Designing the Future Law Firm, Part 1

Topics: Business Development & Marketing Blog Posts, Law Firms, Leadership, Legal Innovation

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The Lawyer magazine (UK) asked for my thoughts on the topic, “If you were to build a law firm today, what would it look like?” and they were kind enough to publish them. But because I think this question is both intrinsically fascinating and deserving of wider discussion, with alacrity I accepted Legal Executive Institute‘s invitation to visit the topic here.

Abandon the partnership model

I realize partnership is part of the tradition handed down since, well since a long time ago, but rather than consider it sacred for that reason, I think the truer analogy is to the false god of the Golden Calf of Scripture. This is my starting point for designing “tomorrow’s law firm.” What follows is by way of advocacy: This is not the “on the one hand, on the other…” sort of column. (That part will be up to you, in comments here or in private emails.)

If you think this notion is so radical that it, and its bearer (at the moment, that would be me) deserve summary dismissal, may I refer you to none other than Immanuel Kant?

Let me explain: I’m currently reading The Shape of the New: Four Big Ideas and How They Made the Modern World, which discusses Adam Smith, Karl Marx, Charles Darwin and the Hamilton/Jefferson debates on democracy. It proceeds from the premise that the Enlightenment enabled all these ideas to come to light and gain currency, and for the sake of context, reproduces the key phrase from Kant’s 1784 essay, Beantwortung der Frage: Was ist Aufklarung (An Answer to the Question: What is the Enlightenment?), itself prompted by a dyspeptic query posed by the Prussian clergyman and official Friedrich Zollner doubting the very concept. The book takes it from there:

Kant did not merely provide a response but a call to arms: “Enlightenment is man’s exit from his self-incurred immaturity. Immaturity is the inability to make use of one’s intellect without the direction of another… .’Sapere aude!‘ (‘Dare to know!’).

Our stage and our ambitions are substantially more modest, to put it mildly. But let us proceed in that spirit.

My partner Janet Stanton has proposed a thought experiment: How many $100-million, $500-million, or $1-billion revenue corporations would choose to convert to the partnership form and model?

Think of the business advantages inherent in the corporate form. Today I’ll address the dysfunctional and antisocial behaviors I believe the partnership model incites through the illusion of “ownership”; in Part 2 of this little series, next week, I’ll talk about how it elevates the individual above the firm and distorts financial reporting.

  • Elimination of the misleading and mischief-making fiction that each partner is an “owner” in a sense that has teeth on a day-to-day operational and managerial level. Rank and file partners in almost any law firm that would flunk Amazon’s Two Pizza Rule* have a voice as “owners” in the same sense in which I have a voice as an owner of General Electric alongside Jeff Immelt because the Vanguard funds I own hold GE shares. It’s a transparent, if quaint, legal construct which causes mayhem and paralytic chaos if pushed literally. [*Amazon’s Two Pizza Rule is that no development project should include more programmers than could be fed in a meeting by two pizzas.]
  • Speaking of mayhem, one of the least amusing symptoms of the partnership virus run amok is the implied license some partners take to dictate the lives of business professionals in marketing, finance, IT and so on, demanding that they immediately execute the partner’s capricious desire of the moment. If you can nominate a candidate for sapping the energy and enthusiasm of these professionals faster and more effectively—not to mention thwarting any purposeful concerted long-term initiatives the firm is pursuing in these areas—suggestions from the floor are now open.

A bit of elaboration on each point.

The fiction of ownership

Okay, before the comments-moderating engine goes into meltdown, let me hasten to add that when I say ownership in any meaningfully-sized law firm partnership is a “fiction”, I do so in the ancient and honorable tradition of distinguishing facts from truth.

Of course it’s an almost tautological legal fact that every member of a partnership has an ownership interest (this is established by statute in most cases, common law or otherwise). That’s Partnership 101: So stipulated.

But the truth of what that ownership interest entitles partners to do, certainly in firms flunking the Two Pizza Rule, is very different.

I aver that since lawyers can be legalistic, they (wrongly) translate the legal fact into the operative/managerial fiction that they ought to have a co-equal hand in control of the enterprise. They ought not. Yet it would be unavailing at best, and a career-ending injury at worst, to explain that concept to most partners when they attempt to grab the steering wheel. This leads us to:

Implied license to run other people’s lives

As I noted, this is perennially the least attractive behavior the partnership form in theory permits and in practice sees abused. The presumed right of any given partner to issue orders to others who do not in any organizational sense whatsoever report to that individual is nakedly premised on the trump card, “I’m the partner.” (Whether or not the card is actually played is mostly a matter of social grace and discretion; everyone knows the card is held in the partner’s hand.)

Now, this may seem utterly logical to you, and I would be the first to admit that it’s about as common as the sun rising in the east. That’s the perspective of fact.

But from the perspective of truth, however, in a sophisticated enterprise it should receive zero organizational deference. It’s not any more mature—and it’s every bit as revealing of the vacuum of justification behind the demand—as the truculent, “I’m the mommy, that’s why.” This:

  • Elevates the partner’s whim over organizational structure and priorities;
  • Is nakedly insulting and, given sufficient repetition, terminally demoralizing to the business professional on the receiving end; and
  • Again, exalts the trivial perspective of fact over the existential perspective of truth.

No, I don’t think “existential perspective” is putting it too strongly. The organizational and enterprise perspective is what matters, and always behaving in its long-run best interests is (I would argue) an obligation of membership in that enterprise bordering on the existential. Elevating one’s own immediate selfish impulse over that end is a betrayal of what partners above all should see as a bedrock obligation of their membership and participation in the enterprise.

If you disagree with the enterprise’s behavior, values or strategy, you are face-to-face with the classic choice of “Exit, Voice, or Loyalty;” but again, that’s not what we’re discussing here today.

Here ends Part 1; look for Part 2 next week