Partnership works – but not as we know it

The question of whether or not partnership is a sustainable model has existed for almost as long as partnership itself. However, the growth of technology and its ability to super-charge change has given the debate renewed vigour.

With artificial intelligence and machine learning already becoming a reality, and a wave of innovation passing through the profession, denial is not a course many are plotting.

For all that – and even before recent developments concerning listed firm Slater & Gordon – I don’t believe that the partnership model is moribund. We all know its weaknesses: it can constrain an organisation’s ability to invest, it can be slow-moving at a time when agility is key, and consensus-driven partnerships are seldom a catalyst for innovation.

However, when one looks at the alternatives and where the competition is really coming from, one would still find it hard to see beyond other partnerships. This may be in the form of other law firms or – perhaps more alarmingly – the accountancy firms. The Big Four have found a path to create multibillion dollar businesses which are still, at their core, partnerships.

There are plenty of competitors to the professional services partnership model, and some of those are also disrupters – the likes of Axiom, Exigent, Capita, Obelisk and Riverview are now familiar names. However, their ability to capture a substantial proportion of the market is constrained by Big Law’s occupation of the “instruction apex”.

Disruptors also still tend to, almost by definition, be focused on narrow segments of work capable of systemisation, automation and shared economy flexible working. They may lack the brand firepower to grow quickly outside of those confines, and therefore will not be in a position to occupy the “instruction apex” to pick up the broader scope of mandates that would edge out Big Law.

In that context, my view of the future is that the partnership model will not die, but it will become increasingly dependent on collaboration, or “Big Law meets New Law”. Put simply, interdependence may become key. Law firms are making great strides in developing new ways of delivering service. But legal process technologies do not tend to be the core business of Big Law, and even those who have made big strides cannot build it all themselves. Maybe they shouldn’t bother if perfectly credible alternatives exist. Law is not a process, it is a profession – but one that needs to engage more with and understand process. AI and Machine Learning will drive a new phase of professionalisation of the profession.

To endure and remain relevant, partnerships will need to develop quicker witted, more flexible and adaptable models. It is not so much whether the partnership model is wrong but whether partnerships adopt organisational structures and decision-making processes to enable them to move with the agility that is required.

While most of us see this, it’s a bold firm which changes it structures and processes in order to do something about it. For instance, how many law firms have adopted a dynamic such that partners see themselves less as owners (or controllers), and more as investors in and custodians of the business? It is a big cultural step not just for partners but for law firm leaders.

Moreso than ever delivering growth for law firms is about leadership in addition to effective management. However, those in executive roles will only attain the greater degree of trust required to provide genuine leadership if they embrace levels of accountability akin to that encountered by boards of listed companies.

Partnership is not dead as a model, but to succeed partnerships have to understand that the model is only a model, it’s what lies beneath it which will sustain success.