"I’ve become accustomed in the last six years to facing the presumption that a profession cannot be a business in its true sense. It is quite a common assertion, made equally by a number from within our own profession. It is underpinned by the belief that business-like behaviour and professionalism are incompatible."
I quote Guy Beringer,
a partner in Allen & Overy’s London office, from a speech he gave last May.
Our topic for today, then, is whether professionalism and a business-like approach are incompatible. (There has also been a meme percolating along these lines on the WSJ‘s law blog, but that has exerted precisely zero impact on my thinking, and for that matter on the timing of this piece, which I’ve been reflecting on for, well, for just about forever.)
For starters, as we are wont to do, it helps to define our terms. There is a distinction between "partnership" and "professionalism," more capably summarized by Dr. Laura Empson, Director of the
Clifford Chance Centre for the Management of Professional Service Firms at the Said Business School, Oxford University:
"For the past few years I have studied partnerships and corporations in a variety of professional sectors, seeking to understand the distinctive characteristics of partnership, why it is so well suited to the management of professionals, what exactly is threatening its survival and how it should adapt in today’s changing world. My research has revealed that it is fundamentally important to distinguish between partnership as a legal form and partnership as a state of mind. Essentially, partnership is an ethos — a shared set of beliefs and behaviours that define a community — and [corporate model] managers can do a great deal to ensure that it survives and thrives."
I wish to focus not on the trivial formalities of the organizational form (partnership or LLC or otherwise) but on what Laura nicely calls the "partnership ethos." That is what the people Guy Beringer is talking about view as antithetical to a business-like approach.
So far here on "Adam Smith, Esq.," I have elided the distinction between the "profession" and the "industry," adopting the working convention or rule of thumb that I say "profession" in the context of partnership structures, leadership, strategy, and so forth, and that I favor "industry" when I’m talking about globalization, consolidation, IT, and finance. In truth, I believe our beloved world is both, and Harvard Law School seems to agree, having launched three years ago their program "to examine the ‘industry’ [their quotes] of law practice."
Guy Beringer takes a straightforward approach to the putative conflict, positing these "cornerstones of the legal profession:"
- Independence
- Integrity
- Access to justice
- The rule of law
and asking whether "sustainable profitability" conflicts with any of these. Indeed, he turns the challenge that a focus on profitability undercuts professionalism precisely on its head and offers "a better proposition, [to wit that] the greatest threat to professionalism is the absence of sustainable profitability."
Simply put, would you lay higher odds on a financially robust and thriving firm, or on a hand-to-mouth subsistence firm, putting those values into practice come hell or high water (in other words, the only times it counts)? I rest Guy’s point.
But he also extends the connection between solid profitability and meeting and surpassing ethical obligations to how a firm generates profits. Let’s take as a given that higher-quality work commands higher margins, erego higher profits. Now step back and ask precisely how "higher quality" work is generated. Guy (and I agree with him) attributes them to:
- Training
- Mentoring and development
- Efficient and effective knowledge management, and
- Values which need to be articulated and followed.
Now, it strikes me that all of these are "luxury [or ‘superior’] goods," in the lexicon of economics, meaning they are goods (like second homes, foreign travel, Chateau Mouton-Rothschild, and luxury cars) which you consume disproportionately more of the wealthier you are. ("Inferior" goods are things you consume more of the poorer you are, such as rice and beans, rental housing [New York City excepted], Wal-Mart brand clothing, and public transit [New York City excepted].)
In other words, the more financially sound and prosperous your firm, the more capable you are of providing the bedrock ingredients for "quality." It’s starting to sound like a marriage, not a divorce, for "professionalism" and "business."
Dr. Empson provides a more nuanced view of the intersection of the "partnership ethos" with other tugging and conflicting considerations. For example:
- While partnership can form cohesive bonds, it can also work to exclude those outside the blessed fold, such as non-equity partners and extremely high-quality C-level executives.
- Are partners who view themselves as owners entitled to exercise "extreme and inappropriate behaviors"?
- Do clients and potential recruits (your firm’s two key aspirational constituencies) understand and value the partnership ethos?
- If the "socialization process" that indoctrinates one for membership in the partnership is too effective,
it can "represent a potentially serious block to change more generally…[the] partnership risks becoming a self-perpetuating collection of clones." - Finally, the partnership ethos can be strengthened not just by preferentially selecting those candidates who embody it but by dealing decisively with those who belong to the partnership but who, for whatever reason, no longer embody its principles.
This is where I come out: The value of the "partnership ethos" is of paramount value to our profession. On this we cannot compromise. Period, full stop.
But in the 21st Century, the only sustainable way to support that ethos is by thorough-going, consummately professional senior executive management with a primary focus on financial performance, and empowered to operate, humanely, to get and to keep the firm on that robust platform.
Or, as my friend Tony Williams, former managing partner of Clifford Chance and of the late Andersen Legal, put it when I asked what he thought of the view that professionalism and a business-like approach to management were incompatible, "Arrant Nonsense! Arrant Nonsense!"
