The right approach, it turned out, was a series of well-structured interviews, individually or in small groups, encompassing the entire partnership, organized and facilitated by consultants from outside our firm. Diagnosis followed, then prescription and further small scale meetings to achieve engagement and consensus. The big meeting happened but it came at the end of the process. It was for informal ratification and optimistic forecasting, not analysis. And the process did what was needed – it transformed the management of the firm and remodeled the pay scheme which, as it turned out, was not so capricious after all.
In the course of this process I found that – quite unexpectedly – having read Henry Kissinger’s Diplomacy (1994) came in handy. I had read that book, just for pleasure, precisely because it was a far cry from my everyday economics and management readings. Yet, as it turned out, there were useful insights to be gained from it for someone whose job requires satisfying a range of strongly held opposing viewpoints which was certainly my situation at the time of this management overhaul.
One such insight is that robust, long-lasting resolutions arise from compromises from which every faction leaves the bargaining table somewhat dissatisfied at not achieving all that its members might have wished for but none leaves empty-handed, disenfranchised or otherwise driven to revolt. Applied to international affairs, in Kissinger’s words:
By definition a balance-of-power arrangement cannot satisfy every member of the international system completely; it works best when it keeps dissatisfaction below the level at which the aggrieved party will seek to overthrow the international order.
You may remember the examples that have been enshrined in a million term papers: The Congress of Vienna ended the Napoleonic wars. France, the loser, participated in the resolution and was left standing and largely intact. The ensuing multinational resolution kept Europe out of trouble for 100 years. The treaty of Versailles ending World War I was a different story in its origin and its outcomes. Germany and Russia were excluded from the council table and Germany believed itself to have been victimized by the reparations imposed by the treaty. (Keynes thought this was so but Germany’s rearmament a decade late is a counter-argument.)
In contrast to Vienna, Versailles left an unstable Europe and consequently a host of woes. Needless to say, the history is vastly more complex but the principle of what makes for a sustainable compromise survives. All this, I admit, is bit grandiose as an introduction to the subject of partners’ pay but the connection should already be clear.
When the time comes for a law firm to rethink and perhaps reset its senior pay arrangements it’s a safe bet that opinions within the partner ranks will differ across many dimensions, the differences will be stark and the opinions will be strongly held. The balance between privacy and transparency of pay outcomes is one such dimension; the balance between individualism and “shared fate” is another.