Is being a partner all it’s cracked up to be?

It used to be seen as the ultimate goal. The prestige. The pay. The power. The corner office and the leather chair. Senior members of the firm would gather round and give you a manly (always manly) handshake, conferring on you that well-deserved reward after the years of toil as an associate – partnership.

But as it becomes harder to make partner, and with the millennial generation supposedly wanting different things from their career, what are the perks and perils involved? Is being partner all it’s cracked up to be?

stuffy partnership old

The early days of partnership

It’s commonly accepted that the path to partnership is lengthening. Once upon a time, it was regularly conferred a mere five or six years after qualification – sometimes even sooner. Today, it’s rare to make it that quickly. The exact timescale differs depending on the firm, but in general the partnership track is now about nine to 11 years long.

How new partners find their footing varies from firm to firm. There are some teams where the senior associates manage all of the client delivery and the partner’s role is entirely about winning work; in others, you are unlikely to lead a significant project until you become a partner. In the magic circle, for first five years you might simply provided with work by more senior partners; in the mid-market you don’t become a partner unless you’ve already demonstrated you ability to find work for yourself.

Generally speaking, the winning of new clients is now more of a team effort than it used to be, where partners will be working with marketing, business development and potentially the finance team as well.

The transition to from associate to partner also depends on the individual firn’s partnership structure. The ‘two-tier’ partnership system is increasingly popular and makes the jump less dramatic. “In most firms now there is a fixed-share tier and an equity partner tier,” says Aster Crawshaw – a partner at Addleshaw Goddard who specialises in how partnerships function. “In the fixed-share tier you sit between the associates and the equity partners and you have most of the responsibilities of partnership, but you are not quite under the same pressure to deliver income.”

What about the first day on the job once you have been promoted? What are the challenges that take new partners by surprise?

“One thing I never considered: Every year you start with a new mountain to climb,” says Ronnie Fox of Fox Lawyers, another expert on partnerships. “You have a target and you start at zero. I never thought of my career in one-year chunks, but law firms do their budgets in one-year chunks and you will be expected to produce a certain amount of income. So you can have a great year and smash your targets. But next year the target will be bigger and you will be starting at zero again.”

The workload

Despite the reputation for the gruelling workload imposed on junior lawyers by the big City firms, in fact it’s partners who find it hardest to take time off. A 2015 survey by Lawyer 2B found that 44 per cent of partners took their full holiday allowance (compared to around 60 per cent of associates). One in every 50 partners said they took no holiday at all in 2015.

“A senior associate, at the end of the day, is employed. If he is feeling sick or has got family responsibilities and can’t fulfil an obligation, the worst that can happen is there is a complaint made to a partner,” says Fox.

“But if one of the partners upsets a client through not being available, or not doing work in the required time frame, or simply not being able to do two things at once… well, it is an incredibly competitive profession.” When clients can choose to desert you in favour of any number of rivals – and you’re a high-achieving workaholic in the first place – it’s easy to stick to your desk like glue.

“Lawyers are having to work harder to meet client needs,” agrees Crawshaw, “but I absolutely don’t think that’s something lawyers should complain about. A successful firm should be enthusiastic about getting more direction from clients so that the firm can constantly improve its service, but that does inevitably mean more pressure on partners.”

Ronnie Fox: “In some ways being a partner in a major firm is a bit of a Faustian pact. A while ago I met a chap who was a partner in the London office of a top US firm. His wife is a partner in a magic circle firm, and she had been a trainee with me. I said: ‘We must catch up, let’s have lunch.’ It took a year to find a date that they could both make.”

It’s not just the demands of clients – it’s the demands from your firm. “If you ask partners in magic circle firms how many hours they work, they usually won’t admit it,” says Fox, “but if you have a team of people and your job is to generate work for them, that is the most fantastic pressure. If you are a lateral hire, and on the lateral partnership questionnaire it said you can expect to bring in £5m a year, but your billing for the last year is £2m, that is pressure.”

Partner pay

The money that partners at the top commercial firms earn makes many of them millionaires – but they have to work for it and if they don’t there are consequences. Every year firms take steps to deal with under-performing partners – people who just aren’t bringing home the bacon like they used to.

“In the old days partnership was normally regarded as a long-term relationship and many people spent their lives in one or two partnerships at best,” says Fox. “Today, it’s a commercial relationship, and you will do well if you perform but if you are perceived as under-performing your income will drop accordingly.”

