Likelihood of Making Partner Affected by Economy
May 29th, 2008 by Jim Cotterman
In an earlier post I talked about what to do if you find that prior promotion decisions have left the firm with some very hard choices in difficult times. This post discusses how firms are grappling with promotion decisions during those same economic downturns.
US firms have raised the bar for promotion and more frequently ask the hard question, “Is there really a need for more owners in this practice?”. The recent Law.com article, London Law Firm Leaders Taking a Hard Line on Partner Promotions, demonstrates that UK firms are facing similar economic and promotion challenges. And many of them are making tiered ownership distinctions, which further complicates the task.
Generally law firms are best situated if they promote to ownership only those who can maintain, refresh and expand the business opportunities of the firm. Without this one attribute, no firm can remain competitive or viable for very long.
Unfortunately, this is easier to preach then to practice. Getting a good answer to the question and a fair understanding of one’s ability to attract business is easy in some situations. But in large law firms where the relationships with clients are quite complex — often spread across time zones, client business divisions, and law firm practice groups, law firm leadership is handed a very difficult and subjective assignment. This is particularly so since the candidates are mostly younger partners who are just beginning to establish their market presence and some of the decision is a bet on the future.
The hard liners will say, “Candidates make it when we can no longer afford to ignore them.” Often this means waiting until the candidate and a string of clients are about to leave. Strongly Darwinian, this model does little, in my view, to create a collaborative organization. More likely it will reinforce individualism as the dominant cultural element. It will however, substantially lower the likelihood of bad promotion decisions. On the other hand it raises the possibility of two opposite problems. First, such firms are more likely to miss opportunities to collaboratively grow business. Second, one may wait too long and the solid candidate bolts.
Others will preach generosity in recognizing the efforts of others to grow the firm. This is key to firms that desire a strong institutional culture. Many law firms we work with, and in particular larger law firms, work hard at establishing and maintaining this perspective. Unfortunately, this approach does increase the likelihood that promotion decision, particularly in good times, will create challenges when the market turns and only the most skillful of the partners will be able to further the workflow of the firm. It is during these times that the firm’s culture is truly tested. Will it move towards the Darwinian model as a consequence of economic pressures? Or will it pull together with increased efforts to maintain work intake to ride out the downturn.
This entry was posted on Thursday, May 29th, 2008 at 5:06 am and is filed under Economics, Partner compensation. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.