The role of ‘successful in New York’ matters far more in terms of brand perception for top international law firms than a rational look at the data suggests it should.
Unlike London (the other global city that really counts) New York doesn’t have a total stranglehold on the market for premium deals and disputes. Citi Group figures show that historically only around 40% of total US premium revenues are sourced from New York. In London the figure is much closer to 100%. Yet still fortunes have been won and lost over decades by firms attempting to maintain or build a New York component to their brand.
At one level the attraction of New York is obvious: the major investment banks call it home, it’s arguably the financial capital of the world (London again would differ on this) and alongside that it’s perceived to be the city that leads the world in terms of the quality of its professional service advisors whether management consultants, accountants or lawyers.
On the other hand the supply of this top talent is by definition limited, meaning that any firm wanting to push its way into the New York market faces the prospect of paying eye-watering amounts of money for that portion of top talent that is ‘on the market’. The very public demise of Dewey serves as a salutary lesson in what can go wrong if you make too many financial commitments to too many top earners – particularly laterals - in order to secure their loyalty.
Despite this they keep on coming. Why? Because the stakes in branding terms are so high and tough as it is today it’s going to get even tougher in the future as more firms establish credible New York angles to their historical national identities and raise the bar on price-of-entry. Firms like Latham & Watkins and Kirkland & Ellis have turned early beachheads into credible offices with deep enough benches to say that they have New York presence – and the flow of major deals and disputes going their way seems to suggest that it’s working.
Focus. Focus. Focus
The strategy that ‘non-New York’ premium firms should follow to build their brand presence in New York is on the one hand very straightforward but on the other very complicated. They should adopt a laser-like focus on building their New York brand around a very tightly defined set of practices, industry groups or very narrow combination of the two. And they should also choose those practices with a highly disciplined and realistic awareness of what they are already famous for nationally or internationally. Instead the strategy most firms seem to adopt is equivalent to throwing mud against the wall to see if anything sticks – a harsh critique but not that far from the truth as far as it appears from the outside.
The reason for this is that it’s incredibly hard to be disciplined in the execution of an office strategy. Law firms, even the most managed, are collectives as much as businesses which tends to lead to spreading resources around in order for the leadership team to take the consensus with them. In strategy terms this tends to manifest itself in shopping list length ‘priority practices’ and a tendency to invest ‘off-strategy’ as much as in line with it when it comes to lateral hires.
Keeping in shape
From the other end of the telescope those firms that already have a strong New York brand pedigree need to make sure that as national and international firms gain traction in the city they don’t get demoted to niche or underweight status. This is a better problem to have than trying to build a New York reputation but on the other hand given the increasing competitive pressures any firm that takes its eye off the ball is likely to find itself prey to those actively searching for top talent.
Despite all the trauma of the recent financial crisis and constant client complaints about rates, New York still has a disproportionate and even irrational importance in terms of law firm branding and as long as that continues more firms will want to make it there.