One of Canada’s largest firms seemingly collapsed overnight. But, like most law firm failures, the collapse was a long time coming.
Canada’s online legal magazine, SLAW, sums it up well in this post, Requiem for Heenan Blakie:
Heenan Blaikie died from a combination of greed, poor management and failed leadership wrapped together in an antiquated business structure ill-suited to “more for less” client demands in a marketplace gradually filling with non-traditional competitors.
As I have said repeatedly, the Canadian legal profession is now entering the most disruptive period of time in its history. It has never faced such strong client demands for value and efficiency. It has never faced competition from non-traditional legal providers.
These are structural changes that never go away; they amplify.
And all of this in an environment of flat legal services demand, over capacity and legal tech entrepreneurs!
Layer in partners who are more loyal to themselves than to the firm and one can see that Heenan Blaikie (like every other law firm in Canada) was a house built on sand, not bedrock.
I fear that many of us can insert “name of American law firm” in place of Heenan Blaikie and tell the same story.
Yes, we’re chatting about this in my circles. What does this mean? Why? What will it take to change law firm culture and business models?
Some argue for the ability of non-lawyers to co-own law firms, thereby giving more control of the actual business function to the true professional business people.
Some argue we need true business development and sales people. Lawyers are not necessarily cut out for this.
Some argue that the services themselves need to be repackaged and sold (think AFAs).
Some argue that the growth through lateral hiring binge is unsustainable and a leading cause of law firm failure.
It’s the compensation plans. No, it’s the commoditization of legal services.
And then there are those lawyers who just want things to go back to the way things were. Institutional clients. None of this business development crap.
There are no single right answers. And there are no single wrong ones here either. These are all contributing factors, leading to a perfect storm that will continue to result in the roller coaster of growth through acquisition, and big law failures, along with a lot of mid-sized failures as well.
I’d like to add another layer to the conversation of change and disruption in the legal industry: There is a generational shift taking place and very few people are talking about it, nor the impact it is having on our sales culture, nor our business culture.