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John M. Westcott

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John M. Westcott

This chapter traces the growth in size and scope of law firms from the late 1960s until 2007. The largest law firm in size in 1970 was Shearman & Sterling, which had a total of approximately 200 total lawyers. In 2016, the largest firm practicing primarily in the U.S. was Latham & Watkins, which was over 10 times as large, having over 2,800 lawyers. It had practices in 31 offices in 14 countries. In addition to the remarkable growth of U.S. law firms, law practice became more specialized; many more practices and offices developed; the recruiting patterns changed; there was much more mobility among firms, billing rates increased; the consolidation of large law firms increased, and law firms concentrated on profitability, which put more pressure on partners and associates to bill more hours. As a result, the legal marketplace has changed radically, with less dependence on clients for the services of one major firm, and loyalties among partners and client relationships have become much looser and less strong.

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John M. Westcott

As a result of these changes, most large law firms adopted a strategy of growth. I contend that this strategy is no longer sensible for most law firms, particularly since the recession of 2008–2009. Most large law firms are too large, with many practices and offices that are not competitive. In contrast, elite New-York-City-based law firms did not expand too much, and are not awkwardly large or uncompetitive. I recommend that large law firms should assess their practices, offices, and lawyers. They should go back to a high partnership elevation standard and review all partners every year, to evaluate their strengths and weaknesses as well as how fair their compensation is.

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John M. Westcott

There are some key strategic building blocks that every law firm should have in place that I elaborate on in the subsequent chapters: 1. Firm Governance (Chapter 4) 2. Client Service (Chapter 5) 3. Assessing Firm Performance (Chapter 6) 4. Evaluating Lawyers (Chapter 7) 5. Fair Compensation (Chapter 8) 6. Strong Administrative Staff (Chapter 9) 7. Treating Everyone Professionally (Chapter 10) 8. Balancing Professionalism and Quality of Life (Chapter 11) 9. Succession Planning (Chapter 12) 10. Retirement Policies (Chapter 13) Through logically and objectively setting the correct strategy, every firm should build an attractive and profitable culture. By concentrating on building a lasting institution, firms must plan for the future rather than have the firm serve each partner’s personal interests.

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John M. Westcott

Law firms have grown very large, and, like large business corporations, need more centralized management to handle the complexity of their size. Governing a large law partnership needs to recognize the difference between a large law firm and other large businesses – the partner, who is both an owner of and participant in the business. Also, law firms need leaders of practice areas, who must set the tone for the practice area as well as being superb administrators. Most practice areas require a mixture of leaders, those who epitomize the practice skills to which others aspire and those with administrative and organizational skills. There is a need for other leaders in other functions, and the large law firm has to reward adequately its leaders internally as well as compensate those who do the legal work and generate clients. Fundamentally, there is a need for strategic planning in most law firms, and a need to present the law firm as distinctive.

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John M. Westcott

Law firms need to respond to their clients, who have become more demanding in the years since the recession. They need to position themselves to deliver value to clients and to shape themselves in the positive ways that the client demands. In particular, they need to reduce their bills, control costs, and institute the efficiencies of practice management, including the ability to set and meet a budget and forego work that does not add value in the client’s eyes. They should promote and present a diverse workforce and take steps for the advancement of women and minorities, both for client recognition purposes and to improve themselves.

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John M. Westcott

Law firms should review and assess the performance of the firm, its practice areas and offices regularly, just as businesses do. Leaders of the firm and practice areas and offices need to be held accountable for their performance for the firm to be truly competitive. The law firm should support and invest in the most effective practice areas and withdraw support from the weak ones, unless there are overriding strategic priorities.

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John M. Westcott

The excellence of its lawyers is the factor that will distinguish a firm from its competitors. Substantive excellence will differentiate a firm from the pack, so everyone in the firm should be concentrating on improvement as a tenet of firm culture. Every firm should evaluate each associate regularly, in order to give him the best chance to develop. Every partner should be evaluated regularly, because strong partners and weak partners need feedback and the opportunity to improve. Lateral partners should be evaluated as regular lawyers in the firm so they do not get preferential treatment. It is important to take care in the evaluation of lawyers, in order to stress the firm’s values.

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John M. Westcott

Both young and developing associates and partners need to be compensated fairly, consistent with the profitability of the firm and their contributions. Partners who feel they have been fairly and consistently treated for compensation purposes over the years generally have the patience not to expect to be rewarded for every success instantaneously, but to rely on the firm’s continuing long-term judgment to treat them justly over a long career. Associates should be compensated fairly for their contributions, consistently with equally profitable firms; but a lot of large firms overcompensate associates because the firm has pretentions to compete with more profitable and superior firms. The annual review of every lawyer, young and old, is an opportunity to give feedback that should not be lost.

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John M. Westcott

A large law firm needs a strong administrative staff. Most large law firms need an Executive Director who is a seasoned and experienced business professional, both to signal to the rest of the administrative staff the importance of the business aspects of the legal practice and to provide leadership for the staff and feedback for the top administrators. Firms should not rely on their lawyers for specialized business tasks which would be better done by an administrator; and large law firms need leadership and expertise in the areas of billing, finance, practice management, computer systems and applications, operations and space, personnel, and technical areas such as the library. Traditionally, law firms developed their own administrative staff, but increasingly large law firms require assistance from professionals who have developed their skills in large businesses, such as finance and technology. Also, they have a need for more computer-literate aspiring administrators who have upward mobility and need to be managed skillfully.