Perpetual Competition in Large Firms is Lesson of Evolutionary Biology
Corporate law firms have grown so large that they have surpassed the “tipping point” that glues individuals together.
Research by evolutionary biologist Robin Dunbar suggests that people can maintain stable relationships with a limited number of individuals, and the “Dunbar number” for humans is 150, two law professors write for the American Lawyer. Only 18 law firms in the Am Law 100 have fewer than 150 partners, they say, and these firms tend to fill distinctive niches and earn high profits.
“When a partnership encompasses several hundred lawyers in a dozen widely spaced offices pieced together by mergers and lateral hires, it is very difficult to sustain (much less create from whole cloth) an organizational ethos in which partners are willing to make sacrifices for the long-term welfare of the firm,” according to the professors, Marc Galanter of the University of Wisconsin-Madison and William Henderson of the University of Indiana.
For most big law firms above the tipping point, the practice model is changing to one in which lawyers are in perpetual competition—to achieve one of a small number of equity partnerships, and then to hold on to that status. “The only finish line is retirement or death,” Galanter and Henderson say.
Such core and mantle firms have an inner core of equity partners “swathed in an outer mantle made up of senior nonpartners under an array of titles, such as nonequity partner, of counsel, special counsel, staff attorney, senior attorney and permanent associate,” the professors say. Lawyers work longer to attain equity partner, and once there “they work in the shadow of possible de-equitization,” the article says.
And the mantle appears to be growing at a faster rate than the core, according to the article. In the top 200 law firms last fiscal year, the number of equity partners increased by only 2.2 percent while the number of nonequity partners jumped by 10.2 percent. The economic power in such firms lies with rainmaking equity partners who are reluctant to subsidize job security or better work-life balance for lawyers they hardly know.
But it doesn’t have to be that way, the authors say. They propose three solutions that could increase loyalty and professionalism, creating a more sustainable business model. They are:
Law firms could convert to employee-owned professional corporations, abolishing distinctions between associates and partners. These firms would focus on specific practice areas and clientele while emphasizing superior service.
Ethics rules could be modified to permit nonlawyer investment in law firms, lessening the impact when powerful partners defect.
Laws could be passed to restore the enforceability of partner covenants not to compete.
