Firms that try to be everything to anyone end up being nothing to everyone. The real danger isn’t external competition or technological disruption. It’s the failure to define who you are, what you offer, and how you deliver value.
Over the past decade, a stark reality has emerged in Latin America: law firms that fail to adapt don’t just fall behind—they disappear. What was once a competitive field of roughly 10 leading firms per country has shrunk to just two or three survivors. These weren’t small players that just faded away. Some were powerhouses that had dominated their markets for decades.
My research across four major Latin American markets reveals a surprising truth about their decline. The biggest threat to firms isn’t obvious outside pressures like new competitors, price wars, or artificial intelligence. The real danger comes from within—a failure to define a clear firm identity and address three internal blind spots:
- Input over impact. A lack of focus on client needs leads to a mismatch between what firms sell and what clients actually value.
- Instinct over insights. Partners rely solely on tradition without data and strategy, misaligning talent and resources with client needs.
- Superstars over systems. Expertise remains locked in partners’ heads, preventing firms from building the institutional knowledge required for long-term growth.
Methods
The findings presented in this article result from a multiyear, multicountry investigation I took as a visiting fellow at the Center on the Legal Profession at Harvard Law School that blended both quantitative and qualitative methods. It included:
- In-depth interviews. Over two years, I conducted formal interviews with senior partners, managing partners, practice-group leaders, and executive committee members at 17 top-tier corporate law firms. These organizations span four countries—Chile, Colombia, Mexico, and Peru—collectively forming the Pacific Alliance, a significant trade bloc with shared cultural and economic characteristics.
- Industry analysis. Publicly available data from ALM Intelligence’s Latin America 50, Chambers & Partners, and Legal 500 rankings served as a quantitative backbone for the study.
- Confidential consultations. I also relied on confidential conversations with in-house counsel, legal recruiters, and consultants who observe the market from a more detached vantage point.
- Publicly available information. Legal media, firm websites, and marketing collateral offered additional context.
A key innovation in this study was the use of visual analytical tools. By mapping each firm’s practice strengths on radar charts, distinct patterns became clear. Correlating these visual patterns with interview data was particularly enlightening.
There are obvious limitations, including:
- Geographic focus. This research centers primarily on Chile, Colombia, Mexico, and Peru. Each of these countries boasts robust commercial legal markets, but they may not be representative of other Latin American jurisdictions or the wider world.
- Data depth and variability. Not all firms offered the same level of data granularity. Caution is advised when generalizing the findings across every type of law firm.
- Moral ambiguity and overlap. While the descriptions presented serve as helpful archetypes, real firms often exhibit overlapping traits.
Choosing an identity
The research findings offer a framework for how law firms can recognize and address internal challenges, as well as choose between three distinct identities that will determine whether a firm thrives or drifts.
Unicorn firms: The specialized elite
Unicorn firms are elite corporate law firms that dominate high-stakes, complex matters through deep expertise and agile teams. They prioritize depth over breadth, commanding premium fees for handling “bet the company” matters. Their name comes from the few steep spikes they exhibit in a few key practice areas, demonstrating dominance in one to three high-value fields such as mergers and acquisitions, financial transactions, or complex litigation.
Take Firm A, a 60-lawyer powerhouse in high-end M&A. Handling fewer than 50 major deals a year, it still commands fees 40 percent higher than its competitors. Its success comes from three key strategies:
- Winning high-stakes cases that enhance the firm’s elite reputation
- Investing heavily in specialized talent to maintain top-tier expertise
- Deliberately rejecting work that could dilute their premium brand
Unicorn firms face challenges in reducing star partner dependency, developing next-generation specialists, maintaining expertise amid legal complexity, and balancing premium positioning with growing client cost pressures, all while sustaining their competitive edge.
Hedgehog firms: Masters of reliable scale
Hedgehog firms are broad-service leaders that succeed through comprehensive coverage, operational excellence, and seamless integration across practice areas. Unlike unicorn firms, they serve a broader range of client needs, but unlike jellyfish firms (more on this later), they do so with disciplined focus and operational excellence. These firms build sustainable competitive advantage through process efficiency and cross-practice coordination. Their name comes from their more balanced performance charts, showing multiple sharp spikes—typically two to three times more than unicorn firms—indicating strength across several practice areas.
