I was with a group of law firm
partners from different City firms this week, listening to them discuss a case
study about super-profitable US law firm Wachtell, Lipton, Rosen & Katz.
Aside from their phenomenally successful business model and profitability (with
the Amlaw100 reporting profit per
partner of over $4m), one of the points that provoked most discussion was
the idea that many of the partners would retire from the firm in their early
forties.
One response from the group was
"that's just coming into your lawyering prime", which really got me thinking
about careers in the legal profession, how they're changing and ultimately what
the end game is for many lawyers.
It used to be simple.
When I entered the profession in the
mid/late nineties you joined a firm, did your training contract, hoped you'd
get kept on, and if you did took your place on the conveyer belt. In the larger
firms this often meant increasing specialisation and more often than not,
increasing your hours.
In particular it was understood
(albeit often unspoken) that the years between two and five years post-qualification
were the proving ground. Where firms got to weed out those who were not
suitable for partnership, and consequently lawyers were competing to prove they
were up to the job.
This ethos, coupled with the
leverage dynamic (with a smaller number of equity partners generating huge fees
from supervising and managing junior lawyers) and chargeable hours model saw
associates happily prepared to work all hours as they strived for partnership.
The pot of gold at the end of the rainbow.
Every year their increased
experience meant law firms could up their hourly chargeout rate, meaning in
turn that as long as their chargeable hours stayed high, a nice chunky payrise
was available, thus providing a short-term incentive for the associate to stay
in the game.
Now this approach certainly had its
faults, but it was largely understood and accepted and as a result it worked.
Hell, early in my career I was certainly prepared to play by those rules.
But things have changed.
That model is breaking.
Firstly, the concept of work/life
balance arose. Slowly, softly at first, it began to gnaw at some of the Generation
Xers. Marriages came and went and at both points, people began to pause for
reflection. Children brought matters into even sharper focus. None of these
events were new, but society's attitudes were changing and the legal profession
was not immune from this.
With the emergence of Generation
Y, the trend began to accelerate. I vividly recall a conversation with a
managing partner of similar age to myself a couple of years ago, where he
shared his frustration that many of his assistant solicitors wanted to leave work
at 6pm. He understood this, but having put the hours in himself at that stage
in his career, found this attitude difficult to reconcile with the drive and
focus he expected from his young lawyers.
At the other end of the spectrum,
change was also afoot. Many of those partners who had put in the hard yards and
had been through the grinder were looking round and asking "is this it?". Some
had migrated into management as this was seen as the only upward progression,
but either didn't like it or weren't suited with it. Others began to see the
downside of their high levels of specialisation by craving a broader workload.
The model was also being tested by
the market. A growing rejection of hourly rates, and more sophisticating
procurement of legal services caused clients to question firstly whether hourly
rates were suitable, and secondly, if they were, why they should be paying more
for a particular resource than they paid a couple of months ago (simply because
they had another year PQE and their rate went up) when the value delivered was
exactly the same.
As the career model began to crack,
the consequences began to emerge. Moves to in-house roles, into venture capital
and private equity companies became more common, and law firms began to adapt
by creating different career paths and non-partner senior roles such as "Of
Counsel", "Legal Director" and of course "Consultant".
But with the structure of the
profession fundamentally changing due to trends such as outsourcing,
technology, commoditsation and globalization, is this enough?
While the supply of law students far
outsrips demand, the answer I suspect is that the slow changes to the status
quo will probably be sufficient in the short term, but ultimately as the
profession reconfigures to meet the changing needs of the market, new and
better career structures must emerge or I believe traditional law firms may
begin to lose heavily in the global war for talent.
Read more from
The Intelligent Challenge
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