Twenty years ago most firms ran a pure ‘lockstep’ partnership. You were made partner, moved up the lockstep (that is, got paid more money) every year and retired after 25 years. There was no performance management and no one was really interested in what you did – the pressure of being a partner was assumed to be enough to make you deliver.

Much more common now are merit-based remuneration systems, where compensation is correlated to partners’ contribution to the business as a whole – not only billings but involvement in management, pastoral work and so on.

Firms are much more active than they used to be in their management of partners, with a review taking place each year and partners moving up or down the lockstep. Partners can no longer assume they can sit pretty, moving up the ladder inexorably and under no pressure to deliver.

Getting chucked out…

If you thought that becoming a partner at least made your position within your law firm secure, you couldn’t be more wrong. “Most firms now have a managed, meritocratic remuneration system,” says Crawshaw. “An underperforming partner’s profit share can be adjusted to reflect his contribution, but if the scope for adjustment is not sufficient – that no matter how far you move a partner down the lockstep they are still taking out of the firm more than they are contributing – you have the potential solutions of de-equitisation and termination.”

De-equitisation entails kicking someone out of the equity partnership and termination sees them kicked out of the firm. You’ll see the legal press regularly report on partners moving between firms; in fact, many of those partners will have been pushed towards the exit door (though it’s considered bad form to make this publically known).

There are two ways to terminate partners. The more extreme is expulsion, which is usually where the partner has committed a severe offence – a hand in the till; a serious issue with a member of staff; alcohol or drug problems. Expulsion is a difficult thing to do because it requires quite a high approval threshold from the partnership.

‘Without cause termination’ is used where a partner has not necessarily done anything “wrong”, but is no longer delivering to the level that the firm requires. “If as a management team you think you have reached the end of the road with a partner, you should speak to them,” Crawshaw says. “In the vast majority of cases, it will not come as a surprise and the partner will ask for a period of time to sort the problem out, which means either improving their performance or falling on their own sword – that is, moving to another firm before they are put through a formal termination process.”

The consequence of all this is that partnership is not as secure as it was 20 years ago. “That is the inevitable consequence of performance management,” Crawshaw argues. “If a partner is not performing, there is only so long that the other partners will be willing to carry him for. There is a limited pool of profits to share around. The more that is given to an under-performing partner, the less there is for the high performers. That can lead to resentment, and to the high performers leaving. So managing under-performance is directly connected with rewarding good performance and the retention of high performers.” 

So why be a partner?

People assume young lawyers don’t aspire to be a partner any more – that it doesn’t fit in with the millennial generation’s lifestyle ambitions. A potentially more attractive option is leaving private practice and becoming an in-house lawyer. Fifteen years ago, if you were a lawyer working in-house for a company there was the stigma that you were somehow not good enough to cut it in a law firm, but now ‘going in-house’ is a much more common and acceptable career choice. As in-house jobs grow in number, it’s a viable, respectable option that has the benefit of a much better work-life balance than private practice.

But the benefits of an in-house career are still not as appealing to aspiring lawyers as partnership. A 2015 survey of students by Lawyer 2B found that 42 per cent of aspiring lawyers still hope to work their way up to partnership in a law firm – twice as many as those who want to go in-house.

“In-house roles are increasingly attractive – I can completely see that,” says Crawshaw, who has spent time in-house himself. “There are a lot of advantages: you get much closer to the business and can have a key role in strategic decision making. From a personal perspective, you may have more control over your life, and often you will be remunerated similarly to private practice.”

On the other hand, career progression can be haphazard – there can only ever be one general counsel at a company, so if there are five good senior lawyers in the business, four of them are going to be stymied, however good they are. “If you do achieve a senior in-house role, in many businesses you will primarily be a manager rather than lawyer. That will appeal to many people, but some find it uncomfortable,” Crawshaw adds.

One of the other downsides of moving in-house that you are a cost centre – the business is about something else. “In a law firm, what  you do is the main focus of the business, all lawyers are responsible for driving the success of the firm. That brings with it some pressures, but it can also be very satisfying,” Crawshaw says. “Even in the largest firm a partner should feel that he and his partners are self-employed entrepreneurs, responsible for delivering to clients and developing the business.”

And despite the pressures, the benefits of partnership in a law firm are still incredible. “You work with other highly motivated professionals, in a partnership with a common purpose,” says Crawshaw. “You are constantly being challenged, doing fast-paced commercial work for sophisticated and demanding clients and have the opportunity to become a respected expert in your field.”

“And of course, it is well paid,” he adds. “But if you are only doing it for the money you are unlikely to stay the course.”