The meltdown we are experiencing today in this country, and in fact around the world, is obviously not a traditional downturn. It will be deeper and it will last longer (as I predicted some five months ago in a series on my Prospering in Tough Times blog, Why the Recession will Be Deeper and Longer than Expected).
Law firm managing partners with restructuring practices are likely to soon be very disappointed with the ability of their restructuring practices to offset the downturns in other practice areas. Through no fault of their restructuring practices, the downturn in demand in other practice areas is so great that it is unrealistic for restructuring practices to be a complete offset. BUT, something for which restructuring practices are likely to be taken to task is their inability to grow the market share of their practices amidst the greatest market opportunity in many decades.
The challenge for leaders of restructuring practices is that the market, albeit larger, is very, very different than in past downturns. (This is the case beyond just law firms.) The nature of assignments has changed. Buying patterns have changed. And, practice economics have changed.
Woe be to the restructuring practice leader that has merely dusted off his or her playbook from the last downturn.
And, even more woe to the law firm managing partner lulled to sleep (really to “inaction” as I don’t know many law firm managing partners sleeping well these days) by the thought that he, or she, has a restructuring practice that will be effective at capturing a fair share of this very different market.
Like in other segments of the restructuring profession, the law firm market is quickly becoming a two tier market. A handful of firms understand the new market dynamics and are building their practices to capture high market share in the changed market. The rest are growing modestly, but are largely just waiting for the boom times to come. They wait with their old playbook on their desk. In some cases they wait with a higher ratio of dinosaurs than of lions eager to get after capturing the new market segments. And, in almost all cases they spend a fair amount of time putting on their game face so they can...with a straight face... tell others that “we are busy.”
For practice area leaders at firms which fully understand the new dynamics of the restructuring market place, these truly are the best of times.
For practice area leaders who don’t understand the new dynamics, they will quickly come to understand that merely being personally busy will not earn them the respect or the big bucks from their partners. In fact, given that ours is a society that likes to put fingers at others, I expect that many restructuring practice area leaders will soon be the target of scorn (or worse) from their colleagues who will not understand why their restructuring practice is not growing dramatically and generating spillover work for other practice areas.
Fear not, soon a headhunter will be calling as the musical chairs of practice area leaders accelerates fueled by managing partners looking for an easy solution to the problems with their restructuring practice and by headhunters benefiting from churn. In fact, I fully expect that we will see an individual or two who does a three-peat, i.e., practices at three different firms within this downturn in an effort to stay one step ahead of the word getting around that they play the game with an out-of-date playbook.
These are such interesting times! Change provides such great opportunities for those that understand it, embrace it, and act on it.
Coming next: This five part series concludes with a look at the likely characteristics of the winners in the battle for market leadership in the restructuring legal market. The series started here.
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