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The Vanishing Partnership Carrot: Where Did it Go? What Does It Mean for Law Firms?

Myriad factors are reducing the attainability and desirability of partnership. Associates are rewriting the rules of success and forcing firms to challenge old assumptions.

FROM: May/June 2004, PAGE 30 BY: Marian L. Carlson

Twenty years ago, most young lawyers entered private practice with the hope of making partner someday. They viewed joining a firm as a long-term commitment and trusted that if they worked hard and “paid their dues,” they could expect a fair shot at partnership in six to eight years. Because it was assumed that every lawyer wanted to become a partner, it was also assumed that those who remained associates after seven or eight years were deficient in some respect. To avoid being stigmatized and to earn what most perceived as “the brass ring,” associates were willing to work extremely long hours, endure considerable stress and make significant personal sacrifices.

Making partner didn’t necessarily mean the end to long working hours, or an immediate salary increase, but it clearly brought its payoffs. Often, the most gratifying rewards of partnership were status, recognition and an end to the stress and anxiety that attended its pursuit. In addition, being a partner meant a relative degree of job security. Partners also received attractive perks such as health club memberships, expense accounts, trips to posh resorts for legal education seminars, free parking and other benefits that made life easier. In short, partnership was perceived as the “promised land.”

Today, however, partnership no longer holds the allure it once had for associates. Many young lawyers now perceive partnership as less attractive and more difficult to attain than it appeared in the past. Although there will always be those who seek partnership as their ultimate goal, firms can no longer assume that all associates, or even the vast majority, are willing to run the partnership gauntlet. What’s the upshot? To prosper in today’s practice environment, firms must understand the factors that have reduced the appeal of partnership and consider new strategies to retain and motivate their most valuable associates.

Where Did the Carrot Go?

Rather than extending themselves to their limits for seven or eight years to either be accepted or rejected for partnership, many associates are changing gears earlier in their careers, when they are more marketable. Some accept corporate counsel positions, some find government jobs, and others go to firms where they believe they will obtain better experience, a more flexible work schedule or increased compensation.

Some enter private practice with partnership aspirations, but later decide that the goal is no longer realistic or desirable. Still others never buy in to the partnership track in the first place. It is difficult to estimate the percentage of young lawyers who don’t want to become partners because many who feel this way don’t announce their intentions. The reason? Traditionally, firms have favored associates who seek partnership, viewing them as highly motivated and committed to their careers. Conversely, associates who openly disclose an indifference to partnership may be viewed as less professional and committed than their colleagues.

Nonetheless, sufficient numbers of lawyers have abandoned, privately or openly, the pursuit of partnership to warrant closer examination of what has changed their perceptions. The key factors fall along two lines: partnership’s attainability and its desirability.

Factors Affecting the Perception of Attainability

Perceptions of the decreased attainability of partnership are variously attributable to economic realities, the firm’s culture and particular partner attitudes.

Law firm economics. Today’s associates have access to a plethora of information about salaries, hiring trends and partnership statistics in larger law firms. This information indicates that, statistically, the odds are getting tougher: First, whether owing to a difficult economic environment or simply a desire to maintain the profit shares of existing partners, many firms are admitting fewer partners. Second, where firms are admitting new partners, they are often lengthening the partnership track to seven to ten years.

In addition, a significant number of firms have created a non-equity partnership tier that defers the monetary rewards of partnership. While the newly admitted partner does enjoy the status of being called a “partner,” the individual will not share in firm profits or hold many other partnership attributes for several more years, when and if he is elected to equity partner status.

The message new lawyers receive from this data is that their chances of making partner are significantly lower than those of prior generations—and even if they do attain partnership, they will have to wait much longer to reap its benefits. Given these lower odds, and knowing their efforts may ultimately prove fruitless, many are hesitant to make the effort necessary to achieve partnership.

The competitive and uncertain environment. Other factors affecting the prospects for partnership include increased competition in the legal profession and the mobility of partners. Firms are less stable than they used to be. For a variety of reasons beyond an associate’s control, she could deliver outstanding work for eight years only to see her firm dissolve or merge, tossing her status up in the air.

