Law firm leaders frequently ask, “Where is the blue ocean?” What they really mean is, “Where are the opportunities? What practices, locations and industries are not being fully served; where could the firm gain a “first mover” advantage?” But when faced with a rare opportunity to be a first mover, most firms balk precisely because it is a blue ocean: there are no precedents, there will be no payoff in the current year and there is a risk they could lose their investment.
Yet, law firms routinely take great pride in believing they have a long-term perspective. It is the justification they use for having slow and cumbersome decision making structures and taking a pass on trends until they have been fully accepted by other respected law firms. What they fail to appreciate is that not jumping at short-term opportunities does not necessarily constitute a long-term perspective.
My Edge colleagues and I have the pleasure of working with law firms around the world, especially in countries with a British law heritage (places like Australia, India, South Africa, Canada and, of course, the U.S.). Because there is something of a competition in many of these places between English and American law, we are frequently asked about the differences we see in the management of law firms in various countries, but especially between the U.S. and the U.K. I think my colleagues would agree that the single greatest difference is the time horizon on which issues are viewed. Perhaps it’s their history of being colonizers, but the Brits seem comfortable with talking about making investments in practices, offices, lawyers and countries in a perspective of five or ten years. Now, U.K. firms can be as short-sighted about profitability as anybody else, but, on balance, U.S. and U.K. law firms seem to see the world quite differently.
Perhaps it is the fluidity of U.S. professional partnerships without non-compete contracts leaving people free to regularly change firms, or maybe it’s the cash basis accounting permitted for partnerships under the U.S. tax code. Whatever the cause, the focus of American law firms, despite their self-image, is staggeringly short-term. As a result, long-term thinking is viewed as anything beyond the current fiscal year.
U.S. law firms have a difficult time dealing with the level of investment required for true “blue ocean” opportunities. My most recent reminder of this was two weeks ago when I tried to find law firms with an interest in India. My partner, Bithika Anand, will be working with me in Chicago later this month. Bithika is the leading Legal Consultant in India and counts the bulk of the 20 largest Indian firms as her clients. I thought it would be a good idea for her to meet with some of the larger Chicago law firms and trade information. The firm would get to tap her knowledge of the Indian legal market for free and she develops a contact that could be of future value to her clients.
To my surprise, only one firm took us up on the offer. The others declined because, “If we can’t open an office there, we don’t have an interest.” Now, India has over a billion people and is as blue ocean a legal market as can be found in the world since non-Indians are prohibited from practicing law there. But, literally as I write this, guess who is meeting with the Indian Law Society on the opening of legal practice to foreigners – the British Law Society. It may not come tomorrow, but it will come in the reasonably near future and U.K. firms are actively starting to invest.
So, it was kind of a rude wake-up call for me, recognizing that, if a firm is unwilling to invest an hour in their own conference room on what may be the most untapped legal market in the world, it is hard to picture U.S. firms dealing with all of the other practice, business model and technological blue oceans that represent their future profitability. And that may well be the key to competing in a global legal market.