That's History: 2007: meet the new boss

What was historic in legal matters in 2007?
I’ll leave judgments about case law and such to lawyers. But in the world of law firms and the practice, I’d guess an event that might become a marker was the closing of Goodman & Carr LLP in March 2007.

Law firms come and go. Leave aside the pain and the financial losses and the career disruptions for those involved, and one firm’s winding up might not be so consequential.  One might say G&C, founded in 1965, was hardly among the ancients. In 42 years, it had a good run.

But G&C’s demise might come to symbolize the end of an era: the era when you could have a substantial law firm without, you know … managing it.

A lot of the commentary focused on the challenges being faced by all the mid-size or second-tier corporate law firms, squeezed between the specialist boutiques and the big nationals. Fair comment, but lots of those firms are still in business, and some look like they’re surviving.

In recent years, some rules of thumb seem to have emerged for law firms that have to hustle in a competitive marketplace. Statements made last spring by G&C insiders seemed to hint that the firm was not following many of those rules.

Canadian Lawyer quoted the last chair of the firm saying, ruefully, “We were not able to be as dictatorial and ruthless as maybe we should have been, especially when times are good.” For “dictatorial and ruthless,” read “managerial.” Can enterprises worth $50 million or $60 million a year really get along if no one is empowered to implement strategic plans and make tough decisions, to decide where the firm is going, to direct its talent, and even to link payment to those goals?

Law Times quoted an insider saying, “Some of the partners with the huge clients had special arrangements with the firm and, therefore, there weren’t as many capital partners as it may have seemed.” There’s a theory of law firm governance - “partners with power” - that says, no matter who has the management title, power rests with the partners who control the client relationship.

But today that’s no longer a law firm; that’s just a bunch of people sharing office space. A 100-lawyer organization that operates as many separate fiefdoms is not going to hold its own against one where people actually work together on predetermined objectives.

Law Times quoting that firm insider again: “It’s just not fair when some partners keep coming back to you and asking you to keep carrying them.” In corporate law, clients are sophisticated consumers; even if you want to carry your partners, they will prefer law firms that can price their work very precisely to the services actually being provided. If firm leaders don’t control pay, they probably don’t control pricing either.

On the same theme, the Toronto Star noted that, near the end, G&C had about 85 lawyers, and 45 or so were partners. That’s actually not far from a lot of Toronto law firms in recent decades, but corporate practice is team practice today - and it’s price-sensitive. Highly paid partners should be leading teams and delegating down, not doing grunt work themselves.

Canadian Lawyer described a meeting right at the end of G&C where 40 or more partners tried to plan a survival strategy. But, as they say, nothing ever gets done in a big meeting, and such partnership democracy may be a luxury that firms can’t afford. Law firm experts mostly suggest law firms in competitive situations need “less democracy.”

Is all this just a problem for the elite firms high in the Bay Street towers? In some ways, it’s even more pressing for the Main Street practitioners. In medicine, the government is pushing family doctors to work in groups, to team with allied professionals, to use new technology, to find economies of scale. There’s no OHIP in law, but as small and sole-practitioner practice gets ever more competitive, the market may be playing the same role.

Christopher Moore is the author of The Law Society of Upper Canada and Ontario’s Lawyers, McCarthy Tétrault, and other works in legal history.

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