The global financial crisis (GFC) in 2007/8 was a wake-up call for law firms, who had for decades worked on the assumption that doing excellent work was all that was needed to ensure their continuing prestige and profitability. While increasing competition in the 1990s had caused many firms to develop strategic processes, these were largely informal and unsophisticated – until the recession hit, and suddenly tough decisions had to be made.
In an article in The Practice, published by Harvard Law School’s Center on the Legal Profession, Professor Laura Empson is interviewed alongside Professor David B. Wilkins, faculty director of the Center, on how strategy has evolved in law firms and who is driving it.
‘The GFC raised big questions around strategy, because if you can no longer make money by doing everything, you have to start making decisions about what to stop doing,’ she says in the article. If you were a senior or managing partner at a firm before the recession, you might have considered privately that some practices were not part of your core business, but as long as they were profitable there was no real reason to question them. However, if suddenly those practices are no longer looking as profitable, you have the mandate to make the choices you’ve wanted to make for years. Because if you close down X practice, Empson says, ‘the rest of the partners won’t be banging on your door saying, “Why is so-and-so gone?” They’re going to be sitting in their offices thinking, “I’m so glad it’s not me”.’
Empson goes on to describe the complex and shifting relationships between the groups of people who contribute to strategy: the partners, the firm leadership, and a new group who are growing in power and importance – management professionals.
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