Commercial firms compete for people as well as work.
There is plenty of work out there and it will continue to follow good people – good people, good work, good profits is the virtuous circle.
But what effect will the increasing availability of statistics and information about profit sharing structures have on the marketplace? The new transparency affects the thinking of existing partners contemplating internal change, and of lawyers thinking of changing firms.
Whether or not they aspire to partnership, lawyers will want to be sure that the firm they are joining is cohesive and shares profits in a way which optimises partner behaviour.
The treatment of this subject and the accuracy of statistics in the legal press are improving. But will there emerge an accepted optimum model towards which UK commercial firms will gradually converge – perhaps the modified lockstep? I doubt it, because partners who have come into a firm on a basis which they see as successful are reluctant to change until the market evidence for change is conclusive.
The potential recruit will be looking at profit sharing with other structural and cultural characteristics likely to affect partner behaviour. For national firms with more than one office, new recruits will be asking how many profit centres it has and how the London office is handled for profit shares, salaries and charge rates. Are clients likely to derive any benefit from multiple locations? Will partners actually refer work on grounds of specialism or geographical conven-ience, or will the centres compete?
Other considerations will be whether a fixed share partnership is merely a "waiting room" or is there a class of long-term fixed share partners? If there is, how does that effect commitment levels in the engine room and should the recruit fear blockages above? What is the conversion rate of fixed share into equity partners? What is the rate of partner turnover? Is a shifting population a sign of clear strategic plans and action, and of ensuring that partners perform or go – or a sign that something is wrong?
LLPs, if adopted, will standardise a lot of information and "full earnings" accounting for tax will help. New themes will emerge to classify firms and perceptions will sharpen.
Some internal mysteries will be clarified and some will remain. Does the firm support partners who are unwell or going through a temporary lean time? Transparency and statistics will not answer this.
The "AB poaches X from CD" stories will continue and we will read them, doubting whether they can possibly explain accurately what happened. But naturally, we say, our transparency is about being businesslike, just like our clients.
Or are our clients businesslike because they do not share confidential information as enthusiastically as we do?
David Marsh is senior and managing partner of Burges Salmon.