaller firms that punch above their weight are adept in their messaging to clients and often among the quickest to offer opinions on the upsides and downsides of a particular issue, said Michael Rynowecer, president of BTI Consulting Group, a legal research firm. A key attribute among those firms, said Rynowecer, is that they're hyperfocused on a select issue, such as the tech industry or a certain type of transaction, and relentless in their marketing around it.
"The smaller you are, the more communication is required to acquire this leadership position," he noted, "because you've got to break through a lot of noise to make sure your [voice] gets heard."
Jeffrey Lowe, a managing partner of recruiting firm Major Lindsey & Africa, said that a notable portion of the industry has learned the hard way that growth alone won't lead to more success. Around the turn of the century, Lowe said, many firms wanted to be the next Latham & Watkins LLP, a firm that today has more than 3,000 attorneys spread across the globe.
"They set out on a path to grow and grow and many discovered that just adding bodies doesn't make you Latham," Lowe said. "A lot of firms have realized, much better today, that it's more than just numbers. It's about practice expertise and why clients are coming to your firm."
"Size doesn't necessarily mean anything," Lowe added, pointing as an example to Wachtell Lipton Rosen & Katz, a firm that had 279 lawyers at the end of 2020 and ranked No. 33 on the Law360 Pulse Leaderboard and No. 6 on Law360 Pulse's Prestige Leaders list.
Wachtell is a major player in the corporate mergers and acquisitions and commercial litigation markets. Its competitors include behemoths such as Kirkland & Ellis LLP and Latham. But as those firms have continued to expand – Kirkland's U.S. attorney headcount grew by more than 1,000 between 2014 and 2020, and Latham's jumped by about 500, according to the Law360 400 – Wachtell has grown only marginally.
Yet that has had no impact on Wachtell's strong presence in its corporate practice focus areas. The firm continues to regularly advise on some of the biggest transactions, and it reeled in more than $1 billion in gross revenue in 2020.
Wachtell partner Daniel Neff, co-chairman of the firm's executive committee, told Law360 Pulse that the firm is not interested in being a "volume business" and is selective about the matters it takes on.
"Our mission is to be the go-to firm for the most significant issues that our clients confront," said Neff, who has been at the firm since 1977. "That could be large deals, board-related issues, major litigation or investigations. We are rarely the outside general counsel to companies. Rather, we've sought to be the firm you call when you have a major challenge or major transaction."
Neff stressed that there are many different strategies for law firm success. For Wachtell, he said, that strategy has been working in one New York office where every lawyer traditionally has had the chance to work with each other and where the firm maintains a selective hiring approach.
"We're not looking to hire 100 people a year," Neff said. "To train them properly, to inculcate them with our values and approach, it becomes impossible with those numbers."
To be sure, BigLaw's growth in size and profits is placing pressure on some midsize and small firms, especially those in smaller cities with corporate merger and acquisition and private equity practices, experts said. Big firms right now are raising salaries and "raiding" some of these smaller shops for associates, said recruiter Binstock.
"It's one of the challenges keeping managing partners up at night at these smaller firms in these smaller cities," he said.
Zeughauser consultant Zimmermann added that in this environment, "being a small firm trying to do too many things is a particularly dangerous place to be."
But even as trends point in the direction of more industry consolidation, sources that spoke with Law360 Pulse said smaller firms and boutiques will still be able to occupy leadership positions. It will just depend on how one defines a leader.
"I've pleaded this for as long as I've been doing this. You just have to know who you are [and] be sure to communicate that to the market," Lowe said. "The clients will come and find you if you're really that great at it."
--Editing by Pamela Wilkinson, Kerry Benn and John Campbell.
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