The full text of my opinion piece first published in the Australian Financial Review on 31 March 2022. It was #2 most viewed article on afr.com’s Companies section on that day.
For law firms, a leader stepping down can be a moment of vulnerability. Most partners know succession done badly can have significant cultural and financial consequences.
So, it’s no wonder the announcement at Gilbert + Tobin that managing partner Danny Gilbert is stepping down is being closely watched across the legal industry.
I suspect the interest is less about the welfare of Gilbert and more about watching a potential train wreck in slow motion. Or, perhaps learning from a best-practice study in leadership transition.
Succession management in law firms is different to major public companies or government agencies.
It’s usually partners at large, not the board, who vote for their preferred leadership candidate. They can also fire them at any time.
The candidate pool for managing partner is usually much smaller, with a strong preference for those in the existing partnership.
‘Home-grown’
Only two of the top 30 firms in the latest Australian Financial Review Law Partnership Survey don’t have “home-grown” leaders. The country’s largest law firm, Minter Ellison, are again in that boat after having two external CEOs from the large consulting firms.
In larger firms, the candidates may have to give up practising law and take on a new career with poor employment prospects after their tenure ends.
In my view, law firms run into succession issues when there is a major power imbalance across the partnership.
Power in a firm is about:
- Decision-making: who can make or significantly contribute to key decisions such as setting direction, allocating resources, recruiting new staff, resolving conflicts and setting reward and remuneration;
- Information: who has access to what information and when they receive it; and
- Relationships: who has sway with key clients and figures inside the firm.
It is usually concentrated in three areas: directed power from the office of the managing partner or executive leadership team; individual power held by specific partners and practice team leaders; and collective power which is held by the broader partnership operating as a whole.
Shared power
To work effectively over time, a firm needs to ensure a sense of shared power.
In other words, the partnership needs to be directed with an agreed strategy led from the top; individual partners need to feel empowered and have the autonomy to build their practices; and at the same time, the partnership feels part of one firm and involved collectively in making critical decisions.
Problems arise when there is a major power imbalance.
When a firm has too much directed power, it may succeed while the “dictator” is in control. However, their departure can result in a massive power vacuum characterised by infighting and wheel-spinning.
Firms with too much collective power become paralysed democracies. Endless meetings to resolve trivial issues mean less partner time on the things that really matter – clients and people. Most collectives also seem to do poorly in building a pipeline of future leaders.
Fly or fail
When partners have too much autonomy, sub-cultures or silos can emerge. If each partner is only looking after themselves, the firm merely becomes a shared office or a hotel for lawyers.
The construct of shared power can be a useful lens to analyse why some firms fly or fail.
From the outside looking in, Gilbert + Tobin appears to be addressing the potential succession risks with an extended process of selection and baton passing.
To avoid this issue repeating, Gilbert + Tobin would be well served by ensuring it has the right power and governance model rather than looking for Danny Gilbert mark II.
Relationship Capital 
#leadership, #professional service firms
The challenges keep rising for overburdened partners
In Articles, Commentary on 13 May 2022 at 7:18 pmThe full unedited text of my opinion piece first published in the Australian Financial Review on 12 May 2022.
The partner role in law firms has always been a ‘stretch’ job – complex, demanding and business-critical. It’s also extremely well paid and prized by many. Most equity partners in Australia’s top 25 firms will earn over $1 million in 2022.
Looking ahead the partner role is only going to get tougher.
It started with Covid
The step-change in the role of partner can be traced to the start of the pandemic.
A decade’s worth of pre-Covid records analysed by Thomson Reuters Peer Monitor showed that associates had around 10 more billable hours per month on average than partners in the same firm. However, in April and May 2020, this long-term trend reversed and partners recorded more billable hours than associates.
The reasons cited for this shift were that clients demanded more direct access to partners to address their most pressing issues and remote working made delegation more clunky.
Two years on and the data suggests both partner and associate billable hours have gone up. Partners are still recording more hours than their associates, although the gap has narrowed.
What’s clear is that the supply side of the legal market is really stretched and a lot of the burden is falling on partners’ shoulders.
Rising expectations
Looking ahead we see client demand remaining strong. While there’s uncertainty as a result of the war in Ukraine, inflation and supply chain issues, the predominant mood is still bullish.
At the coalface this means most partners will have to do more with the resources they have, at least in the short-term. As one partner recently commented, “when that urgent client matter arrives on my desk after a busy week, I find it really hard to ask my exhausted associates to work on it. What typically happens is that I take it home and do it all myself.”
A high demand market has put pressure on salaries and people are transitioning more frequently. One inevitability of high staff turnover is that partners spend more of their scarce time in recruitment interviews, onboarding and in ‘stay’ conversations.
One of the solutions to address high turnover is for partners to develop deeper relationships with their team members. They are expected to engage with team members more meaningfully regardless of where and how they work.
Leading a flexible team also brings new operational challenges. One partner I’m aware of spends around an additional 30 minutes a week configuring workload, arranging desk space, meetings and collaboration events.
Team of the future
Over the next decade partners will not only need to become better people people but also better tech people. In the first half of 2021 over $US1.4 billion was invested by venture capital firms in legal technology. Most of this investment is in new tools to assist lawyers in doing their work and to provide better client service and value.
Partners will have to be digitally literate to stay competitive. This means being aware of latest software most relevant to their practice, and when and how to deploy it most effectively.
Allied to the advances in technology is the growth in diversity of legal teams in terms of age, identity and ethnicity. One partner I spoke with recently commented on the challenges of leading a team of five generations: “The Boomers, Gen Xs, Ys and Zs in my team have each have their own expectations and idiosyncrasies. Tailoring the messaging and engagement approach can be exhausting and I often get it wrong.”
Create the capacity
The most obvious strategies for firms to deal with increased role complexity is to provide their partners with better support, coaching and training.
I think this response will only get firms part of the way.
A more profound examination of the role, and in particular the financial expectations of partners as producers, will create the capacity for them to be [1] healthier, and [2] better leaders and managers.
The partner role is a stretch job, but stretch it too far and it might break.
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