partnership

On average, it now takes 3229 days to make partnership

3229 days – on average that’s how long it will take you to make partnership in 2023. And when I say “partnership”, I’m not talking about equity partnership.

Last week (15 August 2023), Marlene Gebauer and Greg Lambert interviewed Laura Leopard, founder and CEO of Leopard Solutions, on their ‘Geek in Review‘ podcast. It’s a really interesting chat around law firm partner succession plans (or lack thereof), which was actually the primary topic of their conversation.

But, it was an insight that Laura shared at the 13 minutes and 21 second mark that had my hair standing up:

In 2023, on average, it takes 3229 days for a new entry level hire to make partnership.

Two things to note here:

this figure reflects those making partnership in 2023 (as opposed to new entry level hires in 2023 – see below for why this is important)
as Laura and Greg discuss, this reflects ‘partnership’ (i.e., salary partner), not equity; which could take you a further three years to acquire

So what? After all, this information is useless unless put into context. What I mean here is this: Has this number changed at all over the past 10 years?

Well, as it happens, Laura shares this with us too.

In 2012, on average, it took a new entry level hire 1353 days to make partnership

On average then it is now [2023] taking new entrants about 5 years longer to make partnership than 10 years ago!

What can you do to make the path to partnership shorter?

Okay, you’ve decided you want to be a partner: What can you do to make the path to partnership – which, let’s face it, is growing by about 6 months every year – easier / quicker?

Here are a few tips you may want to consider to help make that happen:

Know what your offering / sector expertise is
Learn your firm’s economics / financial metrics – what is realization / utilization / leverage / write-offs / average billing rates? If you don’t know you need to learn this quick! “Play the game”
Look at / speak to your existing network – both internal (referrals) and external (referrals and clients)
Grow your professional network – for example, join industry associations and attend relevant industry conferences
Speak at industry conferences / events (that are relevant to your core area)
Build your personal thought-leadership brand (LinkedIn)
Understand and communicate your value proposition

Most importantly though, have a plan and if you think it will help hire a business development mentor / coach to help you reach your partnership goal.

On the rules of compound interest, a one hour talk each month with someone who knows how to build a book of business will take you a long way to achieving your goals quicker than the industry norms.

As always, feel free to reach out to me for a free chat if you want to talk through how I can help with this.

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“Burden partners”

Came across the term “Burden partners” in this article in the Australian Financial Review today. “Burden partners” is a term denoting those partners within a partnership whose cost to the partnership is greater than their contribution.

In simple terms, partners who withdraw more from the kitty than they have deposited.

The reality is that by its very nature (due to economic cycles), there will – from time-to-time – be partners who have years in which they withdraw more than they have deposited that year; but in most cases these partners will have previously made significantly higher deposits than withdrawals and are effectively withdrawing savings (having said that, retained earnings is not a given with law firm partnerships so this is more a reputational issue than financial one).

It is circumstances in which this is a prolonged (and often unfixable) trend where this becomes a problem.

You can also often see this with new partners who have probably been made-up too soon and don’t really have the book of business yet to justify their promotion to partnership ranks.

Either way, if the term “burden partners” sounds familiar and you want to discuss ways of how this can be fixed, feel free to reach out to me for a chat.

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Shoutout to Sean Stratton on Unsplash for today’s image

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

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.