Why Does Everybody Think it’s So Remarkable that Cravath has Purportedly Begun an Active Marketing Program?

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About as remarkable as Rick Blaine’s responding to Captain Renault in Casablanca with feigned surprise “What?  There’s gambling in Casablanca? I’m shocked.”

 

 

Jerome Kowalski

Kowalski & Associates

July, 2010

 

 

I was completely puzzled and perplexed by all of the recent expressions of surprise, awe and amazement in the trade press and the blogosphere about Cravath embarking on a marketing campaign.

In fact, Cravath, as repeatedly described in the press, particularly the recent press, has been consistently described as the “gold standard” for more than a century in the profession and that it was somehow either demeaning or scandalous that a firm of that caliber would resort to marketing, as if marketing somehow is either debasing or tarnishes Cravath’s luster. The blogosphere seemed to suggest that Cravath was somehow joining the ranks of law firms posting billboards or the law firms seen on very late night television.

Indeed, Cravath has been actively marketing for more than a century.  Its historical marketing was wildly successful.  Cravath, in a soto voce  style and often in a crescendo engaged in the profession’s longest, most successful and effective marketing efforts.  Only nobody in the profession seemed to take active notice.

For many decades, Cravath created, not at all by accident, most remarkable name brand recognition (surely, the most basic form of marketing). It was not pure happenstance that Cravath found its way in to all of the nations’ important financial media standing shoulder to shoulder with titans of industry. Cultivated relationships with leading journalists (what we also today call marketing) was a hallmark of Cravath, whether created intentionally or by pure happenstance. Cravath made it well known that it handled the most important cases and attracted the nation’s best law school graduates. Over at least the last half century, as other law firms actively began to compete with Cravath for these students, Cravath simply upped the ante, consistently setting the pace by offering recent graduates increased compensation.  Other law firms always followed Cravath’s lead by endeavoring to match Cravath, the maestro of “the going rate” of compensation.  The point was that Cravath was the standard, the Cadillac of the industry (when Cadillacs were the Cadillacs of the automotive industry) compelling other firms to essentially say “See, we are as good as Cravath.”  That message was received by significant consumers of significant legal services by questioning “why should I buy a Chrysler just because it advertises itself as good as a Cadillac, when for the same price, I could just buy the proven product, the Cadillac.

For a century, Cravath has indeed handled some of the nation’s most important litigations and transactions. The firm quite successfully and consistently, perhaps under the radar screen, regularly associated itself with matters of great significance.  It effectively created remarkable name brand recognition, well before Richard Sokolove became a ubiquitous national name by spending millions of dollars on late night television advertisements to create name brand recognition. You’ve always known the Cravath brand for decades. Now, you also know the Richard Sokolove name, albeit in a completely different milieu of practice.

Ah, but the market has so dramatically changed in the last two years.  Corporations, and in particular corporate general counsel, under their own economic duress, need to save their money and buy more reasonably priced means of transpiration to bring them to their destinations, safely and soundly.  In fact, it is not necessarily the Cravath wannabes who are effectively competing with AmLaw 100 firms, it is the middle market firms which can now get clients to their desired destinations at small fractions of the Cravath priced law firms.

Many of these law firms have now created their own name brand recognition by employing well oiled marketing and public relations staffs, as well as the wildly effective and largely free blogosphere, as we previously pointed out .

In our new world, suddenly, the acquisition of legal services is increasingly made through the prism of a purchasing agent (with purchasing agents in many instances being integral parts of the acquisition of legal services processes), has made middle market firms in secondary markets significant competitors to the large name brand law firms, the Cravaths,  since the smaller firm, the more competitively priced law firms,  often in a secondary market has lower fixed costs and lower hourly rates. We have all observed that smaller regional firms have been much less affected by the business downturn, but in fact, many have been experiencing an uptick in business.

We also know that the demand for Alternative Fee Arrangements has replaced the haughty  one line bill that the elite few at the top of the food chain could deliver to clients reading only “For Professional Services Rendered” followed with a bare number with no further explanation.

More remarkable than the notion that Cravath is now being more open and vocal about its marketing efforts, is the fact Cravath’s dynamic chairman has now even personally  openly embraced the superiority of Alternative fee Arrangements.

Even some notable academics have recently taken a close look at the “Cravath system” and described it as a bubble about to be burst.

A strong argument can now be made that instead of so much of the profession having spent so many years chasing the “Cravath model”, it is now the Cravaths of this world following models those among the AmLaw top 50 law firms previously disdained.

© Jerome Kowalski, July 2010. All Rights reserved

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