A New Generation Requires New Structures for Law Firms

The early articling hire-back numbers look dismal for a number of firms in Toronto, and this, coupled with the lengthening number of years that it takes associates to make partner – if they ever do – and the merry-go-round of serial lateral partners, should make all lawyers stop and think about how this environment is shaping the next generation of Canadian lawyers, and in turn, the structure of legal services providers.

My friend, consultant, John Chisholm was recently quoted in Australia’s, Lawyers Weekly. “I hear from senior associates who have had to wear the fact that their partnership prospects have been postponed, delayed or in some cases the goal posts have changed,” he said. “[Lateral hires] are affecting lawyer loyalty … people blame Gen Y for not wanting to hang around, but look at what is happening around them.”

In an environment where firms continually show no loyalty to associates – or partners for that matter – it’s no wonder that organic growth and long-term tenure at law firms is a relic of the past; making an already unstable business entity more fragile. This can only create more collapses like Heenan Blaikie.

Game theory – and common sense – says that incentives only work if they are seen to be attainable. If incentives are considered too hard to achieve, they’re no longer incentives.

So too with partnership.

As the brass ring of “partnership” becomes less and less attainable it loses its shine and allure – meaning that fewer and fewer young lawyers will see it as any kind of an incentive to work hard or remain at a firm.

Many firms have seen this problem and created two tiers of partners – making the bottom tier, partners in name only; a title without much difference from the days as a senior associate; one that says to everyone else in the firm that they weren’t good enough to be a “real” partner. How’s that an incentive?

Forward-thinking firms will scrap partnership as a prize – and as a structure.

Instead they will create new rewarding career paths and compensation schemes to tap into and retain a workforce that understands when it walks in the door, that its partner prospects are “nil.”


  1. Gary Luftspring

    Mitch clearly your focus is on Big Law. The irony is that if you track ascension to partnership from student over the last 10 or 15 years the numbers are very low. Although duration has been extended somewhat the numbers probably are not much worse. As Malcolm Mercer recently pointed out to me there was an interesting book written many years ago which either was called or referenced attaining partnership (probably in the US) as the Tournament of Champions ie you hire a tremendous number and only the outstanding/fittest survive. The luxury of such a system is it doesn’t require much discipline with respect to hiring and I suggest it doesn’t put a premium on training. This has worked exceedingly well in a profession that has seen fabulous growth. It works much less well when growth flattens. So I think the point you make and that has to be made is that given the new reality the structure must inevitably change; probably not tomorrow but soon.

    Given that the majority of lawyers work outside of even Medium sized firms I think there are still obviously issues. Freeing up their ability to innovate will be the key in my view.