Robert M. Dell has been at the center of Latham & Watkins's evolution from a U.S. law firm to a global giant. In 1994 when he was elected chairman of the firm at age 42, Latham had nearly 600 lawyers in 11 offices, including four in California. At that time, the firm had 92 lawyers in New York and 6 in London. Two decades later, the firm had grown to 2,000 lawyers in 32 offices around the world, with nearly four times as many attorneys in New York and 260 lawyers in London. He steps down at the end of this year. His successor is Bill Voge, a project finance partner based in London.
Dell's leadership style has been more behind the scenes rather than seeking the spotlight. He doesn't dictate, instead he listens. "My role is to serve the firm, the partnership, and not to rule," he says. For him, listening has been an important part of his approach to management. "I've tried very hard to gather information, hear the perspectives, but not let it get in the way of good strong decision making."
Earlier this month California Lawyer editor Chuleenan Svetvilas spoke with Dell about the firm's growth, culture, partnership, and layoffs during his tenure as well as the legal industry. Here are excerpts from that interview.
How and why did Latham become a global law firm?
Well it wasn't planned when I started. After I'd been doing the job for four years or so, at our strategic planning session, which we do every year, we started talking about how the world is moving. We asked: How are our clients changing? What does that mean for us? Typical questions but we were getting some new answers, [such as] many of our clients are globalizing. Then we asked, can we, should we expand more outside the U.S.? If so how do we do it? That all evolved into a process over about an 18-month period with lots of discussions and questions.
I said to the partners at one of the partner meetings, "We're not going to pursue this without majority view in favor. This is way too important to the law firm. We need everyone on board, and if you're not on board we want to talk to you, at least give us a chance to convince you."
We concluded that we should take the step of becoming a global law firm. That was by far the biggest strategic decision we ever made, and with some trepidation. The issue was, can we succeed? If we didn't, we would have invested a lot, and I felt personally on the line. If I'm just going to push this, I could be an utter failure. We spent a lot of time investigating it, we brought in outside consultants, we talked to clients, all sorts of things to try to get some level of comfort that we could do it effectively. I told them that we're not going to vote on this until we had every opportunity to hear everyone out and to have the discussion. When we finally voted on it, it was a unanimous vote. Part of our success in the globalization process is having a unified partnership behind it. Because we told people at the time, "we're going to hit hurdles, we're going to stumble. We're going to make investments that you're going to look at and say what the hell did you do that for with our money?"
But I said, we have to look at this long-term and if we're generally moving in the right direction we need to be all behind it. And throughout that whole decade of building the global law firm, we never had partners say this is a mistake, we've got to stop this or whatever. I think it's due in large part because of the groundwork we laid at the beginning.
You were already in London when you became chair.
Part of the strategy when we decided to become global was to focus on London, to focus on Europe. In London, we wanted to try to leverage off our strongest practices in the U.S. that were global. We analyzed our client base and asked, which of our clients are globalizing the fastest where is there demand for our services outside the U.S.?
It turned out that many of our biggest clients fit that category. So all our investment banking clients had been globalizing very quickly, and a number of our private equity clients had been doing cross border deals more commonly over the last few years before that. So we had a base for focusing our efforts in certain areas where we thought we could succeed. We did the same thing in all of our expansions in Europe, Germany first and then France, growing London, and then Brussels and Paris. We had a Moscow office at the time that we started this. It actually happened more quickly than our planning had designed, which was fine, although it was exhausting.
I was in Europe a lot. I think those years, say from 2000 to 2005, I was traveling 70 percent of the time. Even now it's been closer to 40 to 50 percent, but back then it was just seemed constant. We were adding new talent, trying to explore potential opportunities, many of which we didn't pursue and so it was just a very time-consuming endeavor.
What do you think have been the key elements to Latham's success and growth?
