As our lifespans extend inexorably from threescore years and 10 to fourscore and more, our working lives are growing longer too. A good deal of focus has been on the pensions gap – the shortfall in workers’ savings that is forcing them to retire later – but the legal profession has a problem even earlier down the line.
The natural consequence of the population living longer and partners retiring later is that new blood has to wait to get a look in. The partner track has lengthened… and lengthened.
Needless to say, lawyer longevity is not the only reason for this trend. The changing make-up of the profession has played its part too.
“There was a trend among firms to move back towards real all-equity partnerships. It made sense at a time when there were no profits” Jonathan Haley, Farrer & Co
In 1980, when a young lawyer could expect to achieve partnership in four or five years, the UK was home to about 38,000 practising solicitors.
The Law Society’s most recent count produced a figure of 139,797, up more than 260 per cent. But the number of UK law firms has shown no such dramatic increase.
The global financial crisis has also had an impact.
“Around the time of the recession, there was a trend among firms to move back towards real all-equity partnerships,” says Farrer & Co partner Jonathan Haley.
“It made sense to have a partnership of that sort at a time when there were no profits, rather than having a salaried partner band and having to pay out the high wages that London lawyers demand. Partnership became harder to attain and I haven’t noticed any trend reversing that.”
Addleshaw Goddard partnership expert Aster Crawshaw agrees.
“When I qualified in 2000 the track was between six and eight years but now, with some notable exceptions, it’s anywhere between eight and 14 years,” he says. “To many fee-earners, that just feels too long, particularly given the increasing appeal of in-house positions.”
Average PQE when making partner
It’s not just a feeling – the stats bear out the truth of the matter. In the past 10 years, the average PQE of a new partner at every one of the four big magic circle firms has risen. Across the four a new partner in 2008 was, on average, 9PQE. In 2017, the average was 10.4PQE.
Because lawyers are highly valued at the senior associate stage, and ambitious associates are likely to be thinking about a wider range of career options, firms are being forced to think about how to hold on to them and behind the scenes, questions are being asked.
“All firms are having these sorts of discussions, even if they are not talking about it openly,” says a partner at one US firm. “The model needs to be thought about, because it is getting harder for firms to keep hold of the best people.”
Alternative partner promotion models
There are exceptions to every rule and the path to partnership is no exception. Kirkland & Ellis famously promotes most of its people at 6PQE and from there, it’s up or out – mainly out, with the bulk of those made up exiting the firm within two or three years.
However, the data suggests that being made up early at Kirkland doesn’t do lawyers any harm, even if they do leave. Many go on to be a partner at one of the other top US firms – Sidley Austin’s London office is peppered with Kirkland alum, for example.
While it’s probably fair to say that most firms wouldn’t want to copy the Kirkland model, other firms exist that still promote relatively early.
An example is Travers Smith. Seven years PQE is the level at which a lawyer at the firm may first be considered for promotion and over the past decade, the average has remained remarkably steady at around 9PQE. (The exception was 2017, an unusual year for Travers in which all four of those promoted were women, and three of them had previously been senior counsel.)
“Our philosophy is to keep things simple. Provided there is a business case, we trust the partners who are putting forward a candidate” David Patient, Travers Smith
“We pride ourselves on promoting our most talented people as soon as we can, because we think the badge of partnership is extremely important for the development of one’s business,” says the firm’s managing partner, David Patient.
“Our philosophy is to keep things simple, wherever possible, and the same applies to our partner promotion process. Provided there is a business case, we trust the partners in the team who are putting forward a candidate.”
Compensation, motivation and retention
Like Kirkland, Travers has its own particular culture, not easily replicated. So is there a solution?
“Retention is complex,” says Shearman & Sterling global head of finance Nick Buckworth. “There is a tendency to just say, ‘We’ll pay them more’ or ‘we’ll have a better package’ or ‘we’ll give them good bonuses’.
“The problem with compensation is that it is simply an earned and deserved reward for what people have done – it’s not motivation. People are realising that money is something you’ve earned, not something that motivates and drives you. It doesn’t make you feel more committed.”
Different types of law firm ‘partner’
A rethink of the title of partner is a possible solution, says Crawshaw at Addleshaw Goddard. “The partner title has real cachet in the market and some firms are thinking hard about being more generous with it.
“That might mean extending time spent as a fixed-share partner from two or three years to four or five before someone is considered for equity.”
Equally, he adds, “some law firms are considering the creation of a third tier of partner. As well as having fixed-share and equity, they could have salaried partners, or some other junior tier which gives a lawyer the title but does not necessarily put them on the track to senior partner status or carry the same internal governance rights.”
This, of course, raises the question of whether a partner who is not a member of the equity is a ‘true’ partner at all. Farrer’s Haley warns against the dilution of the term.
“My personal view is that ‘partner’ should remain an aspirational position – it shouldn’t be dumbed down and available to all,” he says.
“That being the case, the solution is to make some of the alternatives attractive positions as well.
Upgrade the ‘of counsel’ job title
“Rather than the ‘of counsel’ position being a shelf to put people who aren’t going to make partner on, such titles need to be respected within law firms as goals and positions to aspire to in their own right.”
That is yet another issue. The ‘of counsel’ title and its various equivalents have now been around for more than a decade, with the likes of Allen & Overy, Herbert Smith Freehills and Vinson & Elkins all introducing the role in 2006 – largely to stem associate attrition.
As legacy Herbert Smith’s then chief operating officer, Norman Green, remarked at the time: “We were finding the only alternative for associates who don’t want to become partners was to leave.”
But 12 years on, while alternative to partner titles are more common, it is difficult to argue that they have been a unqualified success.
“I could show you firms where they have got the ‘of counsel’ role right,” says one senior market source. “Equally, I could show you plenty of firms where they have got it very, very wrong.”
Crawshaw agrees that diluting the role of partner too much is something to be wary of, but overall he takes a bolder view: if someone is good enough to be a partner equivalent, why not give them the title too?
“There are instances where there isn’t a business case for someone to be made up, but you would be happy to hold them out as a partner. In those cases, titles such as consultant, of counsel and legal director are in use” Aster Crawshaw, Addleshaws
“There are many instances where there isn’t quite a business case for someone to be made up, but you would be happy to hold them out as a partner,” he says. “A number of equivalent titles are already in use, such as consultant, of counsel and legal director.
“The internal status of a junior tier is something that would have to be considered, and you don’t want to devalue the commodity too much, but for the right people, risk should not be an obstacle.”
He adds: “The partner title is not a magic bullet, but some firms will see it as part of a package that may allow them to hold on to talented lawyers until the right ‘full’ partner opportunity comes up.
“My personal view is that we will see more of it in the market. There are bound to be other issues on a managing partner’s to-do list that seem more pressing, but in many firms, these kind of HR issues need more focus.”
Nurture the individual
Whatever measures firms take to address the attrition issue, there will always be more to do. As Shearman & Sterling’s Buckworth acknowledges: “The real challenge when it comes to retention is not the set pieces. It is the day-to-day nurturing of individuals – the ‘How was your weekend?’ conversations, noticing people who are having a bad day.
“The pressure upon all partners is so intense that it is easy to sit in your office and do your work. It isn’t enough.
“The responsibility of the partnership is to encourage, lead, nurture and mentor and one of the keys to retention is to develop the culture so that the partnership really delivers on that.”
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This article is taken from The Lawyer’s monthly magazine. The March issue focuses on partner retirement and includes the results of a major new survey. To subscribe please click here.
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