The following post originally appeared on Forbes | February 3, 2015
Without searching the web, see if you recognize any of the following brands: Brad’s Drink, BackRub, Blue Ribbon Sports, or Jerry’s Guide to the World Wide Web. None of them ring a bell? Not surprising. While it is unlikely that you’ve heard these names, it is also unlikely that you’ve navigated the last year without using at least one of their products or services. These are the predecessor aliases of, respectively, Pepsi, Google, Nike, and Yahoo!—some of the most recognizable and prolific brands in the world.
Recently, the law firm Morgan Lewis combined with more than 200 Bingham McCutchen partners, and nearly 500 other Bingham McCutchen lawyers, legal professionals, and staff. The Boston-based firm’s longstanding name didn’t make the trip, however, and one wonders how much to make of that.
Some of the most powerful institutions in the world dropped their names during their genesis; some for questionable alternatives. Have you ever really thought about the Yahoo! name? This invites the question: How important, really, is a name? There exists significant research regarding the effects of labels (or names) on the perception of products, people, and places. Likewise, there is an entire industry predicated on the development of corporate identities, including names.
A name certainly holds some level of value. And with that in mind, while some may consider the loss of the Bingham McCutchen letterhead a failure, I consider the rallying, consolidating, and bringing to safer shores a group of approximately 700 people so that they can continue to practice together, and do so from a more stable platform, a success.
A firm is so much more than its moniker. It is its people, beliefs, values, social and professional networks, ideas, friendships, client relationships, trust, technology, and capital, among other things—i.e., the firm’s embodiment. Though a firm’s name—its brand—ultimately becomes a symbiotic counterpart to that embodiment, it is all of the constituents flowing together with a level of synchronicity that ultimately makes a firm’s name valuable; not the other way around. And as Pepsi, Google, Nike, and Yahoo! have proven, rightly built embodiments can succeed without their legacy names.
Today I speak with Steven Browne, former corporate practice leader in the late Testa Hurwitz, former managing partner of Bingham McCutchen, and now, one of a small group of managing partners at Morgan Lewis. See our exchange below:
On What Led Up To The Decision To Join Morgan Lewis
Parnell: While the American Lawyer article gave us a good idea of the overall path that led to your combination with Morgan Lewis, on a more micro level, what led up to your decision to seek out a transaction of this magnitude? What were the catalysts that led to this?
Browne: Bingham’s strategy for a number of years was to become a successful competitor with the top tier, US-based law firms. We wanted to compete for the brand-name clients and to do the most highly sophisticated work for those clients. So, for a long time we had a strategy largely executed through combinations and lateral partner hiring that was really focused on adding and building out market leading practices. We were investing heavily for growth. And we were structured for a certain size—large—and were prepared for that growth. And then the legal environment changed.
We were fortunate in that we rode out the recession better than many firms did because we had a strong restructuring practice, and we were so heavily involved in financial services regulatory practice that, when banks started to fail and had their challenges, we did fine for a number of years until that started to clear up. Then, in late 2012 it finally caught up to us. We ended up having our 2009 in 2013, which was sort of a perfect storm for us. We came off a number of very significant litigation cases—some that settled, some that ended. We had made our second year of big investment in our global services center in Lexington [KY]. We also had a defection of a portion of our broker-dealer regulatory practice.
Collectively, those things created negative momentum and confidence issues which led to this trickle of departures despite the fact that we were financially sound. While our performance was down in 2013 and we had to pay our partners less, we were still profitable. However, we were actually slowly shrinking when our strategy and our structure were built around a certain size, a certain critical mass, and a growth strategy.
On The Options Bingham Considered Before The Combination
Parnell: That’s a tough spot to be in. Did you consider consolidation?
Browne: We had two choices: We could, from a strategic standpoint, consolidate around our core; shrink down, reduce our geographic scope, and become more of a middle-market firm and focus on being excellent at a smaller size and a smaller scope. Or, we could continue our strategy. Frankly, we wanted to continue our strategy. We thought it was the right strategy.
Even without the 2013 we had, we knew we were going to have to do something significant in terms of transactions, because once you reach a certain size, it’s hard to really grow other than incrementally. Even if you add five or ten lateral partners per year, when your partners are in the hundreds, it doesn’t really move the needle and get you to the next level.
We still had a fair amount of work to do to really compete with the most successful firms and we were focused on reaching that top level. The year we had in 2013 just moved that from concept to action and motivated us to stare it in the face. So we had a couple of choices—go one way or the other—and we decided that the right approach was to continue with our strategy.
On Who Was Involved In Bingham’s Decision-Making
Parnell: You said that “we” made the decision to continue with the growth strategy versus consolidating. I can’t imagine that “Steven Browne” made a dictatorial decision to continue on with the growth strategy. So who was involved in making that decision?
