Well, 2017 promised to be a challenging year and it did not disappoint with its disappointment. With the Brexit vote upsetting an already-delicate balance in key markets, an inconclusive general election in the summer managed to ramp up the uncertainty further.
Overall, deal activity was solid throughout the year but no more, beyond a continued boom in private equity and leveraged finance work. The long term regulatory squeeze on the banking and securities industries continues, with even once apparently unstoppable shops like Goldman Sachs struggling to live up to their reputation. It is hard for partners of my vintage to get their head around the notion that the major banks are not as central clients as they used to be and will likely become less so in future. But they should get over it.
It was another tough year for the UK legal industry itself – the profession has faced a decade now trudging along without real growth and 2018 will be harder still, even if Brexit negotiations do not end in a disastrous stalemate.
So the question is: what is your firm and its leadership doing in the face of such challenges? We long ago entered the business era in which everyone is a Facebook and Apple-infused wannabe. Business jargon is infested with argot borrowed and bolted on inelegantly across industries, sometimes with relevance, often not.
Your managing partners can talk about ‘disruption’, structural challenges and technologies with the best of them, but what is happening on the ground? I used to opine that the legal industry got a bad reputation for conservatism that belied a tactical nous and responsiveness that had served it well. You can reverse that statement now.
I look at many major UK law firms and find they are mired in incremental reshaping and minor improvements in process and costs a near-decade after the banking crisis. But in the face of gaping strategic issues in terms of US coverage, globalisation and business models, they continue to fiddle and react too slowly. In contrast, during the 1990s, a group of London law firms pushed through dramatic changes in strategy and business models at startling speed in a little over a decade.
I know one law firm that has been engaged in an internal debate over its compensation model for 18 months with no movement. Yet the firm acts as if it has all the time in the world to make a change that is obviously necessary.
Law firms are better governed now, have better business services staff and financial management has improved. These virtues matter, but there is also danger in efficiently doing the wrong thing. The managerialism that has overtaken the UK profession is no substitute for leadership and hard tactical choices.
The legal profession in this country has much to be proud of, but if it does not rediscover the daring that allowed it to blaze a trail across the global profession in the 1990s and 2000s, it will be badly diminished. As 2018 awaits, there has never been a greater need for bold thinkers.