B&M forms single North American profit centre

Baker & McKenzie has completed a three-year overhaul of its North American business model that it hopes will finally rid itself of the ‘McLaw Firm’ label it has been given in the area.
As first reported on www.thelawyer.com on 18 September, the firm’s 11 US and Canadian offices have undergone a radical restructuring that unites the businesses as one profit centre with one new compensation system.
North American managing partner John Conroy told The Lawyer: “We’ve always managed ourselves as one fully integrated law firm. I think there’s been some misunderstandings about our old regime, but there’s no doubt about it, a unified business model, now that we have it, does put a stake through this perception of a franchise operation.”
Of the partnership, 95 per cent voted in favour of reforming the compensation system from one that was based on pure financial analysis to one that takes account of other performance-based criteria, such as best client servicing, practice growth and development, quality management, professional development and training of associates, and knowledge management.
“The key thing is that the compensation bands are indexed on the overall average so that as your overall profits go up, everyone’s goes up,” said Conroy.
The firm announced that revenue for North America grew by more than 7 per cent and that average profits per partner grew by 14 per cent over the 2002 fiscal year. Since 2001, revenues per lawyer in North America have increased by 18 per cent and average profits per partner by an impressive 27 per cent.
Conroy told The Lawyer that this had been achieved through the consolidation of support functions made possible by the reform and a massive cull of under-performing lawyers as the firm focused on its higher-end practices such as M&A, securitisations, project finance, tax and litigation.