It’s a common theme among law firm leaders, particularly big law firm leaders, to claim that their firms have some sort of vaunted “culture” that has been painstakingly developed over many years. This incredible culture, the theory goes, imbues the firm with some kind of wonderful familial aura, enabling the firm and its lawyers to respect a time-honored profession.
Based on what I’ve seen lately, I have to largely call bullshit on all that. Yes, at one time, the practice of law was indeed a profession. Lawyers practiced in stable firms, firms that often had partners who had been there their whole careers. Compensation was often lock step under the one for all theory. As partners aged or had some bad years, they remained partners, albeit at perhaps reduced compensation. Under this milieu, many firms did indeed have a culture developed by long time partners who understood how the firm developed and grew. There was a history made by people who knew their seniors when they were young and who now were seniors to the next generations. Culture was important.
But something changed. As profits per partner began to rule the day, law firms turned from culture to profits above all. Want some proof? Here are three developments that were recently reported:
3 recent reports bear this out:
1. Moving associates to full partnership has been replaced by the practice of creating large classes of “nonequity” partners. A recent article shows just how pervasive this has become. Let’s face it: nonequity partners are just glorified associates. They have no stake in the partnership; they have little control over their work and lives. Why has this happened? It’s all about money and control. The more nonequity partners there are, the fewer equity partners there are to share in the overall pie. And as discussed below, more money is available to appeal to and recruit lateral partners with significant books of business. Firms can set salaries of nonequity partners with impunity since they are, by and large, fungible. Nonequity partners are also easier to manage and control. Equity partners, on the other hand, have independence, especially if they have big books of business. Yes, nonequity partners can become equity partners, provided they develop big books of business. But law firms today are controlled and run by partners with significant books of business. A culture of inclusion of only one type of partner: those motivated by money above all else. Other voices are no longer heard.
2. Another article emphasizes the increased de-equitization of equity partners. Aren’t performing and continuing to bring a big book of business as equity partner year after year? Firms simply de-equitze you and demote you to the ranks of the nonequity. This leaves more money for the rest of the equity piggies at the trough. Firm culture and long term loyalty be damned. Again, the equity ranks gradually are composed of those who have only one motivation. It’s all about the money
3. The culture of most firms is now dictated by lateral partners, as has been often reported. Lateral partners don’t give a whit about “culture.” They know little about the history of the firm. None of that matters. What matters is money and power. On the management side, the opportunity to increase profits by bringing in laterals at the expense of firm culture and tradition is just too tempting. Want to increase profits? Bring in lateral with a big book of business. If you have a big book of business and believe you aren’t making enough as an equity partner? Leave, go someplace else that will guarantee you more. Firms will often claim that they take steps to ensure that laterals understand and respect firm tradition and history. But really, how much respect can you have if your primary motivation for joining a firm is to make more money and money is your primary focus when you get there?
What Does This All Mean?
What does this all mean? Making partner ain’t what it used to be. Cohesive law firms with partners devoted to the firm and their partners are becoming a thing of the past. It’s hard to have real culture when equity partners come and go, and you aren’t secure as an equity partner. Indeed, making equity partner may soon be something only a few achieve with big books of business. Firms are managed mainly by those who, at the end of the day, focus only on making money and profit.
Some would say that the olden tradition based law firm just doesn’t work in today’s days and times and I’m just being naive. Yes, other businesses focus on money and bottom-line profit just as much, if not more so.
All that may be true. But let’s not pretend we are something we aren’t. That we are family, that we have some deep-seated and real culture, and that we are a profession. The truth is big law firms are businesses and often cutthroat ones at that. And management of law firms is a business, a business more and more focused on the bottom line and the all important profit per partner.
