The issue of the shaky status of older lawyers at large law firms refuses to die, as the de-equitization of partners “past their prime” continues.
The Wall Street Journal reported a variety of anecdotal examples early in 2013: a one-third partner reduction at a 200-lawyer Nashville firm, a Wells Fargo Private Bank survey saying that 15 percent of respondent firms will cut partners in the first quarter, a consultant’s claim that many big firm partners are billing 30 percent below the traditional standard of 1,900 hours a year.
The moral of the story continues to be that lawyers must contribute to the well-being of their firms. If they don’t, they will be terminated irrespective of whether they are a partner or an associate. In other words, they must adhere to the formula defining The Business of Law® [profits equal revenue minus expenses]. This basic formula applies to every other service profession [and manufacturing and distribution].
In this formula, age is irrelevant. There are 80-somethings who are contributing to the bottom line of the firm and there are 20- and 30-somethings who are not. Those who do not contribute to the bottom line will not be sustained in the firm for long before they become dead weight.
Being a partner is no longer the key to the magic kingdom. Partnership agreements are written in such a way that a partner can be terminated from his/her equity position without much difficulty.
“What have you done for me lately?” is not an idle phrase in the world of law firms. Everyone must contribute.
The P = R − E formula defines how a lawyer can contribute to the bottom line and well-being of the law firm: Increase the revenue of the firm [collected billings] or decrease the expenses of your efforts relative to the revenue you bring in. In other words, if you can produce client revenue that will keep other lawyers busy, if you bill a significant number of hours [or related value billing efforts] above the average, or if you have a key client relation that is significant for the firm, you will be viewed as an asset of the firm. If your collections decline, if your time expended doing client work declines or if you utilize a disproportionate share of the firm’s resources, then you will be a drag on the performance of the firm and, at some point, terminated.
Invariably, at some point lawyers often feel entitled to get what they’re getting, that by virtue of being in a larger firm their compensation should continue regardless of the fortunes of the firm. If those fortunes sag a bit, even if the lawyers are not so productive, they still want their compensation. This mentality can no longer survive, and it is not just a function of age and seniority.
Recently, I rode my bike to the heights of Mt. Figueroa in Santa Ynez Valley, one of the most difficult climbs in the U.S. Lance Armstrong held the record for the climb at 53 minutes until a young man under 23 years of age beat it at 48 minutes. While I certainly did not come close to either time, I made the journey and was the oldest in our group to do so. Removing the governor of age from my mind and focusing on what I wanted to achieve enabled me to do it.
Similarly, older lawyers who continue to apply the client service lessons learned throughout their careers can still contribute. The alternative is that they will soon no longer be with the firm.