Partnership: Be careful what you ask for …

Partnership:  Be careful what you ask for. As my mother used to say, "… you just might get it."

Myles Lynk, Professor at Arizona State University, spoke at the ABA‘s Law Practice Management Section‘s conference in Tucson. His topic was "Choice and Opportunity–Race, Politics and the Practice of Law.

One of the issues raised during the Q & A session related to new lawyers wanting to make partner. I suggested that there may be a reevaluation of this concept in the near future because of the financial turmoil we’re experiencing today.

Would a lawyer want to join the partnership ranks when his/her voice may be so small in the group that he would have no influence over the direction of the firm. Would he want to be made partner if he has to "buy in" to the partnership at a value asserted by thepartnership rather than by an independent study? Would he want to enter the partnership when the sale of his interest could be only under very restricted terms and at a value determined by a formula different than the formula used for the buy-in and only back to the partnership, not to a third party (even if a lawyer)?  Would he want to join a partnership when his income percentage will be determined by a "compensation committee" in which he has little or no voice?  Would he want to join a partnership when, irrespective of how low his earnings from the firm may be, he would be jointly and severally liable for the debts of the law firm in the event of the firm’s collapse?

Would we advise our clients to move forward with these issues on the table? I think not. Yet, lawyers still pursue the "guild" concept and seek to become a partner because of the glory of the term … and the hope and expectation that an equity partner will earn more money.

This is true for some of the large firms. But, with so many law firms taking a major hit in their revenue stream because their clients are closing their doors, many lawyers will have to reevaluate their reality…especially those lawyers who are the "workers" without their own "book of business."

The professor suggested that many lawy school graduates, even top of their class graduates with choices such as Barak Obama had, may choose public service rather than "Wall Street," prestigious and financially rewarding jobs.

Also, Baby Boomers may not be able to retire quite so soon as they projected because we’ve gone from the 401K to the 101K … Almost everyone I’ve spoken with lately has indicated that they’ve lost at least 50% of their wealth, whether it be stocks and bonds or real estate. This means that we will have more generations in the work place than ever before … And we know the difficulties that the generations are having in understanding each other’s values … it will make for interesting times inside the law firm of the future. Will the old guard still step aside or will they seek to keep power as long as they practice? If not, what will happen to them? If they do, how long will the younger lawyers accept a lesser economic and social status? Interesting questions.

These issues will all play out not only in the generations discussions, but also in the minority and women discussions.

Diversity is wonderful. It demands tolerance from all involved. Will our country, with its current polarization of attitudes — Just watch the current political rallies — be able to experience such tolerance?  Such tolerance, even if normally possible, becomes even more difficult to achieve during times of economic challenges. Just ask the immigrants to this country. On their arrival, were the accepted with open arms or was there initial hostility?

Interesting times. And challenging issues that will need to be faced by the managments of all law firms to survive and thrive.

Categorized in: Management