Two things come to mind. One is creating an environment that's attractive to talent, and that's generally our culture. I've told our partners that I think our culture is our strongest asset and we need to nurture it, preserve it, etcetera. So in terms of growing we've been very focused on doing our best to make sure we add people and talent who embrace our culture. Then combine that with maintaining very high performance standards. If you can combine great talent, high performance standards, with a collegial team-oriented culture, I think that's the key to the success.
How would you describe the culture?
It's multifaceted but number one, it's a one-firm culture. We don't have profit centers. We don't have groups pitted against each other or anything like that, but it's a meritocracy. You succeed or fail on merits, not by who you know or who you work for, or that sort of thing. It is a very transparent environment, we don't hide anything from our partners.
So everybody knows all the financials?
Any partner can just get on their computer and they can access all the financial information in incredible detail, for every client, every individual.
What about compensation? Do partners know each other's compensation?
Yes, everyone knows what everyone's compensation is, which does present more requirements of communication. You have to be able to explain why you made this decision in this way or that, which is another element of the culture. We try to be both transparent and communicative.
It's a culture where we empower young people early - on the theory that they are the future. You compromise having a long-term institution if the senior people hold onto everything, then they retire and the clients go to other firms or whatever. We reward partners who give younger people significant client responsibility. We don't reward partners who just hold onto their clients - even though their billings may be higher. That's not what we value.
Once the partners understand the culture and understand how much we value it, they know they're not going to succeed by trying to go against that. So it all works together to keep the culture strong, but it requires adding people that agree with it. We turn down a lot of people who fit in every way from a business perspective, from a quality perspective, but if we think they're not going to embrace the culture it's not worth it. So I think that's been very important to our success and growth.
It's recognizing that you are part of the team as opposed to building your own your own book of business.
Right, exactly. If your view is: It's all about me and I'll have people working for me, it's a little fiefdom, you won't fit here. It's just not going to work.
That's kind of how you prevent balkanization within the firm within a geographic area or subject matter.
Right, that, and also not having profit centers, which some firms have. I've talked to leaders of those firms and they say they think it's the right way to go because you have to measure performance, and the only way to measure it is to bring it down to a profit center analysis.
From a pure business model perspective, that's true but I don't think it works in a partnership because it encourages people to only care about them and their group. And particularly in a global firm, when you're trying to get the right talent to the client, you want to make sure that group pulls in the right person who's got the right expertise. If that person has no incentive to do it because it's not his or her profit center, that's an interesting divide among law firms that have gone the profit center route. It's much more challenging to deliver seamless client service on a global basis.
There was a time several years ago when the trend toward profit center stuff was so strong, I felt as if I wasn't keeping up with the latest thinking. We talked about it for a long time and just said, it doesn't matter. Maybe we're not as accurate in how we access performance, but on the other hand, the benefit is people working together. They know to get the right people involved in the matter so we can make sure we're delivering the right group to the client. That's a big change from 20 years ago. Now most of what we do involves large teams and it's not a team in one office, it's a team from all over the place, and that's what clients want.
What percentage of partners would you say that you can identify by sight and by name?
All  of them. When I visit offices I will refresh myself with our picture book, and without the refreshing I would stumble. I spend a lot of time with our executive committee and on partner performance evaluations every year. So even though the partner is in Singapore or someplace else, we're looking at a picture, we're looking at what the person does, talking about that person's work, their clients, and all that. So you really feel like you know them better than you'd know them by simply sitting down and talking to them.
How are you able to retain partners who get offers from other firms?
We are financially strong. [But] no matter how financially strong you are there will be somebody out there who offers a partner more. Some of the offers I've seen our partners get are crazy in terms of their real value. Our partners recognize that they're part of a very profitable enterprise, and to risk going elsewhere for a few more dollars is a risk. Most of the successful partners are dependent on many other partners. The teams are very large and global. So you can't just pluck a partner out, put that person in another firm, and have them function. You could do it by plucking out a huge global team, which is just hard to do, so we haven't had that experience. It's very hard to pull partners out of here.
Back in 2009, at Law Firm Leaders, you said that you didn't lay off any partners. But it was associates that took the hit, obviously, to the point where Latham became a verb for layoffs. How were you able to continue attracting associates after those massive layoffs?
