New Partners
I have just spent the weekend with a smallish firm about to introduce 3 new partners. These people are currently associates with the firm and have been employed by the firm for several years.
We spoke about the obvious things that new business owners need to be aware of but there are some things that this firm and others I encounter seem to take for granted. These are a few;
Profitability
It is not unusual for firms to look at ‘controlled fees’ (individual billings plus referred fees) as a measure of financial performance. It may indeed be one of the most important hurdles to partnership in some firms. I accept that gross fees solve a lot of problems but profitability must surly be the main game. Measuring and perhaps rewarding controlled fees alone, ignores the cost of generating the fees.
It may be the case that partners with fewer controlled fees in fact contributing more profit to the firm.
Increasingly better firms are using profitability as a measure of financial contribution. Incoming partners should be taught how to structure their team in accordance with the profit goals of the partnership.
There are several components to the management of profitability, some beyond the control of many partners, long standing occupancy arrangements, IT infrastructure, fixed shared services expenses (HR, accounting, practice development professionals to name a few) but there are two directly controllable factors.
The first is input relative to fixed cost, specifically recoverable charged work (regardless of pricing strategy). Most practice overheads are fixed. They don’t vary with production. It follows that the most productive lawyers, those who do and recover the most chargeable time (or gross fees in non time based firms) per day, week, month and year will be the most profitable. No surprises here I imagine.
The second controllable factor involves the structuring of employed lawyers within the team (see my earlier article Managing Leverage). Within a fixed cost environment that is gradually moving towards a fixed priced environment the structure of a partner’s team, senior lawyers relative to more junior lawyers will significantly impact profitability (its basic labour arbitrage).
Constantly improving the client experience
New partners should understand how to delight a client. They should understand that expertise might land them a gig but expertise alone won’t, in the main build an enduring relationship.
Would that it were as simple as ‘build the best mousetrap and the world will beat a path to your door’. Better mousetraps are being built on a daily basis with the aid of technologies like AI. Building and maintaining outstanding relationships with clients (start by actually caring about them as people not just clients with a problem) will remain a differentiator.
The brightest and the best will always do well I suspect but they’ll do better if they are actually likeable as well.
Leadership for a new generation of lawyers
Many new partners find themselves having to lead and engage people who, until recently were their contemporaries. In the future they will be leading a new generation with, potentially different wants, needs and expectations.
Incoming partners should be open to new learning on leadership, self-awareness and the skills necessary for the engagement of employees. This information is available, accessible and in abundance for those who care enough about these critical skills.
Being a good partner
Partnerships develop their own unique culture either through managed intervention or organically. Some are more supportive and others more competitive. Incoming partners should be mentored through the how to behave without pissing people off process. This is far preferable to the traditional throw them in the deep end and see how they go method.
Firms may define good citizenship differently but, in my experience incoming partners should know that they will be judged by the incumbents (perhaps over a relatively short time frame) and what they could consider if they want to gain the enduring respect of their partners.
Being a ‘good partner’ starts with do unto others… beyond this sensible element of success three manageable actions spring to mind. Firstly, support for individuals and support of management, secondly maintaining great communication with all partners and thirdly looking for opportunities to share client relationships.
I would counsel senior partners against assuming that these behavioural traits are obvious to or even considered desirable by incoming partners. As partnerships evolve to include three generations (boomers, x and y) you will probably experience different attitudes to what we may see as simply common sense.
The long game
Lets start with the obvious. New partners should understand that they have just commenced a reasonably long journey, not arrived at their goal destination. Sustained success will, more than likely involve career long learning, embracing innovative technologies while maintaining professional brand. Most people get this but I wanted to restate it, its important.
New partners should be encouraged to plan. Plan for the business, plan for their work group and plan personally. I have observed law firm partners for 30 years. Those who enjoy success with life style balance, good health and every prospect of a long enjoyable life after law generally planed it that way.
Neil Oakes
Director, FMRC
P +61 2 9262 3377
E enquiries@fmrc.com.au