In the worst of these scenarios, the firm disappears and the associates are out of work. But even if a firm survives a merger, new partners can lose partnership status and senior associates can be backtracked and forced to prove themselves all over again. Awareness of this possibility also makes it less appealing to invest so heavily in becoming a partner.

Perception that criteria are unfairly applied. Another dynamic comes into play when considering women and minority lawyers. These groups may lose interest in partnership because they do not perceive it to be as accessible to them as it is to white males. In 1999, the National Association for Law Placement published its Perceptions of Partnership: The Allure and Accessibility of the Brass Ring. This study found that only 57 percent of women in smaller firms and 54 percent of women in larger firms felt that opportunities for partnership advancement were equally available to all associates. Among minority lawyers, while 64 percent of those in small firms perceived opportunities for partnership as being equally available to all, only 36 percent of those in larger firms agreed with
that perception.

Consequently, while many of these lawyers may begin private practice with confidence in their chances for partnership, many become skeptical of the equality of their opportunity. Demographic realities tell them that, in addition to the generally applicable factors making partnership more difficult to attain, their female or minority status makes their chances even slimmer.

Loss of trust between partners and associates. Still another factor is the loss of trust that has developed between associates and partners in recent years. As management expert David Maister documented in his 1998 essay “A Matter of Trust” ( www.davidmaister.com/articlesby.asp), many associates no longer trust that partners care about helping them develop and seeing them succeed. They believe that some partners view them as “fungible production machines,” as Maister phrases it. Accordingly, some associates are suspicious that even if they perform well for seven or eight years, the firm remains financially viable and new partners are being admitted, the particular partners for whom they’ve worked may turn their backs on them. In other words, the associates are skeptical that the partners will keep their side of the bargain.

Factors Affecting the Perception of Desirability

Not only do today’s associates perceive partnership as less attainable than in the past, they also see it as less desirable. Some of the factors affecting the perception of desirability stem from today’s legal environment, while others arise from the value systems of the associates themselves.

Loss of security and potential liability. In recent years, the desirability of partnership has been affected by the many law firm failures and the potential for increased liability for firm debts or judgments. With the advent of the Enron age and the increasing number of legal malpractice claims, some associates would prefer simply to collect a salary than risk potential liability.

Desire for work-family balance. Over the past 10 to 15 years, many lawyers—particularly women—have decided they cannot do it all. Abandoning the superwoman model of the 1970s and ’80s, many lawyers today are determined to spend a significant amount of time with their children. Rather than attempting to maintain a strong presence in their children’s lives while at the same time standing out by working long hours, serving on firm committees, and building a presence in the legal and client communities, they are willing to forego partnership so they can lead more balanced lives.

For lawyers who want a balanced life, partnership is not the “promised land” but is, instead, a perpetual extension of the demanding life of an associate.

Generational attitudes. Finally, partnership’s appeal has also fallen prey to the attitudes of Generation X. The members of this generation, born roughly between 1960 and 1980, view work-life balance differently from their baby-boomer predecessors. They want to have lives and interests outside of work, regardless of whether they have children. They often view partners, who’ve sacrificed their lives to be valued by their firms, as workaholics. Many Gen Xers aren’t interested in making the sacrifices necessary to become a partner—not only because of the long hours required, but because the payoff doesn’t seem worth it.

As aptly described by Covington & Burling hiring partner Mark Plotkin in a Legal Times article (“Associates Giving Up on Partnership,” by Marie Beaudette, September 30, 2003), partnership is often perceived as “winning a pie-eating contest where the prize is more pie.”

What Does Partnership’s Diminishing Appeal Mean to Private Practice?

The reduced desirability and attainability of partnership may affect law firms’ profitability in a number of ways. First, it is likely that in coming years, fewer associates will compete for partnership positions. Because historically, there was never room for all associates in the partnership ranks anyway, firms won’t necessarily run out of new partners, at least in the short term. However, just as consumers lose out when business competition decreases, firms may lose some of the benefits they experienced as a by-product of intense competition for partnership.