Take Firm B, a 150-lawyer firm with three offices in Colombia serving as primary counsel to more than 100 major corporations, handling both routine and complex legal matters. While their rates are 15 percent below those of unicorn firms, they yield higher overall profitability by making complex legal challenges manageable through operational efficiency and broader service range. Firm B’s accomplishments come from three key strategies:
- Delivering reliability and efficiency across multiple practice areas
- Building a versatile team of both legal and business expertise
- Offering scale and predictable pricing through service bundles
Hedgehog firms must guard against becoming too systematized, maintain quality consistency, balance breadth with depth, manage a complex organization, and differentiate from both specialized unicorn firms and lower-cost providers while delivering comprehensive yet high-caliber legal services.
Jellyfish firms: The perils of strategic ambiguity
Jellyfish firms represent a cautionary tale in today’s legal market. Often bearing prestigious names and storied legacies, these firms drift between attempting to match unicorn firms’ premium services and hedgehog firms’ broad coverage—achieving neither. They earn their name from their dissipated market presence, with no clear spikes or focus areas. Their lack of strategic alignment creates a downward spiral of commoditization and declining relevance.
Take Firm C, once a top-tier firm with a 50-year legacy and 100+ lawyers in Chile, now struggling to retain both talent and clients. They claim expertise in 20 practice areas but aren’t market leaders in any. Their vague pitch of “full-service capabilities” and “competitive rates” leaves them stuck between the specialization of unicorn firms and the operational efficiency of hedgehog firms. This lack of direction triggers a downward spiral, meaning:
- Partners pull in different directions, causing pricing inconsistencies and unfocused growth
- Erratic service drives clients to stronger competitors
- Revenue drops, forcing cost cuts and top talent to leave
- Desperate discounts and misaligned work accelerate decline
Jellyfish firms struggle to command premium fees, lose top talent to focused competitors, face market position erosion, and remain vulnerable to disruptions due to a lack of specialization, operational efficiency, and brand differentiation.
How a solid firm identity helps you master your business model
Law firms should move beyond theoretical alignment and aim to consistently deliver on their firm’s strategic promise. Market mastery is not about perfection—it’s about discipline. It’s the ability to translate your chosen identity into repeatable success: to serve the right clients, attract and retain the right talent, and build a reputation that compounds over time. Mastery creates resilience. In a market where many firms talk about strategy but few execute it consistently, those that do stand out. This next section explores how the most successful unicorn and hedgehog firms turn alignment into advantage by building on three essential pillars.
The pillars of unicorn and hedgehog mastery
Without a rock-solid internal foundation, a compelling market position, and a growth engine that keeps spinning, even your most celebrated partner or practice area can’t shield you from relentless competition.
According to my findings, to achieve lasting mastery as a unicorn or hedgehog firm, you must build on three interconnected pillars:
Institutionalization: Building a firm that lasts
One of the most significant shifts among Latin American law firms over the past two decades has been the move from personality-driven practices to institutionally driven organizations. While charismatic founders and star partners can quickly build a firm’s reputation, overreliance on individuals creates vulnerability. In contrast, institutionalized firms invest in governance structures, knowledge-sharing systems, and a strong culture that outlasts any one leader’s tenure. As one managing partner in Mexico aptly put it, “Building an institution means creating something that transcends you. It requires balancing tradition with innovation, stability with adaptability.”
Think of institutionalization as building your firm’s muscle memory. Instead of a collection of lawyers each doing their own thing, you create a well-oiled machine where everyone moves in sync and adapts as one. As one unicorn firm managing partner in Colombia put it, “Institutionalization is not about preserving tradition for tradition’s sake. It’s about creating something that continues to serve clients and attract talent long after we’re gone.”
Founder-led firms and institutionalized firms
One firm I spoke to had a brand that was inseparable from its founder’s boardroom reputation. Partner appointments, client selection, and compensation all revolved around a handful of rainmakers. But when the founding personality’s halo dimmed, they found that there was no institutional glue—shared compensation metrics, knowledge platforms, or clear governance. Top talent ultimately migrated to firms where their careers did not depend on a single figurehead. After a series of public controversies and succession delays, partner departures snowballed. From 2020 to 2024 the firm’s attorney ranks shrank by about 50 percent, losing nearly half its partnership.
