In today's world, it is hard to become a law firm equity partner
. According to the AM Law 200, 85 percent of the highest-grossing firms in the United States have established a non-equity tier.
From the start, many highly-profitable New York and Washington, D.C.-based firms have always been highly selective about entry into partnership. Additionally, it does not help that the standards for equity partnership have been raised across the profession. This new trend no longer guarantees that partners will be partners for life.
With the present situation in mind, some clarity is helpful regarding what is expected of a law firm equity partner. When the money gets tighter and internal scrutiny increases, all players -even longtime veterans - may be forced to compete for their spots.
Here are some key behaviors that firms need their equity partners to to demonstrate each year:
- Do Excellent Work - Doing excellent work is a given in the clients' eyes, and an expectation of every lawyer in every firm. It is reasonable to assume that many partners do consistently good work, or they wouldn't have gotten this far. A good way to improve your work is to solicit direct feedback from clients regarding how they define "quality" or "service excellence." Let them tell you what is important to them and in what order of priority. How do they define "responsiveness?" What is "effective staffing?" What are they talking about when they talk about "cost" and "value" and "results?" How do they want to be billed and how often? Then, do what they say. Excellent client work is measurable and should be monitored regularly in a systematic way.
- Pay for yourself - Every partner should generate working attorney fee receipts that cover their compensation (salary and benefits), plus share of overhead on an annual basis.The exceptions to this rule include the aging founding partner whose name is synonymous with the firm and who still brings in business despite fewer billable hours, and a lawyer who clearly adds substantial value to the firm in other ways.
- Pay for someone else - Partners must add value to the firm in addition to their own attorney receipts. A partner who merely covers his own cost has not contributed lasting value to the firm and has not increased his partners' economic return.
- Cross-Sell - A partner should proactively look for opportunities to refer business to other partners and should assist others when asked to help develop client relationships. The focus must be on developing business for the firm, in addition to one's personal practice. For a lawyer to be able to effectively cross-sell his partners, he has to know what his or her partners can do. It is important that partners share information on their capabilities and successes with one another - formally at partnership meetings and via internal communications, such as e-mail and newsletters, and informally through everyday office chat.
- Develop Associates and Staff - Partners should actively teach and train their less-experienced colleagues as an investment in the professional capability and longevity of the firm. This can be achieved through means of formal or informal mentoring, internal seminars, training programs, taking associates along to client meetings, sales calls, etc. The effective transfer of skills should be internal and systematic. Firms that are known for their ability to successfully involve and develop associates will enjoy greater confidence from their clients, greater options regarding how to staff members and a competitive advantage over other firms.
- Play Nice - Most firms have a well-understood code of conduct, or set of values that govern behavior in a firm. For example, people are expected to work hard, be honest and treat each other with respect. They should behave in a collaborative, cooperative and team-oriented manner. They should comply with firm policies and procedures. The more visible one is, in terms of their financial contribution, the more important it is that they set the right example by adhering to reasonable management policies that make the firm go, and not by complaining about such things.
- Help Manage the Firm - Each partner should be willing to do their part to contribute to the effective management of the firm and, at the very least, should not keep others from doing so. Also, all partners must effectively manage client relationships and manage the work.
- Represent the Firm in the Community - If a partner is successfully bringing in business for himself and others, s/he is probably already representing the firm in the community. But, there is always room to improve the partner's visibility in the community. By teaching, writing, speaking and being quoted in the press, the partner's visibility is highlighted more. Firm leadership should determine policy and make individual decisions on whether certain types of activities further the business objectives of the firm. Decisions should be made strategically and should be coordinated to advance firm and practice goals.
To conclude, equity partners enjoy benefits of ownership in which other lawyers in the firm do not share. In exchange, they make contributions to the firm over and above what is expected of their non-equity colleagues. Membership in the ownership group should be reasonably fluid to include and exclude lawyers based on their recent and projected levels of contribution and commitment.
To avoid over/under-contributing, law firms should define obligations of partnership, in measurable terms whenever possible, and enforce those standards strongly and firmly.