Patton Boggs’ Late-Inning Transparency a Good Example for Am Law Peers on Deck

by Greentarget

Shedding senior executives, revamping compensation models and prioritizing key business lines isn’t an easy task for any CEO. It’s even more difficult in the professional services environment where a company’s key assets walk out the door every night. But when organizations faced with these challenges direct the narrative head on, they can more effectively shape the dialogue among key stakeholders rather than awkwardly respond to it. Last Friday’s Wall Street Journal story on the challenges facing Patton Boggs is a good example of this.

During the last several months, Patton Boggs, like a handful of its Am Law peers, has been troubled by stagnant revenue and eroding profits. The firm let 65 staff go in March, including 35 associates, and an additional 17 partners departed the firm in June followed by a handful of high-profile defections in July. A July 18 Politico story reported that these developments led to an overhaul of the firm’s strategy — including the announcement of a new compensation model — to better position it for the new era.

Events culminated with the Aug. 8 story in The Wall Street Journal where Patton Boggs CEO Edward Newberry connected with legal reporter Jennifer Smith to discuss key tenets of the firm’s realignment — namely, its focus on parting ways with underperforming partners, cutting expenses and directing resources to practices that sync up with the firm’s strong suit: government expertise.

The firm could have opted to hide behind a series of media statements attributable to a firm spokesperson. But Patton Boggs decided — correctly, we contend — to engage the WSJ in a transparent discussion of how the firm is navigating a changing industry landscape. Following months of negative coverage, the firm needed to use this opportunity to redefine  itself at a critical juncture in its evolution rather than letting others define it for them. Because of this, the underlying fundamentals of the firm’s actions and, perhaps more importantly, the promise of its future, will be better understood by key stakeholders. Internal audiences in particular need to be reassured of its stability and leadership.

So what does Patton Boggs’ experience portend for other firms implementing similar realignment strategies? It teaches firms that early and transparent communication is vital to ensuring that the industry dialogue is rooted in factual information and key messaging.

In particular, firms need to:

  • Focus on each stakeholder: Understand how each stakeholder group, internal and external, is likely to respond to the news, and customize your messaging and the communications vehicles/tactics appropriately.
  • Communicate internally: While external positioning is important, the key focus of firm management should be on internal communication. Every situation is different, of course, but firms need to insure that their most valuable assets feel like they are being communicated with openly and honestly. Death spirals occur much less frequently in cultures that place a premium on internal communication.
  • Get out in front of the news: Many firm reductions/realignments are occurring under the radar, but firms should consider “proactively” outlining their plans with select media as initial stories will set the stage for all future coverage and reporting.
  • Firms should “be” rather than “seem”: Organizations that live the brand and culture they want to project rather than simply working to convey that brand tend to be more authentic and, thus, treated more fairly when difficult news and developments go public.

As Am Law 100-ranked firms continue to realign themselves to the new normal, more and more of these firms are making the difficult, often public, decision to part ways with unproductive partners. Weil Gotshal’s decision to cut 60 associates and 110 staff earlier this summer and The New Republic’s controversial article on the imminent demise of Big Law, which we covered here and here, underscore the dialed-in, “who’s next?” media environment in which all firms are now operating. But what Patton Boggs has shown us is that transparency and a forward-facing approach will be rewarded.

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