Here at the Firm Spy we make an effort not to just hijack the content published on other websites, in particular those operating in the same space as us (namely ALB, Lawyers Weekly, and The New Lawyer). However, in the last week we have read two articles published by our good friends at The New Lawyer that we considered so compelling,  so pertinent, that we have decided to republish them here.

Unsurprisingly, both articles are a slap in the face to the modern-day corporate law firm partner.

The first article was written by a former associate to Michael Kirby. Nick James:

The nature of the top tier law firm has fundamentally shifted in the last three decades, writes Nick James, so isn’t it natural that those most adversely affected would begin to cast around for new alternatives?

OBSERVERS of the legal industry have for a while been describing a new set of behaviors and attitudes displayed by emerging lawyers. Generation Y in particular is described as a challenge and sometimes a problem for the existing law firm model.

The new generations, we are told, are less interested in doing the work required to become a partner and are more interested in:

• profit share at an earlier age
• flexibility
• being given greater responsibility and client access
• experiencing an individual connection with their personal values and the subject matter of their work.

While both Gen Y and X are different from the generations before them, it is important to note that many of the ‘changes’ in attitude ascribed to them are in fact natural responses and adjustment to dramatic changes in the large law firm environments they are inheriting.

Today’s mega law firm juggernaut is a relatively recent phenomenon. The very largest law firms in Australia in 1980 had only just exceeded 30 partners. They also operated under a very different set of conditions. In 1979 an article comprehensively surveying the phenomenon of the emergence of the “corporate” law firm in Australia, noted that “one firm has gone so far as to … specify weekly minimum billing targets for its partners and employee solicitors”. The article continued “other law firms have clung longer to a sense of individual autonomy in the partners”.

As law firms have grown since then, in only a few decades, what once was a system of a community of partners bounded by either personal friendship or acquaintance evolved into a highly impersonal/competitive/corporatised and semi-political structure. Its decision making model: Requiring the consensus of a large group of partner-owners who have a window in their career to collect profits before retirement; has (arguably inevitably) driven management decisions which have over time tended to serve the short-term profit interests of the equity partner-owners at the expense of other important interests, including those of the emerging lawyers and even of the firms’ clients.

The fall-out has been a large factor in the crisis in our legal profession of unhappy lawyers (even in partnership ranks) and dissatisfied clients, not to mention a decline in the general level of community respect for the profession. Increasingly higher fees; higher hours worked by lawyers; behavior driven by billing targets; the overheating of the leverage model; the creation of salaried partner/special counsel roles; and the increasing delay of promotion both to and beyond senior associate; are all a result of the intense focus on profits-per-equity-partner as the fundamental goal sitting at the centre of the top tier firm.

Ultimately these sorts of observations don’t mean much in a business sense unless they necessarily lead to two conclusions:

a) Factors inherent in the current large law firm model actually make the model bad at what it must do in the long term in order to remain sustainable and successful; which is to keep its workforce and its clients happy.

And therefore:

b) The current large law firm model is vulnerable to new structures that can do a better job of giving lawyers a better place to work and clients better service and value while being able to accommodate the scale of needs of modern globalised corporations.

The structure which will win in the long term will need more than the simple advantages of incumbency which make the modern top tier law firms appear invincible at this point in time. Any new structure must, to be successful, rebalance the needs of lawyers for conditions which were once an embedded part of their working life as well as provide a dynamic engine capable of driving the growth of the business. How this is to be done is the task for the next generation of lawyers; those who have inherited a large law firm model which they can now plainly see is flawed and requires rethinking. The urgency of this task is heightened as they increasingly realise they themselves are among the primary victims of its basic dynamic and the cost to their lives as well as their professional enjoyment is too great to continue working within the existing model.

It is important to remember, that emerging alternative visions for the future for top tier practice, like the aspirations of the new generation of lawyers, are not a radical departure from the history of the legal profession. It is instead the overheated, current big firm model which is the aberration. It seems arguable that ‘new’ visions for the practice of law in fact represent a continuation of the sorts of things we have always wanted from our workplaces and which are only resurfacing now because they have been left behind for a while too long.

