{"id":5894,"date":"2016-06-22T20:34:34","date_gmt":"2016-06-23T00:34:34","guid":{"rendered":"https:\/\/thebigpictureandthecloseup.com\/?p=5894"},"modified":"2016-07-14T16:55:33","modified_gmt":"2016-07-14T20:55:33","slug":"partner-and-other-big-firm-euphemisms","status":"publish","type":"post","link":"https:\/\/thebigpictureandthecloseup.com\/?p=5894","title":{"rendered":"\u201cPartner\u201d and Other Big Firm Euphemisms"},"content":{"rendered":"

The Big Picture Home Page<\/a>\u00a0|\u00a0Previous Big Picture Column<\/a>\u00a0| Next Big Picture Column<\/a><\/p>\n

\u201cPartner\u201d and Other Big Firm Euphemisms<\/h2>\n

A version of this piece published on the Daily Record Website June 22, 2016, in the Daily Record June 23, 2016<\/p>\n

Despite a mostly placid surface, the most recent of the Law Firms in Transition<\/em> reports<\/a> issued annually by law firm consultancy Altman Weil is alarming. True, it starts with the unstartling observation that larger firms continue to change in response to changing market conditions. And that anodyne tone continues. But then you start recognizing the unspoken norms and assumptions informing the report \u2013 and those are chilling.<\/p>\n

“Non-Equity Partner”<\/h3>\n

I was reminded an old Steve Stills lyric<\/a>: \u201cYou are living a reality I left years ago\/ It quite nearly killed me.\u201d The report is based on a survey propounded only to firms of 50 lawyers or more, and responded to by, among others, 49% of the 350 largest law firms. In short, the survey reflects the world and the thinking of Big Law. I myself labored in firms large enough to receive the survey until 22 years ago. I\u2019m not there now. And to judge by the report, it\u2019s just as well.<\/p>\n

Around the time I left, for instance, I was just beginning to hear of a concept called the \u201cnon-equity partner.\u201d That once-novel status is now reportedly a feature of the structure of nearly 100% of Top 200 law firms<\/a>. By definition, the phrase must, at a minimum, mean that the partner does not receive \u201cequity,\u201d which equates roughly to ownership. (Thus Merriam-Webster\u2019s relevant definition<\/a>: \u201ca risk interest or ownership right in property.\u201d)<\/p>\n

But wait: that\u2019s contradictory, isn\u2019t it? How can you meaningfully be a partner without a share of ownership? Neither in classical partnership structures nor in limited partnerships can you call someone a partner who owns no piece of the partnership control or profits.<\/p>\n

In practice what the term means is someone who receives salary, and does not get a piece of the end-of-year profits. But, as noted, true partners divide profits. Anything less is simply a salary, and shouldn\u2019t be called an incident of partnership. Economically, then, a non-equity partner is simply a mislabeled employee. There may be enhanced status attached to the label, and perhaps greater job security (hold that thought, though) but still what we\u2019re really talking about differs at best in such particulars from the status of an associate.<\/p>\n

Feeling Hobbesian?<\/h3>\n

Whenever something is persistently mislabeled, it\u2019s time to take alarm. As was observed nine years ago by law firm consultant Robert Denney<\/a>, \u201cWhether firms admit it or not, the principal reason [for establishing a non-equity class of partners] is usually to avoid slicing the profit pie into more, and possibly smaller, pieces to maintain a high net income per equity partner.\u201d In plain English, non-equities become that way to assure that the rich get richer, that the haves have more, and the have-nots have less.<\/p>\n

This transfer of wealth and power is happening as we speak. Quoth Altman Weil: \u201cAlmost half of firms are taking the … step of de-equitizing full partners, moving them out of the profit-sharing class.\u201d<\/p>\n

Are we feeling Hobbesian yet?<\/p>\n

“Underperformance” and “Counseling”<\/h3>\n

It gets worse, as one flips through the report. One learns, for instance that \u201c[c]ompensation adjustments are being used in most firms to deal with underperforming partners…\u201d That phrase \u201cdeal with\u201d makes it sound as if \u201cunderperformance\u201d were some form of misbehavior that the headmaster will need to address. Okay, so we know Altman Weil are really only talking about \u201ccompensation adjustments,\u201d i.e. cutting people\u2019s pay. But actually it can get worse. We learn that \u201cchronic underperformers are being counseled out of their firms.\u201d<\/p>\n

Don\u2019t slip and fall in all that euphemism. To say directly what the people at Alman Weil were too squeamish to: Firms are earning less than their shrinking class of true owners, the \u201cmade men,\u201d wish, and lawyers perceived as not contributing enough to satisfy the overlords are being penalized for this supposed shortcoming by being fired. Not \u201ccounseled,\u201d for heaven\u2019s sake. Few people leave jobs they want to keep because they have been \u201ccounseled.\u201d<\/p>\n

