So, you're a new partner—Now what?
Now that you've made partner, it's no time to rest on your laurels. New partners have a new set of expectations to meet, says Jim Paone, a partner with Lomurro, Davison, Eastman & Muñoz, in Freehold, N.J. Paone paired with Mac McCoy, a shareholder in the Tampa, Fla., office of Carlton Field, to dispense advice for new partners in a Young Lawyers Division podcast, “Making Partner and Going In-House.”
The first consideration for a new partner is: What kind of partner are you? There are contract partners, equity partners and shareholders, for instance. The type of partnership shapes your rights and responsibilities and determines advantages and disadvantages, Paone says.
A new partner has
to focus more on business development through marketing and networking, according
to Paone and McCoy.
Partnership means different things at different law firms, McCoy says. “My firm is clear in communicating to the associates what the partnership structure looks like, so it was fairly easy for me to figure out,” he says. “But in other places, depending on how your firm is structured and how the partnership tracks are structured, it may be necessary after you've made partner to find out how to get to that next step, maybe from a nonequity position to an equity position.”
Another important factor is the upfront cost for a new partner. Becoming a partner or shareholder requires a sizeable outlay of cash, which may be due upfront or financed over a period of time. “That was a huge consideration for me,” McCoy says. “I really had no idea how much money the buy-in was. It's something in hindsight I wish I had been better prepared for. Young lawyers have to plan for that economically because we're talking several tens of thousands of dollars, if not more.”
New partners also need to understand the way their new title may affect their compensation. Some aspects of compensation are likely to be subjective, such as your business-development activities for the firm, McCoy says. “You'll have to understand how those subjective factors weigh into the compensation decision, who's making those decisions and how they're balanced against objective factors, and what those factors are,” he says.
Base compensation may not be the amount you actually get paid, McCoy adds. There may be occasions, in order to capitalize the firm for a period of time, when compensation may be withheld. Holdbacks can range from 10 percent to 35 percent, according to Paone.
Planning for holdbacks is difficult, though, because they may not be a sure thing at your firm, McCoy points out. “The money you get back is based on the firm's financial performance,” he says, “and at the end of the day, that's a big question mark.”
However, studying your firm's finances can help remove some of that surprise, McCoy says. “In solidly performing firms, there's some transparency with respect to finances, and you have the ability to ask questions when the opportunity arises at meetings,” he says. “It's a learning curve, and if you don't have a financial background, it can be challenging. But as a new shareholder, if you haven't started asking those questions, you should, because it's extremely important to the long-term viability of your firm.”
In addition to paying closer attention to your firm's finances, a new partner has to focus even more on business development through marketing and networking, according to both Paone and McCoy. “We all hope to get to the point where we're bringing in Fortune 500 clients, but it takes time and a heck of a lot of experience,” McCoy says. “That's why marketing is such a big deal—you're attempting to develop credibility in your niche practice. For instance, I practice in class-action defense, and my publishing and speaking focus on that, so that I can establish myself as an authority in that area. This isn't translating into direct dollars through the door, but it is giving me some weight in those areas so that there is long-term business-development potential.
Social media is an important tool to stay on top of networking, McCoy says. LinkedIn, Facebook and Twitter can make it easier to stay in contact with your extended professional network and to provide referrals. “When you connect other people in a way that is mutually helpful and productive, they will remember that, and eventually that will pay dividends,” McCoy explains.
For more on taking on the new leadership role of partner, listen to the full podcast here.
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