Browne: That’s a great question. And at some level it evolved over time. As you know, an interesting thing about law firms is that the talent—the partners—are actually the owners. However, they have a varying level of knowledge—the desire to have the knowledge, the sophistication—of the marketplace and law firms and how they are run.
Ours was a collaborative process. We had an excellent executive board. It operated like a board of directors who were very involved. We looked at [the choices]; we talked about [the choices]. As management we recognized the choice in front of us and started raising that with the executive board and got a dialogue going with them about the alternatives. I was an early advocate of continuing with the [combination] strategy because going the steady course was going to be too costly. Our structure was too large. There were too many offices to continue that approach, given the declining revenue we were facing.
On The Major Challenges Faced During The Combination
Parnell: What were some of the major challenges that you faced during the combination process?
Browne: You have to start from the proposition that you’re looking at two very large, well-established, long-standing law firms. That’s a very complicated transaction to do. It’s not like a 1000 person law firm taking on a 25 person law firm. And, it’s not like a corporation with a board of directors and separate group of shareholders who are really investors, where the board makes a recommendation, people like the price, they sell their shares, and they go on to other things.
[In a law firm,] you’ve got partners who are your talent and who need to be satisfied with the deal, both from the ongoing position that they’re going to be partners and working in the combined law firm, but also from the perspective as the owners; they have to like the deal. So you’ve got a firm that, combined, is well over a billion and a half dollars of revenue, 2000 lawyers, and 28 offices worldwide.
I think the real challenge that I saw, aside from how much work needed to be done and managing the process and keeping people motivated—because on both sides we were very careful to make sure this was going to work and work well—was just really holding it together, making sure people stayed together and saw the vision, believed in the opportunity, believed that we could execute on it, and believed that we would deliver. That was what I was concerned about the entire way through: Can we get to a point where we can bring a deal to the Bingham partners that is compelling and that they’ll immediately find obvious.
On Keeping The Partnership Motivated
Parnell: As Bingham’s managing partner, was there a particular strategy or tactics you used to keep everybody’s eye on the ball? To keep them motivated? I think most important during the combination process is ensuring that, basically, the partnership believes what’s coming out of your mouth—a very difficult thing to do in the scenario you were in. How did you do that?
Browne: The starting point as we came into 2014 was that the firm basically consisted of a core group of partners who, frankly, really liked practicing with each other and trusted each other—really excellent lawyers. So I think we started from a position where people did want to stay together, and that was very helpful. Also, I think I had shown people over the years that I was a “firm guy:” That I cared about the firm and the people more than I cared about, for example, my individual practice or my own individual goals.
I like to think that people knew that even if there were things going on that they weren’t fully informed of, that my decision-making was motivated by their interests. And I tried to communicate as often, and in as much detail, as I could. My view was not to just be a glass-is-half-full guy all the time, not to always put too much of an extra positive spin on the facts. I was direct with people about our challenges, about our strengths, about what it was going to take, and about what the ultimate downside could be, rather than simply saying “It’s all going to work out. Just trust me.”
On Handling The Media
Parnell: Talk to me about the media. What was your strategy? What was it like dealing with them at the time?
Browne: I took the approach that the media has a job to do and I respect that. I realized that the actual story—the fact that Bingham was financially sound, that we had a plan and a strategy, and that by and large our partners thought that we were going to be just fine—frankly, was not exciting news and was not going to sell newspapers. The idea that we combine two very strong firms and create a law firm powerhouse for the future, that’s a little bit more interesting. But it’s not as interesting as “Bingham’s in real trouble. Let’s talk about bankruptcy. And let’s say that they got in real trouble and had to get acquired.” So, frankly, I didn’t see how we were going to get much in the way of positive stories. Also, I learned pretty quickly that you cannot just put a toe in with the media and say, “Well, I only want to talk about these two things. And then I’m going to shut it off and not answer your other questions.”
So I reached the conclusion in discussions with others that the best thing to do was to try to help reporters by letting them know when they got something egregiously wrong. But going out and spending a lot of time and energy trying to tell our story and say everything was fine just wasn’t going to be believed, and it wasn’t going to be reported. So what that meant was that a lot of time and energy would have been spent unproductively when we had more important things to do.
On Dialogue With Clients During The Process
Parnell: Moving on to the clients. What kind of dialogue were you having with them? Were you getting concerns from clients? I read that you were continuing to get work—new work, new clients—as things evolved. Was there anything in particular that you had to do to keep that going?
