RE-MAKING LOW-OUTPUT PARTNERS

by Joel A. Rose
 

Your firm may be faced with the dilemma of dealing with underutilized partners for a couple of reasons.

Perhaps the firm recently lost a large client and now there's not enough of a particular type of work to go around. Or maybe the firm made a strategic decision to alter its practice areas and certain partners work in a department that will cease to exist.

As difficult as it may be, given friendships between partners, the firm needs to come to grips with the fact that it probably can't afford to keep those partners around at their current status. The options are:

  • Ask the partner to leave;
  • Decrease the partners' compensation to reflect his or her current contribution to firm revenue; or
  • Re-engineer the partner by training and moving him or her into another practice area.

This article will focus on the third option and what a firm should consider as it is determining if re-engineering partners is the best alternative.

Mixed Reviews:

Re-engineering of partners, as a practical matter, has received mixed reviews from managing partners of firms that have attempted it.

Depending upon their ages, experience and personality, certain partners may be able to re-establish their positions as major contributors to their firms by obtaining training in other substantive areas.

Embarking on this course of action is a complex and sensitive issues which requires considerable planning and discussion.

Ongoing Need:

It is essential to determine the extent to which there will be ongoing, rather than a one-time, need for the expertise to be developed, and whether the firm can continue to pay the partners' direct and indirect costs during this training.

It makes little sense for a partner to invest his or her time to develop a narrow specialty to satisfy the needs of a casual client unless that specialty has the long-term potential for retaining and attracting potential clients and proving profitable.

Other issues that must be addressed during the planning process includes:

  • The effects on the firm's philosophy, objectives and current guiding principles, generally referred to as firm culture.
  • The manner and method of organizing substantive practice areas and the need to identify to whom the partner to be retrained will report for supervision, training and review of work product.
  • The firm's economic resources and substantive capabilities, strengths and weaknesses, current and potential client requirements, to assess how the political, economic and social trends relating to the new specialty will affect the firm and its clients.
  • The willingness and ability of attorneys to sell legal services and cultivate prospects in the new specialty. This relates to the confidence other partners have in the partner to be retrained, to master the new specialty and to relate positively to clients.
  • The partner-associate relationships in the particular practice area, i.e., the ratio of associates to partners, criteria for admission to partnership and the perceptions of the senior and profitable associates about their career opportunities with the firm.

The firm's desire to retain underutilized partners notwithstanding, care must be taken not to encourage the experienced, more profitable senior associates to seek employment with another firm because of perceived career limitations at the current firm.

Youth and Pliancy:

Re-engineering partners into new specialties has been most successful when they are relatively young and pliable, personally and professionally. Re-training of mid-level and older partners has been most successful when they can learn a specialty that is related to their areas of interest. This requires an accurate assessment of that partner's aptitude, interests, as well as the demands of the new area of law.

Sometimes, given the requisite skills and ability, partners may not necessarily be amendable to changing their practice areas. An established litigator may be intellectually capable of learning corporate law but may not be interested in doing so.

Similarly, a partner who practices general corporate law may not have the temperament to become an effective litigator.

Much of the re-learning cannot be done on the partner's own time.

During the time that a partner is learning a new areas of law, most firms usually lower their production and billing targets for a specified period. The partner's compensation may not be appreciably altered during this learning period.

In addition, the partner usually receives an increase comparable to what other partners at the same level receive. However, if the firm's income level shows only a slight increase or remains the same, the base salary or draw may continue but that partner may not be permitted to participate in bonuses at the same level as other partners.

Further, it may be unrealistic for the firm to expect an established or older partner to be willing to learn an entirely new area of the law.

If this partner is not willing to make the effort, then some difficult decisions will have to be made about modifying his or her status.

©1999-2015 Joel A. Rose & Associates