In light of my post earlier
this week recapping the extensive empirical evidence on the hazards (or,
at least, the not-to-be-assumed, non-automatic, benefits) of shifting
to a two-tier partnership model, news that
Gibson-Dunn is considering just such a move is incongruous, to say the
least. As Legal
Week puts
it,
"Even with an all-equity partnership, Gibson Dunn remains one
of the most profitable US practices based outside of New York. Average
partner profits in 2004 were up 10% to $1.5m (£857,000)."
Were I the Legal Week
editor, I would have changed the introductory phrase from "Even with,…"
to "Thanks to…"
I emailed Chuck Woodhouse, the Gibson-Dunn Executive Director (whom
I’ve met with), alerting him to my post and the professor’s paper.
I’m
thinking of changing the tag-line of this blog from "…an inquiry into
the economics of law firms" to "beware the law of unintended consequences."
really.]
Creating a two-tier partnership allows you to retain senior associates who are great lawyers and nice colleagues, but with whom you might not necessarily be able or willing (in part because of these senseless rankings you enjoy to report)to share part of the equity. Is money your only bottomline?
Dear Damien Geradin:
I appreciate your taking the time and effort to comment, and I’ve approved
your comment in full; it appears verbatim on the blog now.
More importantly, I wanted to reply by letting you know that, while money is
*not* my only bottom-line, it is, I believe, the most interesting topic for
the vast majority of readers of “Adam Smith, Esq.,” and, furthermore, an
ineluctable reality in today’s world. No single law firm has the option of
“opting out” of the bottom-line driven system, which rules the market for
lateral partners, practice groups, client mobility, and so forth. We may
rue the reality, but it is the reality. On “Adam Smith, Esq.” I try to
reflect that.
For other views about life and values in law firms, I would commend you to
other blogs; that is one of the blogosphere’s primary virtues (an enormous
diversity of voices). My blog represents one view, and I intend to stick to
it.
Again, many many thanks for commenting; I appreciate your time and agree,
essentially, with your point about two-tier’s enabling a firm to retain
senior associates. The point I’m making is simply that that decision,
valuable as it may be in itself, entails consequences.
Cheers and best regards,
:Bruce