Browne: Yes, we did get calls from clients, ranging from curious to concerned. Clients saying, “How are you doing over there?” to “Hey, just want to make sure everything is going to be okay because we don’t want to get caught short in the middle of a big transaction or big case and hear that you can’t continue to serve us.” And, so, throughout the whole process I think we did a good job of never losing sight of what’s most important, which is our clients and our talent.
We made sure, despite the distraction, that we continued to perform excellent work for our clients at the highest level, and that we retained our best people. We were communicative with [our people], including the associate ranks and staff so that they were comfortable and could stay focused on the work.
Frankly, we were honest with our clients. We acknowledged that we had our challenges; told them how we felt about it, that we were financially stable, and that we had the defection issue under control. [We told them] that we were dedicated to making sure that they didn’t suffer any loss of service and that they weren’t going to find themselves suddenly interrupted by our inability to continue to perform for them. And we were able to deliver on that promise.
On Dealing With The Banks During The Transaction
Parnell: Okay. Now the banks. Per the American Lawyer you breached a covenant at some point. What was it like dealing with the banks? How did you keep their trust in you as things evolved?
Browne: Just one technical point: we never breached a covenant. Given our position and the situation we were in, over time, we would have. But we didn’t.
But the real answer to your question is that we’ve always had a very strong partnership relationship with our lenders. Well before [the combination with Morgan Lewis], we treated it that way. We spent time talking with them about how to help us grow our business. We behaved like partners, and they always understood the fundamentals of our business and how we manage our business. Consequently, where a variety of people were looking and saying “Oh my goodness, this must be a really troubled institution, financially,” [our lenders] knew that we weren’t.
We just said “Let’s talk. And here’s where we are. And here are the numbers. And here’s who’s left. And here’s who’s staying.” When we got into the combination matter, we told them about that. We explained, honestly, what the challenges were to executing that and what the likelihood was, and we really just treated them with respect and like partners. I think they felt that they could trust us. And we got to the right result for us and for them.
On A Culture That Ultimately Withstood The Pressure
Parnell: Culture is obviously a huge factor in all of this. I’ve read a number of pieces that are pointing to the solidarity of your culture as the issue, the catalyst, which was causing the firm to crack. How did your firm look at combinations over the years to ensure that the firm or group you were adding matched your culture? Could you talk to me about that?
Browne: It’s interesting: As a firm that grew largely by combination and lateral hiring, there was always a concern about culture and building glue to bind everybody together. There has always been a sensitivity to how much effort you need to put into making sure you team up with people and firms that match your culture, and making sure that you invest in that culture and integration constantly.
Frankly, when I joined [Bingham] it was one of the things that I focused on. When I looked at the risks at that time, I said, “You know, this firm has a lot of different constituent parts.” Coming from a firm that was in a struggling period at [Testa, Hurwitz & Thibeault], I started thinking to myself “One way to look at firms is how will they react when things aren’t all rosy?” And that was my concern when I did my due diligence on Bingham: is the culture strong enough?
And, so, there was a lot of investment in [integrating cultures]: Partner Retreats where everyone was brought together. We managed the entire firm, not by office location, but by practices. People working across offices got to know each other.
Looking back, many of the people who peeled off and departed during the challenging times were people who were not long-time members of constituent firms or had come in on relatively recent combinations. There is a real challenge there, and in fact, some of those people are the ones that we lost.
When we came off 2013, most of the people that were at risk in that category had already made a decision to stay or go. We basically had a core of partners that was the vast majority of people who really wanted to be part of Bingham, wanted to continue to practice together, saw the value in the institution, saw the value in the clients, saw the value in the relationships they had and the opportunity to receive work from other people and refer work to other people on whom they could rely. At the end of the day, this is the part that impresses and pleases me the most. Because, as I said, besides the challenges of putting a deal like this together, the biggest challenge I thought for Bingham was for us all to stay together and execute on it.
On The Bingham McCutchen Name
Parnell: Can you talk to me about leaving behind the Bingham McCutchen name?
Browne: Well, we spent a lot of time talking about it and thinking about it. And what started and really colored the decision was that, for a lot of reasons, we settled on a structure for a transaction that wasn’t a merger. With that backdrop, changing the name became a more complicated issue in any event. Morgan Lewis had just spent significant energy and money working on the brand of Morgan Lewis. We just looked at everything from the logistics of changing the trademark registration to domain names—many things—and decided at the end of the day that what mattered to the clients was the people—our people.
The strength of a law firm is not its name. It is the lawyers and the staff and the talent and the business they have. What we brought to the combined organization was that talent. We brought those practices and the clients with it. And, so, from my perspective, the clients care less about the name, and more about their lawyer working with them from a strong platform. And in this case, it’s an even stronger, more diverse, more stable platform than before, with incredible bench strength and broader geographic coverage.
