Four questions to ask yourself before conferring equity partner status on anyone else.
My colleague Ed Wesemann recently published a must-read article titled “A Five Year Survival Plan for Mid-sized Firms.” Ed’s first piece of advice to the leaders of these firms is: “Stop making partners.” I think that’s absolutely correct, and I’d like to expand on it.
Annual partner promotions are so ingrained in most law firms that they’ve become almost ritualistic: many firms feel they “have to” make partners on a regular basis. Breaking this habit is hard, but it’s also essential: the disciplined application of a fact-based strategy for law firm equity ownership is critical for any firm that wants to control its destiny.
Here are four questions you should ask yourself before pressing the “Admit” button on an equity-partner candidate.
- Is this partner an outstanding business generator or truly exceptional manager? If the answer is no, do not promote. And hold yourself to those high standards: “promising” or “above-average” aren’t good enough. Equity partners should reliably bring in overflowing amounts of profitable work, or should be simply masterful at client, people, or project management. Don’t “settle” when it comes to your ownership ranks.
- Is this a lateral candidate with a big book of business at another firm? If so, do you know how much profit this partner actually generates on all that frothy revenue? Do you know how many of those clients will stay behind when he joins your firm? Are you buying past performance or future productivity? You’d better have ironclad answers to all these questions, because someone will be asking them of you in two years’ time.
- Do you already have “under-performing” partners in your ranks? Granted, the term is pejorative and often misleading; the answer nonetheless is invariably “yes.” If so, then halt the promotion process and deal with it. Get your house in order before adding new rooms – especially if the profile of the current candidate is alarmingly similar to those of the “under-performers” back when they were first up for the role.
- Are we promoting this lawyer to partner because we don’t know what else to do with him? If you’re being honest, this is likely the case about half the time. Reclassifying an associate as a non-equity or equity partner doesn’t magically change who he is or erase his deficiencies. Partner promotion is a lousy alternative to openly and frankly assessing whether a lawyer provides your firm any real value beyond leveraged production.
No one is entitled to become an equity partner. It’s not a “Long Service” award. Create clear, rational, exacting standards for equity partner admission, tied to the firm’s strategy and purpose, and apply them diligently and consistently.