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Once upon a time, partnership was considered the zenith of both professional and personal success. Unfortunately, some fairy tales feature a grisly end - much like partnership in the 21st century.
Many law firms can trace their roots back 200 years or more. In the 18th, 19th and 20th centuries, most firms focused on keeping equity in the hands of a limited number of partners. New partners had to prove their worth and pay for goodwill on admission, displaying a daunting combination of professional derring-do allied with financial flair. The social, economic and cultural revolution which rocked the world in the 1960s and 1970s eventually filtered through to the legal profession; law firms realised that growth was dependent on broadening the partnership base and they realigned the parameters for entry accordingly. In the 1990s, with a surge in the number of fixed-share partners, the pendulum of partnership equity swung in the opposite direction, with equity reaching its widest distribution.
The best, brightest and hungriest graduates now want to work in the City, make their millions and retire by 45. The prospect of putting in 70, 80 and 90-hour weeks for the dubious pleasure of paying to become a partner is not attractive, nor are the associated financial risks. For those who eschew City life, quality of life has assumed new importance: having a work-life balance which enables one to live life to the full is what it is all about - no one wants to cling on until they are 60-plus, sitting on a stack of cash but too old to enjoy it.
Concurrently, many managing partners are looking ahead to the possibility of a recession, whether shallow or deep. Some are saying that if recession does strike, staff will not be first in the firing line - this time, partners will be culled, once again concentrating equity in the hands of fewer, rather than more, partners.
In part, this is simply good business sense, but it also reflects the hope that the Law Society will one day allow external organisations to take an equity stake in law firms. Since the practice of new partners buying goodwill has effectively ceased, many outgoing partners have been denied this route for realising capital value from their professional practices.
So, whither the partnership?
When compared with the most prosaic industry sectors, the benefits that partnerships provide are rightly criticised. While money may not be everything, legal salaries have failed to keep pace with industry, and the perks are now laughable. While partnerships are for some the last bastion of grown-up temper tantrums and claret-filled Friday luncheons, other perks are sorely lacking. Longer holidays, sabbaticals, incentive schemes, flexi-hours, meaningful part-time employment, the availability of crèches, gyms and even 'duvet days' could help to redress the balance and make law firms exciting places to work in.
The risk of partnership is another factor which law firms must consider. Who, in our increasingly-litigious culture, wants the possibility of joint and several liability hanging over them?
The way forward for the profession is clear. The ownership of a partnership business must be separated from the practice of the partnership. Partnership equity interests can and should be held by a smaller number of stellar partners who are extremely well rewarded for their efforts. Partnership should be restored to its previous status as the preserve of the few, rather than the right of the masses. New career paths need to be forged for those with aptitude, yet who either lack entrepreneurial skills or who aspire to a more agreeable work-life balance. Partnership, as readers of The Lawyer know it, is dead.
However, instead of 'rest in peace, partnership', think about rewards in practice - rewards for partners, for staff, for stakeholders.
George Bull is executive partner of the professional practices group at Baker Tilly.