The Partnership Model

For the past 50 years, the law firm business model has been based on associates being motivated by a desire to become partners.  Yet, law firms are finding a growing number of associates who have no interest in becoming a partner, preferring a career as an employee.  This phenomenon appears to be international.  A recent survey by the British publication Legal Week reports that only 38 percent of UK associates consider making partner their ultimate career objective, compared to 45 percent last year and 50 percent in 2008.  The numbers are even lower for female lawyers – only 29 percent say they are interested in becoming a partner.

What this means for law firms is a possible restructuring of their HR and professional development programs away from the “up or out mentality.”  Long-term associate status requires retention strategies including expanded pension and insurance benefits.  But it also changes the focus of associate professional development away from team leadership and marketing skills and more directly toward training that makes lawyers more effective and efficient in their current skill sets.

Why is the shift away from the partnership goal occurring?  Young lawyers see an expanded set of career options permitted with a law degree (according to the survey, 22 percent plan on leaving private practice to pursue a career outside of private practice).  At the same time, many want to enjoy a lifestyle that they fear is not possible with the work and business development requirements of being a partner.  Others see the development of private practice career options as permanent associates at high salaries as more attractive than having the ownership risks and “cut throat” firm politics of partnership.

Overtime for Lawyers

For years, law firms have walked a fine line with their paralegals and legal secretaries by attempting to demonstrate that they are professionals operating with a high degree of independence, in order to disqualify them from overtime compensation under wage and hour laws.  Most large firms, operating under multiple state employment laws, have given up the argument and simply pay overtime.  However, the issue of labor law coverage is now extending beyond the para-professional ranks to perhaps include contract lawyers.  A recent law suit filed by a former contract lawyer charges that much of the work he performed was routine in nature and did not, therefore, meet any of the standard tests for exemption from overtime compensation. 

U.S. Legal Market Analysis

2011 Associate Salaries

This time last year law firms were faithfully promising each other that they would never return to the salary wars of the past decade.  Well…the recession isn’t even over yet and firms are racing to return to prior salary levels.  But this time there will be a twist that makes compensation comparisons difficult – a merit factor.

An early announcer of their revised compensation system is Boston/Washington based WilmerHale who shared the new program with associates in a recent memo.  The “projected” base compensation will be:

The plan is that high-performing associates will have the opportunity to earn extraordinary bonuses.  The complaint has always been that associates don’t know in advance what the criteria will be for bonus compensation.  WilmerHale’s subjective factors have been announced to be: “Quality of Contribution” (overall evaluation assessment) and “Productivity and Value” (time spent performing substantive legal work (both billable and pro bono).   The market norm for bonuses is $25,000 for strongly positive performance.  WilmerHale’s associate bonuses are anticipated to range from $17,000 to $60,000 dependent on the level of performance.

Fashionista Wars

Record high temperatures are creating some low-grade battles among women lawyers concerning summer clothes in the workplace.  The battle line, according to The Careerist, is senior women shaking their heads at how casual or tawdry junior associates look, while the juniors are thinking that the “old” ladies (code for female partners) are way too formal and uptight.  A recent tweet from a first-year associate read, “OMG  they even wear support hose on a 95 deg day.”  Now there is a website (www.corporette.com) that deals with professional office fashion issues including an ongoing debate as to whether it is appropriate for a woman to tell a colleague when her wardrobe is inappropriate.

Pro bono Contributions on the Rise

Traditionally, the most profitable law firms make the largest contributions of pro bono time.  Surprisingly, however, the recession has generated an increase of almost 15 percent in the number of hours contributed to pro bono causes by large firms.  According to the American Lawyer’s annual survey for 2009, the average lawyer worked an increase of five hours of unpaid time, compared to 2008.  While the quantity of pro bono work has increased, there is concern by some organizations, including the Association of Pro Bono Counsel (www.probonocounsel.org), that the quality of the work performed, particularly in support of broader social justice initiatives, has decreased.  The concern is that firms are using pro bono work to fill the empty plates of associates and, therefore, there is a reluctance to take on expensive litigation such as death penalty cases and employment discrimination class actions that require a long term commitment.  As a result there is a move toward assessing pro bono contributions by a firm based on a combination of factors and not just the percentage of hours involved.

Rainmakers: Born or Made?

Almost every law firm has a couple of partners who became major business developers despite obstacles including a lack of formal training.  Yet, firms continue to sponsor business development training under the theory that there is nothing that makes a lawyer a natural business developer that can’t be duplicated and taught.  However, according to a recent book, Born Entrepreneurs, Born Leaders, 40 percent of the variation in the tendency for specific areas of business accomplishment is inherited.  It would be a stretch for firms to abandon marketing support and business development training, but advocates of the marketing DNA theory suggest that lawyers who come from parents who are successful sales people or have a history of working their way through law school doing commission sales may present the greatest likelihood of maturing into rainmakers for the firm.

LegalTrends

LegalTrends is a semi-monthly newsletter written and edited by Ed Wesemann, a Founding Partner of Legal Resource Group, LLC.  Ed is also a management consultant and advisor to US and International law firms. In addition to being the author of LegalTrends, he also pens articles for EdWesemann.com that is emailed to thousands of subscribers around the world. In addition, he has written four books on legal management issues.  For further information visit the Legal Resources Group website at www.LRGLLC.com or Ed's personal website at  www.edweseman.com.  He can also be reached at 1-912-598-2040 or by email at Ed@edwesemann.com

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