Taking control of our future firm
It’s been fun – and I have to say, somewhat rejuvenating – to meet with the trainees at some of our clients who are embarking on their legal careers this month. Universally, they have been bright, enthusiastic and keen to make their mark – the very antithesis of what many commentators would have us believe is the entitled mindset of today’s graduates.
These oases of hope and expectation in this otherwise gloomy environment have led me to consider the many challenges facing the profession the trainees are now entering and, specifically, the intergenerational issues the sector faces.
The question of intergenerational equity is one that taxes partnerships across the globe. There are those that believe the predominant demographic cohort in legal partnerships (the baby boomers) represent an all-powerful elite that is at risk of not using its power wisely and fairly. It is undeniably true (and I speak as a ‘boomer’ myself) that this generation has been sociologically and economically fortunate; it enjoyed a loan-free education, it experienced an asset appreciation (principally property) that significantly outstripped wage increases and even now many boomers look forward to a future cushioned by the maturing of defined benefit pensions.
For those that follow, things look and feel very different; income growth is at best moderate and technological and other changes mean that career security is far more fragile than it once was. Add in a slower rate of wealth aggregation and a faster rate of debt accumulation and it becomes easy to see how some believe that the boomers have been negligent in leaving the country’s finances in disarray and in bestowing the burden and expense of sorting out the economy and environment to others.
In the law, of course, we are looking at a sub-set of these demographic cohorts, and arguably a fortunate sub-set. However, and always accepting that describing any accumulation of people as having the exact same motives and agenda is arrant nonsense, it is naïve to believe that these economic and sociological trends do not leave problems for law firms partnerships to sort out.
For example, many partnerships are now facing up to the realisation that more ‘boomer’ partners are likely to want to, and be able to, work for years longer than they may have anticipated upon entering the partnership. Where does this leave the ‘next’ generation in terms of access to valuable client relationships and knowledge that may not be transferred? What about the post-recession levelling of earnings and restriction of entry to partnership combined with the cost of funding retiring partners’ payoffs and pensions by subsequent generations of partners? How should new partners assess the risk of their capital contributions in an era in which reward may be considerably more uncertain than in the past and when executive decision-making is often far removed from them and concentrated in the hands of management partners who may have very different priorities? And of vital importance, where do the wants and needs of clients fit into this morass of partnership planning?
It is all too easy for these concerns to be dismissed as the ‘snowflake’ concerns of privileged lawyers; the reality is that, unless they are addressed, these are exactly the forces which may cause some partnerships to, if not split asunder, then at least suffer internal pressures that cause unwelcome tensions and distractions.
The smart firms out there appreciate that this is what proper partnership planning is really all about and are taking sensible steps to address these issues. Such steps include
- Assessing strategically the future capabilities and skills required for the work the Firm wishes to pursue bearing in mind anticipated technological and market changes. Vitally, in our opinion, clients should be a part of these strategic assessments.
- Identifying critical roles and positions in the Firm and building long-term plans for those with the current or expected skills to be able to fill them.
- Including talented associates in discussions about the future type of partnership the Firm foresees and being transparent about earnings, risk, partnership expectations and behaviours.
- Entering into open, frank and trusting discussions with partners about their personal career plans, including thoughts about retirement or a change of work pattern. Importantly these discussions should happen regularly and as a matter of course – all too often they appear to take place merely as a proxy or a prelude to asking a partner to retire.
- Focussing training and development activities with laser precision around the skills and capabilities the Firm needs at all levels.
- Developing plans and methodologies for the continuous transference of knowledge and relationships around the partnership so that clients and know-how becomes institutionalised rather than vested in individual partners.
Of course, there are many other factors that partnerships need to consider in addressing these fundamental issues, not the least of which will be the compensation models, the diversity of the partnership and the existing demographic make-up of the Firm – none of which makes this easy stuff. However, if the profession is to live up to the expectations of the talented trainee class of 2017, the time to act is now.
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