Life after managing partner

Life after managing partner

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:

  1. 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.
  2. 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?
  3. 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.

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