In The Lawyer UK 100 Annual Report 2006 the extent to which the majority of the UK’s top 100 firms have proportionately reduced the number of full-equity partners was revealed for the first time.
Dick Tyler, the managing partner of one of the few remaining all-equity partnerships, CMS Cameron McKenna, argued at the time that the seemingly inexorable drift towards ever-smaller groups of partners having real control of their businesses – and a real share in the spoils – was not a positive development.
Last week The Lawyer caught up with Tyler to see whether a month’s settling of the dust had moderated his views.
Tyler believes that a firm’s profitsharing system sets the context for its practice and its ambitions. For Tyler, all-equity is currently the model that works for Camerons.
As with most firms, Camerons is looking to develop broad and deep relationships with its key clients. In Camerons’ case, perhaps 100 out of 4,000 clients generate around 65 per cent of the fees. Squeezing more money out of this group is the goal.
“This requires people to collaborate and deliver the best result for the client in a joined-up way,” explains Tyler. “I think the way in which you reward people is extremely important in this.”
In Tyler’s opinion, the impact on people’s behaviour of different remuneration levels “can be quite significant”.
“What I want people here to be doing is focusing on delivering the best result for the client and having the same motivation and incentive to do so,” he says.
At the turn of the century, Camerons began the process that would eventually see it phase out its salaried partner layer, leaving only full-equity partners at the firm. Tyler claims one of the key catalysts had been less to do with the profit-sharing system and more about the way in which the firm managed partner performance.
“That’s the critical thing. Where you are on this list [The Lawyer UK 100] is much less significant than whether or not you’ve got an effective system for managing partner performance, which is seen to be visible and helpful.”
Six years on, it is this system that fires Tyler. “Lockstep works only if you’re prepared to be intolerant about underperformance,” argues Tyler. “This means you’re helpful and visible in terms of managing people, but people have to succeed by reference to what we believe to be an acceptable level of contribution.”
At the heart of this system is regular evaluation. And this really does mean regular. Every three months the firm’s practice group managers sit down face-to-face with all the partners in the firm. Put simply, the review boils down to three questions: what did you say you were going to do? Have you done it? And what are you going to do next?
As Tyler puts it, his firm made a commitment to differentiate itself by the way it worked. “It was a very clear message we got from our clients that how they differentiate between firms has very little to do with the size or geographic footprint of that organisation or any financial characteristic, it’s down to the quality of service, the quality of advice and how consistent it is,” he claims.
Tesco’s half-year results, released two weeks ago, prompt Tyler to draw a comparison with the legal market. “Every time Tesco announces its results they’re always better than the last time and [chief executive Sir Terry] Leahy is asked to explain the magic and he says, ‘we just listen to our customers’.”
Over the past few years Camerons has been listening to its customers a lot. Last year it conducted around 150 face-to-face interviews with clients. Unusually, along with the qualitative feedback, it also asked for quantitative feedback.
“At the end of these discussions, we ask the client to give us scores out of five to reflect how well we’re doing on a whole range of measures,” says Tyler.
“We set ourselves a target three years ago of getting four-and-a-half out of five on those measures. And we got there. Turns out we need to get something more than four-and-a-half and do it for longer. But that’s what we’ll do. That’s the path we’re absolutely committed to going down.”
The results feed into the partner review process, of course, but at the other end of the career scale Tyler points to statistics of which, he says, he is most proud. Of all the partners made up over the past five years at Camerons, 71 per cent trained at the firm.
“It’s my ambition that all of those people [trainees] will work here for the whole of their professional careers,” he says. “My job is to make sure that remains the most attractive thing for them to do.
“That’s the way we’re going to continue to build this firm. It’s a much more reliable and fruitful source of supply of our future talent and future partners. Not the only source, but the best source.”
As Tyler puts it, the battleground is not India or China. “It’s talent,” he says. “Five years hence the firms at the top of the tree will be the ones that crack this.”