On the other hand, a different firm rebuilt itself over the past 10 years around transparent governance: a mandatory partner-retirement age, a 15-member executive committee, merit-based lockstep compensation, and a pension funded by the partners themselves. The results are visible: 10 new partners were promoted in 2024, eight of them women; no single client brings in more than 2 percent of revenue; and around 60 of Latin America’s 100 largest companies are on its roster. By tying career progression, profit-sharing, and innovation budgets to firmwide—not individual—performance, the firm has become a magnet for lateral talent and complex cross-border mandates that once went to personality-centric boutiques.
Hallmarks of institutionalized firms
- Decentralized decision-making. Clear governance, compensation models, and performance metrics distribute leadership responsibilities rather than concentrating them among a few senior partners.
- Enduring cultural values. Core principles, like client-centricity or collaboration, are explicitly codified. Hiring, promotions, and daily operations reflect these values, ensuring consistency through leadership transitions.
- Knowledge capture and transfer. Rather than relying on “star partner memory,” firms implement structured training, research teams, and document best practices. This safeguards intellectual capital for future generations.
- Predictable partner tracks. Clear advancement paths make the firm more attractive to top talent while reducing internal politics that can undermine morale and stability.
Unicorn firms favor a lean, flexible structure that emphasizes autonomy, creativity, and individual excellence. As a managing partner in a unicorn firm in Peru noted, “Success here hinges on each lawyer’s ability to excel under pressure.” They have speed and agility in decision-making, allowing senior partners to quickly assemble bespoke teams. And they have an entrepreneurial culture. While autonomy is well-suited for complex, high-value matters, a limited structure may create scalability challenges and hinder junior development, creating a risk of burnout and producing collaboration gaps.
A unicorn firm’s cross-border M&A team delivers lightning-fast results
Faced with a high-stakes transaction in an unfamiliar industry, a leading unicorn firm in Colombia renowned for its elite dealmaking needed to provide immediate, nuanced guidance.
The firm swiftly assembled a senior-heavy team comprising corporate experts, regional legal advisers, and sector-specific consultants. Thanks to its lean, autonomous structure, the team bypassed internal bureaucracy and delivered tailor-made counsel within an aggressive timeline.
The successful outcome reinforced the firm’s reputation for high-speed execution, demonstrating how strategic autonomy empowers partners and counsel to act decisively in high-stakes scenarios.
Hedgehog firms take a hierarchical, process-driven approach that emphasizes efficiency, teamwork, and reliability. As one managing partner put it, “We look more like a business than a traditional law firm.” There is firmwide consistency around workflows, roles, and responsibilities, ensuring seamless cross-practice integration and allowing for structured collaboration. Hedgehog firms leverage structured systems and standardized processes, ensuring long-term stability and operational reliability. By scaling services across corporate, litigation, and regulatory practices, hedgehog firms meet broad client needs. However, they might encounter challenges, including limited flexibility in high-stakes, bespoke matters and hurdles to talent development.
A hedgehog firm’s scalable response to new regulations
When a major jurisdiction in Chile introduced sweeping environmental regulations, corporate clients urgently needed legal audits to navigate the changes.
A hedgehog firm capitalized on its broad practice coverage and hierarchical structure to deploy compliance services across the agriculture, energy, and manufacturing industries, almost overnight. Standardized workflows and specialized training ensured consistent quality, impressing clients and elevating the firm’s profile as the go-to provider for environmental compliance.
This rapid, coordinated response highlighted the strength of a well-positioned hedgehog firm: broad capabilities, institutional alignment, and swift mobilization.
Differentiated position: Standing out in a crowded market
The legal market is increasingly full of countless firms claiming they can handle any major matter. True competitive advantage comes from clearly defining whom you serve best and how your firm delivers unique value, and consistently executing on that promise.
Differentiation ensures you stand out in a sea of generalists. As one managing partner in Chile put it, “We win because clients know exactly what we’re about. Sometimes that means turning down good money because the work isn’t in our sweet spot. And that’s exactly why clients trust us. We know what we offer, whom we serve best, and we stick to it.”
Leaders of unicorn-focused firms stake their reputations on excelling in a few high-stakes practice areas where outcomes matter more than cost. This approach is defined by deep expertise, a premium brand, and strategic selectivity.
But there are challenges, including what might be thought of as niche vulnerability, where economic shifts or regulatory changes can destabilize a narrowly focused practice. They also need top talent, which requires continuous investment in training, experienced lawyers, and evolving methodologies.