Once they have decided not to pursue partnership, associates are likely to continue the trend of leaving firms in their third through fifth year, when they are most marketable, rather than waiting until they are on the doorstep of partnership to make their decision (or have it made for them). Unfortunately, it is during these years that associates are most profitable. Typically, they have enough experience to work independently but are not as expensive as a senior associate or a junior partner. Even if such lawyers remain in their firms, they may not be as willing to bill as many hours or make as many sacrifices—such as giving up weekends or tolerating abusive partners—as they might have otherwise.

The situation might be simpler if the associates who were ambivalent about partnership were always the weaker performers. But that isn’t the case. Often, those who are willing to forego partnership in favor of a balanced life are strong performers. In these cases, firms must consider new forms of incentives to motivate and retain these profitable lawyers. Ultimately, the firms that will prosper will be those that challenge old assumptions about the nature and allure of partnership and find creative ways to make work meaningful and rewarding for today’s associates.


Marian L. Carlson ( marian@carlsonperformancestrategies.com) is a consultant specializing in attorney training and professional development. Before starting her firm, Carlson Performance Strategies, she practiced law for 15 years.

SideBars:

Partnership Then and Now

In a landmark report on perceptions of partnership, the National Association for Law Placement contrasted the characteristics of partnership at the close of the 20th century with those that existed for most of the last century:

THEN

  • Mutual lifetime commitment
  • Abundant legal work
  • No capital contribution
  • Profitability of the firm paramount
  • Low risk and little liability
  • Continually earn more throughout career
  • Mutual respect among partners
  • Partnership criteria embracedlarge numbers
  • Teamwork and collaboration

NOW

  • No promises, no loyalty, much mobility
  • Increased competition for legal work
  • Significant capital contribution
  • Profitability of the individual paramount
  • High risk and extensive liability
  • High earnings possible, dependent on economy
  • Lack of respect and common courtesy
  • Rigid criteria to restrict qualifying associates
  • Isolation and “every man for himself”

Source:

Perceptions of Partnership: The Allure and Accessibility of the Brass Ring. NALP Foundation for Research and Education, 1999.

Ideas for Motivating and Retaining Associates

Holding out the partnership carrot isn’t the only way to motivate and retain profitable lawyers. Consider some of the following incentives.

  1. Offer part-time partnership. One way to restore the appeal of partnership to star performers who seek work-life balance is to consider part-time partnership positions. In firms that have adopted this approach, an associate can be promoted to partnership even on a reduced-hour schedule, if he or she is otherwise qualified. The lawyer’s desire for a reduced schedule is viewed as an issue of compensation rather than a sign of lack of commitment to the firm.
  2. Adopt a policy describing the conditions under which lawyers can work flexible schedules. Although many firms allow flexible work arrangements, the most frequent complaint about them is that they are created on an ad hoc basis. If you create a written policy, associates know what to expect, what to do to be eligible for the program and how to take advantage of it.
  3. Provide bonuses for reduced-hour or non-partnership-track lawyers. Many firms also reward non-partnership or reduced-hour lawyers with incentive bonuses for billable hours worked in excess of a given threshold. This helps avoid the consequences of “schedule creep,” in which a person commits to a part-time schedule and receives part-time pay but ends up doing full-time work. Such bonuses also provide an incentive for full-time but non-partnership track lawyers to bill additional hours when the firm needs them.
  4. Avoid stigmatizing alternative-track lawyers. Lawyers on nontraditional tracks are often stigmatized. Negative attitudes are manifested not only through formal removal from the partnership track, but through other signals as well. These include relocation from a practice area deemed incompatible with part-time work to a more suitable practice area; refusal of some partners to work with part-time lawyers; loss of secretarial support; and pay that is not proportional to the lawyer’s schedule. Keep in mind that stigmatization nullifies the benefits of a reduced-hour program. Many lawyers would rather leave than deal with the disfavor they would face by taking advantage of such a program.
  5. Recognize and involve alternativetrack lawyers in the firm. To combat stigmatization and motivate lawyers on alternative tracks, don’t forget to recognize their achievements on particular matters. Invite them to serve as mentors for younger lawyers and, as their schedules permit, to become involved in firm projects and committees. By recognizing and including these lawyers, you increase their job satisfaction and reduce the feelings of isolation that sometimes accompany nontraditional positions.

—Marian Carlson