Bells are ringing in the New Year for law firm professionals, but for whom does the bell really toll?
Unfortunately, law firm partners have little to celebrate in 2013, as their numbers decline in both health and good fortune.
Law firm partners face layoffs, according to a recent Wall Street Journal article.
“You’re only as secure as the amount of money you bring in,” a partner recently told Jennifer Smith of the Wall Street Journal. The aforementioned unnamed partner was first asked to leave a large national law firm during the recession, and then subsequently let go last year from his following firm.
This is just one anecdotal story of many in the legal industry. And, the problem many be more prolific—reaching coast to coast, continent to continent.
Once a managing partner for the British law firm Clifford Chance before leaving in 2000, law-firm consultant Tony Williams explained to the Wall Street Journal, “Firms are now much more clear in what they expect…and much less forgiving if people consistently fall short.”
Lawyers are no longer recognized for their mastery of the law. Instead, lawyers and law firm partners must be managers, leaders, and technological and social media savants all tied into one.
Like many of its predecessors, law firm Waller Landsen Dortch & Davis LLP, located in Nashville, Tennessee, also overhauled its partnership structure during the recession, adjusting pay and hour requirements, in addition to revenue goals for its partners.
“Over that time we went from about 85 equity partners to about 55,” said Chairman John Tishler of its 200-lawyer firm, according to the Wall Street Journal.
“We had a lot of hard conversations, and so some people left us.”
In fact, roughly 15 percent of nearly 120 firms surveyed in Wells Fargo Private Bank’s Legal Specialty Group study intend to cut partners in this year’s first quarter, continuing a three-year trend of partner layoffs, reports the Wall Street Journal.
So, what New Year’s resolutions are to blame for the New Year’s redundancies? Apparently, lack of productivity.
A legal consultant in the U.K. told the Wall Street Journal that partner restructuring was simply “good housekeeping,” seeing as many law firm professionals are having trouble keeping busy these days.
Partners are billing about 30 percent fewer hours per year than pre-recession industry benchmarks. Before the recession, partners averaged roughly 1,900 billable hours per year. Now, they’re lucky to reach 1,300 hours.
“There are a few very major firms that are genuinely and consistently busy,” law-firm consultant Paula Alvary admits to the Wall Street Journal.
But, death of the traditional partnership track means birth to a new, more efficient system.
Here are a few ways to make your partners more productive at your firm:
- Track more than just billable hours and new business. Consider leadership or management responsibilities, as well as mentorship as requirements among your partners.
- Make partnership duties transparent so that struggling partners can become inspired by the work of other more successful ones. And, more successful partners can see which of his or her peers need some extra help. Espouse an environment of mutual assistance, not competition to increase productivity.
- After promoting a new partner, require special partnership training. Don’t send your partners into battle without the proper legal weapons.
- For partners in large law firms whose specific practice may permanently fail, consider their cross-sectional expertise and what other departments may profit from their experience. Encourage partners to have multiple, cross-sectional knowledge and flexible skill sets.
- Retrain, don’t rehire. It may be tempting to make cuts to maintain profits. But, where possible, see where you can retrain current partners to become more productive. It often costs more in the long run to fire employees only to rehire one in the future. Before you layoff partners, find out if they’re willing to work part-time, contingency cases, or under a new title (Of Counsel, for example, with a smaller salary).
Law firm partners are certainly ringing in a new era of change.
But, change can start with communication. If productivity is the problem, think about putting partners on sabbatical or asking them to attend training on becoming managers or more efficient workers.
Certainly, partnership standards and cutbacks to increase profits at law firms have increased. But, increasing your firm’s creative management techniques and its communication about new partnership requirements to keep its top executives is just as valuable.
Adapt or downsize? Which New Year’s resolution will your firm follow this year?