Leaders of hedgehog firms stand out by offering clients an integrated, full-service platform that prioritizes efficiency, scalability, and cost-effectiveness. Strengths include breadth and convenience, a process-driven consistency, and a collaborative culture.
However, firms in this model also face challenges, such as shallower specializations and overextended foci. As they scale, they must ensure efficiency doesn’t come at the expense of top-tier execution and adaptability.
Common objections to clear market positioning
Law firm leaders often raise three concerns when faced with strategic clarity. Each stems from short-term fears that overlook the long-term payoff of a focused market position.
- They claim their market is different. Firms that try to do it all often dilute their brand and struggle to compete. As client expectations and competition rise, focus becomes a firm’s best defense against irrelevance.
- They fear they’ll lose their best partners. Strategic change may trigger some departures—but strategic drift causes more. Without a clear direction, top talent grows frustrated and leaves to join firms with stronger identities.
- They claim clients want them to do everything. While some clients may resist change, most prefer firms that know their strengths. Sophisticated buyers understand no firm can excel at everything.
How a unicorn firm mastered financial regulatory law to dominate the fintech legal market
A unicorn firm in Mexico specializing in financial regulatory law gained prominence by retaining fintech startups navigating intricate compliance requirements.
By focusing exclusively on this rapidly growing sector, the firm developed unparalleled expertise, allowing it to advise clients on groundbreaking legal frameworks for cryptocurrency exchanges.
This focus not only solidified its reputation but also attracted marquee clients willing to pay premium fees.
How a hedgehog firm became the go-to partner for multinationals entering the country
A hedgehog firm in Peru with a strong corporate and labor law practice positioned itself as a one-stop solution for multinational corporations entering its city.
When a client required assistance with market entry, employment contracts, and regulatory compliance in another city, the firm seamlessly coordinated between departments and freelance legal providers to provide integrated support.
This ability to handle a client’s needs holistically created a long-term relationship that extended to opening a second office in a new city.
Flywheel alignment: Driving continuous results
In Jim Collins’s classic business writings, the flywheel analogy describes how consistent, well-targeted efforts can generate self-sustaining momentum. Applied to law firms, the flywheel effect arises when every element of the business model—from client selection to talent management to operational processes—reinforces the firm’s chosen strategy. Over time, small gains accumulate into a formidable competitive advantage. Every matter you handle can reinforce your strategic advantage if done right. Each success enhances your reputation, attracts top talent, and unlocks new opportunities. As one managing partner in Mexico noted, “When everything finally clicked, it was as if we hit terminal velocity. People called us an overnight success, but we’d spent a decade refining client relationships, honing processes, and improving recruitment.”
How flywheel alignment works
Both unicorn and hedgehog firms build momentum by executing their strategic focus with discipline:
- Start with clarity. Define clear objectives and allocate resources aligned with your firm’s model.
- Reinforce through execution. Align hiring, incentives, and client selection with your firm’s core strengths.
- Gain momentum. Each success makes the flywheel turn by fueling reputation, referrals, and top-tier talent acquisition, setting the stage for further growth.
Unicorn firms gain momentum through specialization, reputation, and premium client engagement. As one senior partner put it, “The more we excel in complex cases, the stronger our reputation and client trust. That trust fuels our ability to keep raising the bar.” However, unicorn firms may encounter challenges successfully executing their flywheel, including an overdependence on exclusivity or an underinvestment in innovation.
Hedgehog firms thrive on breadth, cohesion, and cross-practice collaboration. As one partner noted, “Every satisfied client strengthens our ability to scale. Each new matter adds to our collective expertise and fuels our growth.” However, these firms may encounter challenges, including frustrated ambitious junior lawyers seeking greater autonomy from a rigid structure and an excessive reliance on process efficiency that stifles innovation.
Firms that maintain alignment between strategy and execution create self-sustaining momentum. However, even well-intentioned strategies fail if execution doesn’t match vision. Risks include:
- Neglecting competitive positioning. A unicorn firm that fails to keep pace with innovation risks losing its elite status.
- Operational silos. A hedgehog firm promising integrated solutions but operating in a fragmented manner can frustrate clients expecting seamless service.
Escaping the jellyfish trap
Like a jellyfish floating aimlessly, a state of strategic limbo can be lethal. Clients expect their outside counsel to be either unicorn firms, excelling in niche, high-stakes expertise, or hedgehog firms, delivering integrated solutions at scale. Junior associates, too, crave direction and consistent opportunities. Firms that remain adrift are forced into price wars, staff turmoil, and the loss of top clients. In a fast-moving market, drifting is not an option. A lack of strategic direction leads to rapid and sometimes irreversible decline.
