Is The Tail Wagging The Dog In The Modern Law Firm?

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Everyone thinks it, so let’s just come out and say it:

“Fee earners in Australian law firms are over-managed by ‘non-lawyers’ these days!”

Last week (10 December), Justin Whealing – editor of http://www.lawyersweekly.com.au – wrote an article headed [Australian] ‘Partners unhappy and over-managed’.

The article provides a fascinating insight from “one of Australia’s leading legal recruiters” [Whealing’s words] into several aspects of current thinking (or whinging)  among dissatisfied law firm partners, including that the partnership of some of Australia’s larger and global law firms are unhappy that:

“They are losing their sense of proprietorship and sense of being a partner and feel more like an employee… Senior management aren’t listening enough to partners in making decisions.”

Sorry, but my levels of sympathy are low.

Do I believe that partners in today’s Australian law firms feel disenfranchised?

Yes; without a doubt.

Do I believe that this feeling is more pronounced when the partner in question is a member of a firm that has been involved in a merger – either domestic or international – as the article indicates?

Again; yes, I do.

But…

“…Senior management aren’t listening enough to partners in making decisions.”

Seriously?

I have very little sympathy for this argument – and the reason I say this is two-fold.

First, today’s business environment necessitates that major law firms move away from a partnership structure and towards a corporate one. Simply put, a global law firm with over 300 partners would be impossible to manage if each partner had an equal vote on all decisions relating to the day-to-day operational issues of the firm. Nothing would get done. So, in order to achieve the objectives of the partnership as a whole, a central committee of expert professionals needs to be formed to manage and run the day-to-day operational business of the firm.

Second, by definition a partnership is the sum of all of its parts. So, even if we were to say that the partnership should rule the roost on partnership issues – including both strategic and operational issues (and no corporate structure is needed), then said partnership needs to act in the interests of the collective and not the sole interests of one partner. If a partner doesn’t agree with this approach, then the partner in question should set up as a sole practitioner and avoid the complex issues of being involved in a partnership.

In other words, the power in a partnership structured law firm vests with the partners.

However, does a better balance than currently exists need to be drawn?

Undoubtedly, the answer here is ‘yes’.

Having a central committee (board) who carries out the wishes and instructions of the partnership, as decided at the annual partners meeting, is one thing. Having an executive committee who dictates to the partnership how the partnership needs to be managed and the strategic direction that partnership should take is quite another.

And there is little doubt that following the global expansion of a number of law firms this balance has misaligned (funnily enough, in many cases, at the suggestion of outside ‘management consultants’ the partnership itself has hired).

Overall though, while I would agree that a case can be made by the partners that the pendulum has probably swung too far towards management telling the partnership what they must do – aka, the tail is wagging the dog – if the partners of these firms truly wish to wrestle control back from these ‘non-lawyer’ managers, then they need to move away from the an attitude where they talk in corridors about…

“No one appreciates a micro-managed performance-based system”

…and start to take the bull by the horns and spell out what the joint strategic vision and goals of the partnership are at the next partnership meeting and then dictate that strategy to the management committee running the operational aspects of implementing said partners’ agreed strategy.

Alternatively, in Australia at least, there is the option to list your firm and become a shareholder of the business.

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