That was an unfair characterization. I can explain what happened to our firm in that financial crisis. It was actually more extreme than other firms because if you looked at the industry data from 2009 to 2010 or '11, among the large firms 80 percent or so had a decline in associate population exactly the same as ours. We chose to do it with great transparency. We also provided the most generous benefits to those who we laid off. Most firms gave two or three months' [severance] pay, we gave six months'. It was a terribly hard thing to go through. We knew there was an unfairness or unfortunate aspect to it that a number of those associates were first- and second-year associates, so they didn't have a chance to prove themselves.
So why did we have to do it? The financial crisis was a hit to all law firms in terms of demand for services. We were particularly hit hard because our sweet spot, our largest client base, was right at the vortex of the crisis. Lehman was one of our biggest clients, gone, poof. Bear Stearns was one of our biggest top ten clients, boom. We started talking to our private equity clients, one of our strongest practices, and no one knew what was going to happen. It was a scary time. Some of our very prominent private equity clients told us, we don't see doing a deal for three years. So, we're sitting there thinking, are you kidding? So we had to take steps to preserve the business, and we had to shrink.
How do you think you were able to continue attracting associates after the layoffs?
I think it hurt us. There were associates who were leery. What helped was that we had a pretty quick recovery in terms of the firms success, so we could pretty quickly afterwards offer people great opportunities again. The concern about either not having a reduction in force or having a small one was you'd have too many resources and not enough opportunities. So by "right-sizing," we were able to assure people they were going to get great work.
How would your describe your approach to management?
I think fundamentally my approach has been that I'm in this role to serve the firm, the partnership, and not to rule. It's a partnership. Partners want their perspective to be heard. So listening with an open mind is a real important part of the role, the style.
I've tried very hard to gather information, hear the perspectives, but not let it get in the way of good strong decision making. With 600 partners you're not going to get 100 percent agreement on everything.
What criteria do you use to select your office managing partners?
I email all the partners and I say so and so is going to be completing his or her term, I'd like your thoughts about who would be good, either call me or send me an email. I keep a completely open mind, but what emerges all the time is they're candidates who people trust and respect.
So the same name will come up multiple times?
Yes. You'll get sometimes a name that comes up, anyone but this person. It could be a good productive partner but just somebody they don't think would function well in that role, that sort of thing. But they tend to be people who partners feel have good strategic vision and who are looking for the best interest of the office and not themselves, because a person in that position can use it for personal benefit.
Do they change over time?
Yes, in fact that's actually a change I made. A number of years ago I thought it was more important that we have more turnover in those positions to give other people opportunities for those leadership roles and to prevent people from getting stale in those roles. We had a number of people who felt entitled to certain roles, such as office managing partner, so we made it a five-year term. It doesn't matter how good you are or how bad the next person is going to be. You're gone after five years. That was a painful couple of years as people who felt entitled to those positions had to be removed. But it's been a great thing. In some situations the person doing it was the best person, and others, most of the time, rise to the occasion and does a good job.
It's resulted in more younger people having those opportunities, more diverse people having those opportunities, which has made for a healthier law firm.
Do you think that we'll see more law firm mergers?
Yes, that trend has been going on for ten years and it's not stopping. That doesn't mean I think all of them make sense, but I do think there is such a pressure to address the globalization demands of the clients that it's going to continue. There will always be really great smaller firms who have carved out their niche and they will be very successful. A lot of firms will continue to merge and expand. I think there will be two or three times as many 2000-lawyer plus firms over the next number of years.
What's next for you?
A blank slate. Seriously. I have no idea what it will feel like to not be doing this. I need to experience that for a while, and then I can make a better decision about what I might want to do. There are some things I know I will do. I'm going to play more music. I will do more charitable work. I'm not going to do a full-time job, but whether I do something else in some other arena or whatever, I'm going to literally stop on January 1, and wait to get bored. And then think about what I want to do.