The Lawyer reported this morning that Mark Walker, until recently the
managing partner of Cleary Gottlieb in New York, has moved to Paris and
into the world of finance as a senior advisor to the global sovereign advisory
group at Lazard.
One of the subtle flaws in many law
firm governance schemes is the absence of policies and management structures
that facilitate a managing partner's return to full-time practice or a
transition to a new career.
Sometimes the end of a managing
partner's term of office can create a crisis with financial, governance, and
leadership implications for the continued success of the firm. Midsize law
firms appear to be the most vulnerable, although the transition can be
difficult for small and large firms, as well.
This is one of the principal
reasons, although not the only one, for the "managing partner for life"
phenomenon that we see in many law firms. It becomes easier for the managing
partner to remain in place, usually with the enthusiastic support of one's
partners (most of whom would not want the job), rather than reintegrate into
the firm's practice and rebuild client relationships that largely had been
shifted to other partners.
Most law firms have buy-out
procedures in their partnership agreements. (I use the traditional term partnership
agreement to include similar documents for other corporate structures of
law firms, such as limited liability companies or professional
corporations.) However, in many instances, these provisions have not
changed in years - even decades - and might not reflect the current size,
value, and financial personality of the firm.
Here are three relevant indicators
that your firm's partnership agreement might need a review and updating:
- Is your current partnership agreement more than five
years old? If so, your firm might be in an
entirely different market environment and internal management position
than it was only five years ago.
- Are any of your partners over age 55? If so, there is a reasonable probability that one or
more of them will want to retire or to pursue other opportunities within
the next ten years. Will your firm be able to meet all of the
challenges the every firm experiences when a partner withdraws?
- Is your managing partner nearing the end of
his or her term of office? If so, as Mark Walker's recent move to Lazard indicates,
there is a reasonable possibility that he or she might want to pursue alternative
to returning to full-time practice in your firm.
For more information about how
Walker Clark, LLC, can assist your firm with these and other governance-related
issues, please contact me by e-mail.
on the Walker Clark Worldview Blog.
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