Nick James is the founder and director of the Sydney-based law firm Optim Legal. He is an alumnus of two top tier firms and was an associate to Justice Michael Kirby at the High Court of Australia. Comments can be left online or sent privately to nick@optimlegal.com.au.

The second article was written by Michael Bradley. Bradley, you’ll recall, has previously been the subject of some Firm Spy criticism. Until now, we thought Bradley was some kind of space cadet. We censured him over forcing graduate job applicants to his firm Marque Lawyers (named after a wallet) to write a 500-word application essay featuring the word “jazzy”. We wrote our own application and published it. We also criticized Bradley over the advice he gave to seasonal clerks on how they should comport themselves at their job interview.

We thank Bradley for having the courage to write an article which broadcasts the problems of the modern-day partnership, and necessarily implicates his former firm Gadens where he is an erstwhile managing partner.

Being a partner no longer means having a say in how the business is run, among other things. Michael Bradley asks, what is partnership now, anyway?

“…I looked around at the partners and I thought, ‘I don’t want your life’.” So the senior associate from a very large firm told me in describing his reasons for leaving secure employment and the path to partnership. That’s of course a very personal thing. There are plenty of lawyers who are at least prepared to live that life for the reward of partnership. But what is partnership these days?

It used to mean ownership, a direct financial stake and a say in how the business was run. But in most large firms, the role of the “partner” has had its scope defined progressively more narrowly over the past 30 years to what is now pretty much a single dimension.

The risk/reward proposition in private practice never really stacked up. The available pay per hour worked is, even at the most profitable firms, paltry by comparison with some alternative career paths. The trade-off was the addition of job satisfaction – intellectual, emotional, proprietorial. You could aspire to own a real piece of something special, and enjoy the benefits that went wit h it. These included loads of social status and a soft landing at the back end of your career – a leisurely slide out with a corner office and some board seats, supported by the next generation of partners who were in a carriage further back on the same perpetual train.

It became noticeable by the early 90s that this system had an inbuilt defect, due to the lawyer’s natural imperative to think myopically. The spectacle of ageing partners living off the fat for years after their prime became rapidly annoying and ultimately intolerable for the young Turks. Firms responded by, first, implementing a gracefully staged slide down the equity pole. This quickly escalated into an entrenched “up and out” philosophy throughout the profession which dictates that every partner will progress upwards in power and profitability until they can go no higher; and then they are taken out the back and shot.

It’s a classically human mode of organisation. Human, but not humane. Law firms have accepted that they are not places for the faint hearted, which might be okay if the slices of pie had gotten bigger to compensate for the loss of long term job security. But it hasn’t. Partners still derive all their income during their stay at the firm; they have no access to capital gain and no opportunity to cash out (unless they float the firm). And their incomes, while still high, haven’t climbed in the exponential way that, for example, public company CEOs’ salaries have.

At the same time as finding themselves participating in what is now quite literally a rat race, partners have progressively given up most of their traditional role. Driven by the two complementary theories that “good lawyers make bad managers” and “partners should stick to their knitting”, the era of “professional management” in law firms has arisen and is now firmly in control. Whether or not the guy (yes, it’s a guy) at the top is or isn’t a lawyer, there is a phalanx of COOs, CFOs, HR, BD and KM Directors in complete charge of every aspect of the management and administration of the firm.

The partner’s role is now reduced to this – ensure that (a) you and every member of your team/cell/unit has the requisite number of chargeable hours on their timesheet every day; and (b) the fees under your “control” (however that’s measured) are adequate to justify your continued progression up the greasy pole. How you achieve that is not so centrally controlled, but the consequences of failure certainly are. Pressure? Yeah, just a bit.

It’s efficient, definitely. But for the partner in the trenches, is it what you bargained for? I’d argue that, if you have no real say over hiring, firing, remuneration or progression, and you don’t frequently participate in an open forum with your partners to talk about your business in whatever terms and on whatever agenda you choose, then you are an owner in nothing but name. It shouldn’t be a huge surprise that not everyone wants to be you anymore.

Will we see a day when a group of corporate lawyers/accountants assemble together and simply say to partners “give us a bigger slice of the pie or we’ll leave and your firm will disintegrate”?

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