There is no doubt that some number of Bingham partners would love to see the Bingham name preserved somewhere. But in reality, what was likely was that it would be preserved in just a legal name; it would be a third name. And today, you’re lucky if a law firm is referred to by anything other than the first name. It’s unusual. So at the end of the day, we just factored it all in and [leaving the name out] was the right decision to go with.
Parnell: So let’s just be direct with the public: You were not muscled by Morgan Lewis. This was a joint decision. And it sounds like one that was well educated by talking to the partnership and clients as well.
Browne: Yes. Just to be transparent about the process: We weren’t muscled by anything or anyone. One of the themes that we started with—and I give Jami McKeon a ton of credit for this, along with many other things—was doing things collaboratively. She was very much focused on, from day one, “How do we think about this as a combined firm? Let’s get away from ‘us and them’ as early as we can and think about how we manage this whole process and the end result for what’s best for the clients and what’s best for the combined firm going forward.”
There were many issues that needed to be tackled during this process. And the name was one of them. And it surfaced early and we worked through it. I don’t think there was any muscling or any jamming on much of anything all the way through this.
On What Managing Partners Should Know
Parnell: For a managing partner whose firm is, perhaps, in a tough state, what are the top two or three things that they should know, or that they should be looking at?
Browne: I think the first thing that is easy to say and incredibly hard to do is to make sure that you have a realistic view of your firm, the legal marketplace, your strategy, and whether they all work together. Then, if you’ve done that, make sure that your partners understand it, and that your partners and your structure and your systems are all aligned to execute on it. Because executing on any strategy is hard enough.
When it comes to dealing with partners in a law firm, I certainly think that communication is critical. And communicating in an honest, open, transparent way is critical. If you dance around people, if somebody’s a problem and you don’t tell them and you let them continue to cause problems for others, if you’re having challenges and you just gloss over them, I don’t think it works because it’s hard to build trust that way.
If you don’t trust your partners with information, it’s hard to build a relationship where they’re going to send trust back to you. You want to build that trust and then you want to communicate so they know what’s going on and can validate it, because no leader makes perfect decisions, and no leader deserves credit for all the good things that happen, or deserves full responsibility for all the things that don’t go so well. And you want people to understand what’s going on.
On Future-Proofing A Firm
Parnell: To the extent that a firm can be “future proof,” what are some attributes that you think are necessary for a firm to comfortably move into the next 10-15 years in such a rapidly evolving marketplace?
Browne: I think it starts with the leadership team. You need strong visionary leadership. You need nimble leadership. You need leadership that can lead, but can also be willing to listen and have an ear to the ground, both in terms of the clients and the lawyers. If you have good, nimble leadership, they will make decisions, and they will reverse decisions. That’s really what you need because every single day, every single week, every single month, the environment changes; the context changes. You need to be willing to second guess what you did. And you need to be willing to change. That is incredibly important.
Conservative fiscal management is also important. Hopefully, the days of partner leverage beyond partner capital are becoming a thing of the past.
And you need to make hard business decisions. Law firms traditionally have been very conservative. There are corporations that, when they get into challenging times, one of the first things they do is reduce their workforce, and their stockholders applaud them for it. Within law firms, however, it’s seen as a sign of failure or weakness. No one wants to ever say that they let a single person go, or that they cut an expense budget by 10% to really try to focus people on spending wisely. I think those kinds of things—the economic integrity, the control, and making sure that you are running a profitable business—are going to be the norm going forward.
Then, I think it goes back to the clients. You have to focus on the fact that, without your clients, you are not a business. You need to be growing your business with your clients. You need to know what their needs are. You need to understand their business. You need to be ahead of them, and in front of them, and thinking about their challenges. You need to ask them how you’re doing. You need to listen when they tell you that you’re not doing so well, and to learn from that.
Also, you have to attract the best talent so that you have the people who can provide the stellar service and the talent that the client needs. They don’t need or deserve second rate advice. It’s very much a service business. You have to be incredibly responsive and give immediate attention and immediate response.
So, I think if you structure your entire organization around the concept of providing superior client service—from billing to attorney training for your client, focus on everything being about the client—and then you have good leadership, a disciplined and well-run organization where everyone is aligned and understands the mission, understands the values, understands what is expected and everyone’s going in the same direction, that’s what you want. It sounds easy. It sounds like business school-speak. But it’s true. It’s not more complicated than that. But it’s very hard to execute on it.
Email: [email protected] Twitter: @davidjparnell
Books: The Failing Law Firm: Symptoms And Remedies; In-House: A Lawyer’s Guide To Getting A Corporate Legal Position