Though why they\u2019d want to keep such jobs, I\u2019m not quite sure.\u00a0 Why would anyone with his or her eyes open spend years trying to become an owner if that ownership was so evanescent? If the value and even the survival of one\u2019s \u201cownership\u201d were so dependent upon the favor of people who prosper more when one loses it? Well, you\u2019ve got me. I can\u2019t figure it out. But it\u2019s happening.<\/p>\n

Then too, work just seems not to be there for (oh, surprise!) the non-equity partners. Altman Weil say: \u201c62% of firms report their non-equities are not sufficiently busy, including 80% of the firms with 250 or more lawyers.\u201d<\/p>\n

The Headmaster Awaits<\/h3>\n

Oh, okay. I grant it is possible that purely by chance and by some amazing coincidence the people who aren\u2019t given a true stake in the business are so consistently the ones with too little work. Possible, like the possibility of drawing to an inside straight.[1] But a more sensible bet would be that the big guys are hoarding the work because they want to stay the big guys, and under the existing ground rules they endanger their status if they share the work. And when the non-equities aren\u2019t busy enough because the equities don\u2019t share the work, guess whom the headmaster, a\/k\/a the HR manager, will call next into his study? (A hint: a 2013 Altman Weil report<\/a> suggested: \u201cOver time, reduce the number of non-owner partners the firm has.\u201d)<\/p>\n

I\u2019ve singled out non-equity partners, but actually there is a full trough of job titles<\/a> for people who, most often, become losers in this Brave New World: of counsel and senior partner and staff attorney and permanent associate and contract attorney and many more.<\/p>\n

Most people my age didn\u2019t understand any of this when we started practicing law. There was another, more colloquial sense of the word \u201cpartnership\u201d that we thought we were aspiring to: everyone working towards a common goal and<\/em> a common benefit. Well, silly us! If the Altman Weil profile is to be believed, the risks of the biggest legal enterprises are now being increasingly spread over the whole group, and the bulk of the benefits are being enjoyed by only a diminishingly few members. (Incidentally, does this remind you of anything?)<\/p>\n

Small Law Definitions<\/h3>\n

As I\u2019ve said, I made my own break 22 years ago. And I\u2019ve seen a lot of others do it since.<\/p>\n

From my observation, most of the refugees to the world of Small Law have, in one way or another, tried to create workplaces that were about<\/em> their owners. All<\/em> of their owners. In the Small Law world, partnership truly means ownership. In the Small Law world, partnership means receiving a fair share of the firm\u2019s proceeds and enjoying a fair share of the say in running the show, and relying on genuine job tenure.<\/p>\n

To be sure, Small Law practitioners seldom have access to the huge clientele or the big money their bigger brothers and sisters do. At least up until that moment the Big Law \u201cpartner\u201d is \u201ccounseled\u201d out the door, he or she will probably earn more than we Small Law folk do. But in terms of what makes practicing law worthwhile, from where I sit, foregoing those extra dollars seems like a bargain.<\/p>\n

_______________<\/p>\n

[1]. 4\/47 or roughly 8-1\/2%.<\/a><\/p>\n

Copyright (c) Jack L. B. Gohn<\/p>\n

The Big Picture Home Page<\/a>\u00a0|\u00a0Previous Big Picture Column<\/a>\u00a0| Next Big Picture Column<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

One learns that \u201c[c]ompensation adjustments are being used in most firms to deal with underperforming partners…\u201d That phrase \u201cdeal with\u201d makes it sound as if \u201cunderperformance\u201d were some form of misbehavior that the headmaster will need to address. Okay, so we know Altman Weil are really only talking about cutting people\u2019s pay. But it can get worse. We learn that \u201cchronic underperformers are being counseled out of their firms.\u201d Don\u2019t slip and fall in all that euphemism.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-5894","post","type-post","status-publish","format-standard","hentry","category-bigpicture"],"_links":{"self":[{"href":"https:\/\/thebigpictureandthecloseup.com\/index.php?rest_route=\/wp\/v2\/posts\/5894","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/thebigpictureandthecloseup.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thebigpictureandthecloseup.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thebigpictureandthecloseup.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/thebigpictureandthecloseup.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=5894"}],"version-history":[{"count":4,"href":"https:\/\/thebigpictureandthecloseup.com\/index.php?rest_route=\/wp\/v2\/posts\/5894\/revisions"}],"predecessor-version":[{"id":5908,"href":"https:\/\/thebigpictureandthecloseup.com\/index.php?rest_route=\/wp\/v2\/posts\/5894\/revisions\/5908"}],"wp:attachment":[{"href":"https:\/\/thebigpictureandthecloseup.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=5894"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thebigpictureandthecloseup.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=5894"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thebigpictureandthecloseup.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=5894"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}