Several years ago, an article appeared in the McKinsey Quarterly commenting on the state of the legal profession.

Law Firm Strategic Positioning

The article rightly recognized the changes that were occurring in the legal market and then moves to the hypothesis that there is a direct relationship between profits per partner, the number of equity partners and the apparent strategy of a firm. They overlay the total profit of firms as an isoquant. The prime base for measurement is 1999, although some firms have their 1993 profits also shown.

The article proposed four standard strategic positionings (in a classic matrix):
  1. Incumbents, being firms with multipractices, operating regionally and that rely on long-standing client relationships for competitive advantage. They face an erosion of this competitive advantage, tend to have a significant proportion of commodity work and have underperforming partners. They lack the world-class skills and scale to compete with other types of firms. Most are moderately profitable, while a few are above average in profitability;
  2. Shapers, being firms that dominate markets by driving their evolution. They have world-class skills, a broad but coherent set of practices and locations, and are able to command premiums;
  3. Specialists, being firms focusing on a relatively small number of practice areas or client segments. They tend to have in-depth expertise and talent in their chosen area and can command premiums;
  4. Full-Service Integrators, being firms with around 300 equity partners, that lack depth and breadth of expertise in particular practices and operate unprofitable practices. They lack professional and cultural ties between practices and offices.