I was honoured to be a part of panel discussion at the recent Georgetown Law Center Symposium “The Shrinking Pyramid: Implications for Law Practice the Legal Profession.”
Several thoughts occurred to me while attending this event; one of which I’ll share with you now.
There was some discussion about the fact that lifelong partnership at one firm is a relic of the past; there is a constant merry-go-round of lateral partners moving from firm to firm to firm. We see this in Canada as well. Lateral hires typically move for more money (and sometimes for firm management reasons) but paying more money to a lateral hire means that her rate will also increase, which means that clients pay more.
From a firm management point of view, bringing in laterals with a “book” of business can be a very dubious proposition – most often these lawyers are more loyal to themselves than to their partners; so building a firm around a group of individuals who may leave at any time with their “book” is not a structurally sound decision. It also reduces the ability to make any long term investments, as laterals demand large immediate compensation for the revenues brought in by their "book" – failing which, they will leave.
But firm strategy is also flawed when it demands that young lawyers go out and build a "book" of business in order to make partner. What is overlooked by firm management is that when that lawyer does follow instructions and build her "book,"she is then able to leave the firm with her "book." Again, firms are setting themselves up for self-destruction.
The lateral merry-go round is exacerbated by clients who claim that they hire the lawyer, not the firm. This of course emboldens lawyers to be even more "me-centric" and less interested in the long term health of the firm, as the lawyer can simply leave with her "book" whenever she wants.
So we have an interesting circle of life.
The less loyalty that clients show firms, the more lateral movement increases, which in turn weakens firm structures, reduces the incentive for law firms to make long term investments in better and more efficient client service, which in turn increases legal fees paid by clients.