What Value Do You Add As a Partner? Securing Your Job and the Future of Your Firm
To ensure the security of the partnership, all partners must contribute to nurturing the personal, professional and economic bonds that keep the firm together. It’s time to evaluate your contributions and assess how you are doing.
In every market and every economy, some law firms persevere and flourish and others falter and fail. The reasons for the dissolutions are many and varied. Time and again, though, it’s clear that it ultimately relates as much—or more—to the partners’ mind-sets as it does to the firm’s financial liabilities. Some firms that are in debt are able to link arms and pull themselves through by sheer will and professional drive, while other firms that are profitable dissolve because arrogance replaces consensus, competition replaces collegiality and greed replaces loyalty.
The lesson learned is that a partnership is a fragile entity—some would say a fluid gathering of professionals. To ensure the security of the partnership— and their own jobs—all partners must contribute to nurturing the personal, professional and economic bonds that keep the firm together. Unfortunately, many law firms basically strip-mine the place every year—distributing substantial partner profits and investing little retained earnings in the firm’s future. But wise partners balance the long-term interests of the firm with the short-term pressures to maximize their net income as individuals. Essentially, partners have to view themselves as the custodians of the firm as an entity and add value to the entity wherever they can. Otherwise, the entity may not survive the egos of the individuals involved.
So what value are you adding as a partner? Or, put differently, what is your worth to the firm and to your partners in terms of the types of contributions that will help the firm triumph through good and bad economic cycles? Here are issues to consider as you ponder that question.
The Work Flow You Generate for the Firm
To begin, consider the basics of profitability and to what extent your partners are benefitting from the work flow you generate. Are you fully utilized and working sufficient hours as a timekeeper? What is the average hourly rate for the work you do after write-offs, write-downs and premiums? Are you watchful of any behaviors on your part that could negatively impact the margin, such as a failure to work effectively with associates and support staff?
Another critical issue is whether your practice is properly leveraged. Do you put paralegals, associates and more-junior partners to good use? Or, do you hoard work to pad your own hours when the client would be better served by someone who bills at a lower hourly rate or works in a different practice area?
Overall, are you a net receiver of work or a net generator? The metrics for determining that will vary, of course, but here is one gauge. In most good-sized markets, a partner with a book of business that represents revenue of between $800,000 and $1 million in fees is likely generating enough revenue to feed himself or herself but not enough to generate work flow for others in the firm. Typically, when you work the first $1 million yourself, you might expect to earn something in the range of $250,000 to $350,000 depending on your firm, its overhead structure and the contribution of your partners.
The Contributions You’ve Made in the Past 12 Months
Another way to assess your value to the partnership is to identify what you have done in the past 12 months in terms of the multiple roles that any partner can—and should—be playing to contribute the firm’s success. So, as you are considering your worth to the firm—and the security of your job as a partner—think about the steps you have taken in the following key areas during the course of the past year, and where you plan to make improvements starting now.
- Increasing the profitability of your practice group or your firm. What should you be doing here? You have four levers of profitability to play with. You can work more hours. You can increase your leverage by generating work for others. You can develop and market your expertise or the expertise of your group, thereby increasing your overall rate for the work you do. Or you can improve your margin by effectively using technology, teams and low-cost resources in new ways to serve clients, add value and lower the overall cost of delivering your particular services.
- Improving your profile. What specific actions have you taken to increase your profile? Who are your target clients? What types of events do they attend and, better still, what do they read? Writing articles is a way to increase your profile without spending cash. Writing leads to speaking; speaking leads to a perception of expertise; and that perception of expertise leads to work.
- Improving the quality of the service you provide. Clients assume that their lawyers are capable. However, how many clients have you interviewed to find out how they define quality? The 80/20 rule applies to the practice of law as much as anything else. Do you get the last 20 percent of your client work done in a timely fashion? Do you get reporting letters done, final accounts done and cash collected on a timely basis?
- Cross-selling your expertise to others in the firm. Many lawyers think that cross-selling means that it’s the responsibility of others to involve them. But cross-selling is an interactive process between you and your colleagues. Have you built effective relationships with your colleagues so that they will want to work with you on client matters? Have you shared your expertise with your colleagues, and have you identified which of your partners have clients that might benefit from your areas of expertise?
- Developing the younger lawyers in your group or your firm. The younger generation represents the future of your firm, and they need your guidance to succeed. Are you serving as a mentor? Have you learned to give our associates feedback that is informal, timely and appropriate? And have you asked for feedback from them to see how you might help them in more meaningful ways?
- Improving your personal communication skills. In the words of my colleague John Plank, “Your academic accomplishments, your professional training and your experience combine to make you a highly competent professional. Yet your highest level of success will be determined by your ability to communicate your professional expertise to colleagues and clients.” What have you done to improve your communications with partners, associates, clients and your referral network?
- Furthering your contribution. Have you been a supporter and contributor to positive change in your firm? For some this might mean a leadership role, a mentoring role or a marketing or business development role. Or it might mean embracing a “follower’s” role to ensure that a valuable initiative receives the necessary support. Both types of contributions add value, since participation in a firm requires both leadership and “followership.” Also, at different times, firms need different kinds of leadership. Leaders who do their best work during times of stability and smooth sailing may not be the best leaders in a crisis—is this perhaps your time to step up?
- Building better bonds with your colleagues. In good times, so-so players and egotists alike can stay under the radar. But in tough times, like today’s economic crisis, all partners need to link arms and build strong bonds if individuals, groups and the firm itself are to achieve great things. So, are you collegial or competitive? Are you loyal or greedy? Are you building trust or mistrust among your colleagues? Working together in a group can be challenging—particularly when the members are highly intelligent, fiercely independent and extremely driven. But it’s a challenge you must rise to if you want the partnership to survive.
Your Place in the Dynamic
Recognizing that these are tough economic times for law firm partnerships, you have a choice to make: You can either focus on your short-term profits per partner or focus on the long-term interests of the firm as an entity by continuously improving in your contributions as a partner and a custodian of the firm. Those who cannot or will not contribute are in danger of losing their jobs. Those who recognize that there is opportunity in crisis will become stronger.
There is a dynamic between individual and collective philosophy and behavior that helps partnerships triumph through good and bad economic cycles. What about you, are you willing to contribute to that dynamic? Your firm’s future is in your hands.
About the Author
Karen MacKay is President of Phoenix Legal Inc., where she focuses on leadership, strategy, management and compensation issues for law firms. She is a Fellow of the College of Law Practice Management.