There aren’t many law firms that have been unambiguously successful in the post-down era. Many within the Am Law 200 have posted stunning growth in revenue, but slid backwards in profits. Others have seen profitability rise, but have failed to grow the top line. In each of these cases, the success of the firm requires a caveat – an admission that not everything has gone perfectly. Only a small group of firms can claim success without a caveat. Among this elite group, Kirkland & Ellis and Latham & Watkins stand out. It is difficult to manage a large law firm and to do so as successfully and consistently as these two firms is incredibly impressive. Their management teams deserve the standing ovation which Roy Storm gave them in the Law Firm Disrupted column last week.
The most interesting question is not if these firm have been successful, but how they accomplished that success. It is tempting to attribute Kirkland and Latham’s success over the past several years to the same factors. The law firms share many similarities after all. Both firms are extremely large by law firm standards – ranking as the 1st (Latham) and 3rd (Kirkland) largest law firms in the world by revenue last year. Both are relatively well rounded in terms of their practice area strengths – with extremely strong transactional and litigation teams. Both are highly global and extremely profitable. The firms even share more mundane similarities. Latham and Kirkland were both started outside of New York City, an interesting detail in an industry which is dominated by firms with roots in New York and London. These similarities however hide important differences. An in-depth look at the data on these two firms reveals they have followed different paths to success in the post-downturn era. One firm has followed a fairly traditional path toward growth and increased profitability, while the other has broken with law firm management orthodoxy. The differences in these two, seemly similar, firm’s strategies point to broader trends in the legal industry. They also provide an interesting case study in the strengths and weaknesses of different law firm management strategies.