Drifting in limbo: Why jellyfish firms lack strategic clarity
Like real jellyfish, these firms don’t chart their own course—they simply drift wherever the market takes them. Here are the four warning signs you might be turning into a jellyfish firm:
Blended without distinction. If your firm lacks a clear identity, it risks fading into the background. While unicorn and hedgehog firms differentiate themselves with a strong value proposition, jellyfish firms struggle to articulate why clients should choose them.
Unanchored and unstable structure. A weak strategic identity is often matched by weak internal structure. Without clear governance, talent development tracks, and strong operational processes, your firm may be held together by outdated norms and internal power struggles rather than a cohesive vision. These deficiencies keep jellyfish firms reactive and chaotic, making them unattractive to both clients and top talent. Without a firm foundation, they drift—and eventually, sink.
Trapped in price wars. If you lack specialization, price becomes your only competitive lever. As one jellyfish managing partner in Chile conceded, “Without a clear value proposition, we’re not competing; we’re just sinking to the lowest price. And in a race to the bottom, nobody wins.” One firm I spoke with tried to keep a corporate client by offering permanent 20 percent discounts only to watch that client shift complex work to a specialized competitor. Left with only low-margin tasks, the firm struggled to cover overhead, leading to layoffs and partner disputes.
Static while the tides turn. Clients are increasingly expecting predictable costs, faster turnaround times, and either deep specialization or seamless, full-service solutions. If you’re still relying on past reputation while struggling to meet these new demands, you’re already falling behind. Many firms acknowledge the need for change but hesitate to make the difficult reforms necessary to stay competitive.
The anti-flywheel
While unicorn and hedgehog firms benefit from a self-reinforcing cycle of success, jellyfish firms spiral downward in a destructive loop:
Left unchecked, this cycle leads to brand erosion and talent drain, and leaves the firm vulnerable to acquisition, dissolution, or outright irrelevance.
Why jellyfish firms persist
Knowing how the jellyfish cycle perpetuates itself is only half the story. So why do some firms remain stuck despite mounting evidence?
- Inertia and tradition. Decades of decision-making by key partners create a comfort zone that resists institutional change. For example, one midsize firm in Peru kept rolling over its traditional compensation model for decades, despite knowing it failed to reward cross-practice collaboration. Each renewal signaled business as usual, quietly reinforcing the comfort zone.
- Short-term revenue fixes. Taking any available work may stabilize cash flow in the moment but weakens long-term positioning. After losing a marquee client, a firm in Chile took on heavily discounted, high-volume contract work just to cover payroll. The immediate cash flow eased partner anxiety, but the firm’s specialized capabilities atrophied.
- Internal politics. Conflicting partner priorities make it difficult to rally around a single strategic direction. In a firm with multiple offices in Mexico, different practice group leaders rallied to protect their own revenue streams. With no alignment on which markets to target, every partner pulled in a different direction, leaving the firm directionless as a whole.
While these concerns are understandable, clinging to outdated models only prolongs strategic drift. Leaders must choose whether to let inertia dictate the firm’s future or take decisive action to break free from the jellyfish doom loop.
Regaining control of the current
If you want your firm to thrive, transformation is essential. Global firms, specialized boutiques, and sophisticated in-house teams are capturing client loyalty and top talent, while unicorn and hedgehog firms present clear, competitive alternatives. The middle ground that jellyfish firms once occupied is vanishing.
To move forward, you must get comfortable making tough choices. You must define your ideal clients, allocate resources strategically, and unify your partners around a common vision. Turning down low-value work may feel like sacrificing revenue, but it really creates room to build something stronger.
Retaining top talent is equally critical. Clear career paths, competitive compensation, and a culture-driven environment improve retention, while transparent leadership transitions help sustain trust in the entire partnership.
Many firms will face a pivot-or-perish moment. Successful change requires strong leadership, cultural shifts, and strategic investments. Whether your firm pursues elite specialization or a scalable, process-driven model, the lesson is clear: half-measures won’t work. You must choose a direction and commit to it with discipline.
Mariano Batalla is a partner at Alta and a strategy advisor helping law firm leaders build smarter models, sharper operations, and stronger momentum. This research forms part of a forthcoming book.
