The 6 most important qualities for an equity partner
Jaap Bosman.
From a sociological perspective, law firms are very different from many other businesses. On the one hand, law firms have the clear distinction between fee earners and staff (the non-fee earners). Although both categories are part of the same organization, they form two distinct separate classes: an upper class (fee earners) and a middle class (staff). These two classes do not mix well. Even a nonlawyer CEO or COO will be seen in the end as part of the middle class.
Typically, when a corporate event such as a skiing trip is organized, it is only for the fee earners (upper class). For staff there are often no such perks.
The other relevant distinction is between equity partners and the rest.
This type of social class system found in law firms is rather unique and is rarely found in such a distinctive way in other businesses. In most “normal” types of business, all employees would be seen as more or less equally important, and even though there might be the distinction between management and the rest, there would not be quite the same division of status as you will find in many law firms.
In my early days, I worked in retail, and certainly the sales team was not more important than the buying department, logistics, real estate management or any other function. Each employee had its own role and contribution, and everyone felt an equally important part of the same organization. This holds true for many, dare I say most, forms of businesses. It also holds true for in-house legal departments: Regardless of the job title or role, everyone is part of the same team. No upper class and middle class.
In “normal” businesses there is also no equivalent for equity partners. Yes, some business is family-owned. Some other businesses have founders and large shareholders among the workforce, but these owners tend to all work for the same common business goal. What makes law firms unique is that, irrespective of firms demanding capital contributions or firms with various types of profit sharing, each equity partner works primarily for his or her own benefit, rather than for the benefit of the firm. What further makes law firms unique is that equity partners form a special upper-upper class that lives and operates differently from normal company management (or large shareholders). Sociologically, law firms are a species sui generis.
In this column, we will concentrate on the equity partners. If we can improve equity partners, we can change the firm. There are clear distinctions between the most talented and experienced nonequity lawyers and those who make it to equity partner. Once you are promoted to equity partner, you not only become part of “the club,” but another form of transformation takes place at the same time.
In the first week of May 2019, we witnessed the inauguration of Japanese Emperor Hironomiya Naruhito and Thai King Maha Vajiralongkorn Bodindradebayavarangkun. Both gentlemen underwent a transformation similar to a lawyer who is made partner. The day before the coronation, both Naruhito and Vajiralongkorn were humans, and now, they are considered sort of divine and infallible. Becoming equity partner is not dissimilar. The day prior to a title change, you can still “be wrong”; on the day when one’s title is changed, you are supposed to know everything and supposed to always be right. Equity partners are supposed to be superheroes (and sometimes see themselves as such) and act accordingly.
All of these sociological quirks are part of reality, but not per se, in the future interest of the firm. In our experience, law firm business results will be better if there is more equality and teamwork—not only between lawyers and staff, but also between equity partners and lawyers, and among equity partners. So, to improve business results, we might need a different type of equity partner: humans, not superheroes.
Below, I’ve listed the most important criteria that should guide a firm in its appointment of equity partners. In this list I do not mention legal skills because these should be a given. Any lawyer lacking the required legal skills should have been dismissed long before the partner nomination procedure starts. All remaining senior lawyers should have legal skills equal to the equity partners.
Most important criteria for appointing a new equity partner
1. Creativity: The first and most important criterion is creativity, or the ability to find new and effective legal solutions. Creativity can take many forms here: the verbal creativity to convince people and let them see the world your way; the creativity needed to find an alternative approach or solution if needed; the analytical creativity to spot when things that seem logical and factual are actually mere claims without basis, just to name a few. As the legal industry will move toward value-based billing, it will need lawyers that can deliver this value. Such value will be in creation and not in production, as it is today.
2. Practice development: The second most important skill to look for is the ability to bring in new business. Equity partners have the responsibility to bring in new business. A great lawyer that does not possess the ability, the ambition and the skill to bring in the right clients and the right matters should never be made equity partner.
3. Practice management: This one is sort of obvious but often overlooked. Being an equity partner means that you must be able to plan ahead in a structured manner. The times that a partner could leave requests lingering on the desk only to remember and panic at the last minute are well behind us. Both associates and clients do not want to receive stuff five minutes before a deadline expires. Tomorrow’s equity partners must have the ability to seamlessly work with project management professionals.
4. People skills and emotional intelligence: Being an equity partner requires well-above-average people skills. Without the right people skills, it will be very hard to attract the right clients. Without adequate people skills, it will be impossible to manage and keep a good functioning team of associates. Gone are the days that partners can shout at associates—or anyone else for that matter. The new generations of millennials and Gen Z simply are not willing to work with bullies. They certainly don’t mind working hard, but they want to be taken seriously and treated with normal respect. Further, emotional intelligence is absolutely required to work with today’s sophisticated clients. Lawyers that are not able to understand the client’s social and emotional motives and drivers will not be able to deliver the value that clients are looking for. The acceptance of partners that have difficulties with social interaction is a thing of the past.
5. Presence and confidence: An equity partner must have the ability to represent the client when the stakes are high. This will only be possible if the partner has a good and relaxed air of self-confidence. Partners must have the ability to handle complex and tense social situations and explain and defend their client’s position in person (in writing is much easier) even if the other party is much more powerful and holding better cards. Partners must ooze confidence and have a presence in the room.
6. Integrity: The sixth and last of the criteria would be integrity. These days we have seen far too many examples of lawyers who got involved in shady business on behalf of their clients. We have seen lawyers accused and found guilty in #MeToo situations. We have witnessed lawyers overbilling their clients, partners covering up mistakes by other partners, partners favoring friends and so on. One could say that it goes without saying that integrity for partners is paramount. Unfortunately, reality shows that it is not.
We are aware that in law firms, partner promotions tend to be sort of revenue-focused and opportunistic and that in many firms there is, at present, no structural approach that would include all of these six criteria. We are convinced that, given what the legal profession will look like in the near future, law firms should start applying different criteria and raise the bar substantially when it comes to new equity-partner promotions. This does not mean that partners should be superheroes or that we would be supporting the upper-upper class of equity partners. On the contrary, raising the bar means that tomorrow’s partners need to be able to collaborate and work in teams and will need to be more human than ever. Only real humans can relate to other humans. In the end, the legal profession is very much about humans, their interactions and their emotions.
Jaap Bosman is a leading strategy consultant, investor and one of the founding partners of TGO Consulting, a boutique consultancy focusing on the legal sector operating from New York, the Hague and Hong Kong. In April, Bosman published his latest book, Data & Dialogue: A Relationship Redefined. In 2015, he published Death of a Law Firm. Bosman is a regular speaker on the future of the legal sector. Contact Bosman at [email protected]
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