Towards the end of the calendar year most law firms announce the elevation of their new partnership classes. Although the demand for legal services picked up somewhat since the end of the recession, especially in transactional areas of practice, firms remain conservative in their partnership decisions.
What does it really mean to become a partner? The answer depends largely whether you’re promoted to equity, or non-equity, partner status. It’s now common for law firms to have at least two tiers of partners: equity partners who share directly in the profits of the firm; and nonequity, income, or contract partners who, in most cases, receive a base salary plus bonuses usually dependent upon their personal production. Equity partnership involves shared liability for the debts of the firm, a capital contribution, voting rights regarding the affairs of the firm, and compensation based on a share of the profits.
In some law firms, nonequity partnership is a required interim step to full equity partnership. In other firms, senior associates who are valuable but not quite up to the challenge of full partnership at the time of partnership consideration are given probationary nonequity status. Many firms don’t set a specific deadline by which lawyers in the nonequity partnership tier must demonstrate their readiness for equity partnership. Some lawyers remain in this tier permanently. Regardless of the circumstances of your elevation to partner, you should conduct yourself as one with ownership aspirations in order to get ahead.
As an associate working long hours in the trenches, you might think that life is easier once you become a partner. Wrong. You must work even harder. As an associate, your job is to bill lots of hours and develop your legal skills. As a partner, not only must you produce quantities of excellent work for your clients, but you also must generate and maintain clients, supervise and mentor associates and staff, and participate in the firm’s business activities.
Partners also have a responsibility to the firm as an institution. In the eyes of the public—clients, potential clients, associates and staff—what you say and do reflects on the firm. In order to live up to these new expectations, you must develop and hone your managerial and leadership skills and educate yourself on the business of the firm. Learn as much as possible about the finances, politics, and strategic plans of your firm, including how your particular practice fits into your department and the firm as a whole. Study the strategic plan to determine what you, personally, can do to facilitate your firm’s success. Choose particular committees, activities, or issues where you can make a meaningful contribution. And, very importantly, observe the interaction between the partners in your firm so that you can learn to be most effective in being heard and getting things accomplished.
As an associate (and, in most cases, as a nonequity partner), your salary and benefits are part of the firm’s overhead. As an equity partner, you’re responsible for generating revenues to pay that overhead. Your compensation is based upon your contributions—both financial and administrative. Learn your firm’s numbers by practice group and as a whole: revenues, expenses, leverage ratio, average billable hours, profitability, cash flow, etc. Take a class on accounting for lawyers, if necessary, because as an owner, you need to really understand how your business works.
On the personal finance side, you may have to pay for all or some of your own benefits, such as insurance and parking, which the firm provided for you as an associate. You may also pay quarterly estimated taxes and, if you’re an equity partner, make a capital contribution to the firm. So, you may need new personal money management skills as well.
In addition to keeping your billable hours up, as a partner, you have additional non-billable administrative responsibilities. You may need to assist with firm-wide activities such as recruiting, training, staffing, and billing and collection, or participate on committees dealing with compensation, associate reviews, technology and office systems, non-lawyer staff, and business planning. Working as a team with partners from other departments within the firm will help you get an overall view of the business of the firm, and make you a more effective partner. Pitch in and help out wherever your talents are needed. The idea is to create a partnership that is greater than the sum of its parts.
One of the most important responsibilities of a partner is making rain. A wise associate planned ahead and began business development activities along the way. Since bringing in business means building relationships, it takes time to show results. It’s best not to have to start from a standstill when you become a partner. But, begin now, if you haven’t already laid the groundwork, or to step up your efforts if you already began planting those seeds.
You can promote yourself and your firm by regularly writing articles, giving speeches, and participating in bar association and trade group activities. Furthermore, think about cross-selling the services of your partners to your new or potential clients. Likewise, make sure your partners are aware of your capabilities so they can sell your services to their clients, as well. And, once you get the business in the door, you’re responsible for keeping track of assigning the tasks, monitoring their progress, ensuring the quality of the work product, and overseeing billings and collections.
To get a handle on these new tasks, a new partner must prioritize and organize. Take the time to set up systems to, for example, keep track of billings and collections, manage your contacts for business development purposes, collect information for potential articles or presentations, and track status on tasks assigned. Observe or ask how others manage these tasks, and use the computer or paper files that best suit you—and keep them current.
Also, learn to delegate appropriately and as much as possible. Time spent planning and organizing will reap rewards in terms of productivity and efficiency in the long run, and—perhaps most importantly—decrease your stress level so you can relax (a little!) and enjoy your hard-earned promotion to partner.