You may have heard about the Business Leadership Summit being organized by The Lawyer, taking place in London September 22—23. (More information here; registration here.)

The theme is “embracing change in the delivery of legal services,” and here are are a few of the highlights:

  • The keynote speaker on Day 2 will be Peter Kalis, Chairman and Global Managing Partner of K&L Gates, speaking on “Leading through Disruptive Change” (Here’s his recent discursive, iconoclastic, and immensely literate interview in The Lawyer.)
  • Panels and topics will include “The GCs’ Ten Commandments;” how traditional law firms, new law, accounting firms, and LPO’s can co-exist; implementing and adopting change across the firm;
  • and much more.

I’m writing today to provide a preview of the panel I’ll be moderating on Wednesday 23 September at 4:00 pm: “If you were to build a law firm today, what would it look like?”

I’ve been giving this some thought and in that vein wanted to share with you one idea I think deserves to be part of the mix of discussion at the panel.

Abandon the partnership model

What follows is by way of advocacy: This is not the “on the one hand, on the other…” sort of column. So here’s why I believe this topic needs to be considered a serious contender as a piece of the answer to the question posed by the panel’s headline.

Before proceeding: If you think this notion is so radical that it, and its bearer (at the moment, that would be me) deserve summary dismissal, may I refer you to none other than Immanuel Kant?

Let me explain: I’m currently reading The Shape of the New: Four Big Ideas and How They Made the Modern World, which discusses Adam Smith, Karl Marx, Charles Darwin, and the Hamilton/Jefferson debates on democracy. It proceeds from the premise that the Enlightenment enabled all these ideas to come to light and gain currency, and for the sake of context, reproduces the key phrase from Kant’s 1784 essay, Beantwortung der Frage: Was ist Aufklarung (An Answer to the Question: What is the Enlightenment?), itself prompted by a dyspeptic query posed by the Prussian clergyman and official Friedrich Zollner doubting the very concept. The book takes it from there:

Kant did not merely provide a response but a call to arms: “Enlightenment is man’s exit from his self-incurred immaturity. Immaturity is the inability to make use of one’s intellect without the direction of another….’Sapere aude!‘ (‘Dare to know!’).

Our stage and our ambitions are substantially more modest, to put it mildly. But let us proceed in that spirit.

My partner Janet Stanton has proposed a thought experiment: How many $100-million, $500-million, or $1-billion revenue corporations would choose to convert to the partnership form and model? Now, I realize I’m swinging an analytic halberd at the Golden Calf of partnership, and if that offends you I strongly counsel you to stop reading right now; this will only get worse.

Think of the business advantages inherent in the corporate form:

  • Elimination of the misleading and mischief-making fiction that each partner is an “owner” in a sense that has teeth on a day to day operational and managerial level. Rank and file partners
    in almost any law firm that would flunk Amazon’s Two Pizza Rule* have a voice as “owners” in the same sense in which I have a voice as an owner of GE alongside Jeff Immelt because Vanguard funds I own hold GE shares. It’s a transparent, if quaint, legal construct which causes mayhem and paralytic chaos if pushed literally.[*Amazon’s Two Pizza Rule is
    that no development project should include more programmers than could be fed in a meeting by two pizzas.]
  • Speaking of mayhem, one of the least amusing symptoms of the partnership virus run amok is the implied license some partners take to dictate the lives of business professionals in marketing, finance, IT,and so on, demanding that they immediately execute their capricious desire of the moment. If you can nominate a candidate for sapping the energy and enthusiasm of these professionals faster and more effectively—not to mention thwarting any purposeful concerted long-term initiatives the firm is pursuing in these areas—suggestions from the floor are now open.
  • You have all heard the tiresome brain-teaser posed by people who think they’re being cute but are actually revealing their obtuseness: “Do clients hire the lawyer or the law firm? [Vocalized or implied, “A-ha!”]” The only mature answer is, “both of course.” But to the extent one can assign a priority ranking, the partnership model reinforces putting the lawyer first, the corporate model would reinforce putting the firm first. Loathe as we are to cast any shadow over the unique and sui generis talents of each and every individual BigLaw lawyer (all 150,000 or so of them), recent history in our industry has taught us that free agency among lawyers can be a menace to enduring institutions. And our assignment for today, lest you forget, is to hypothesize about the ideal design for the law firm of the future.
  • Finally, the partnership form profoundly distorts the reported earnings of law firms since “profits” are calculated, in essence, before senior management (the partners) are paid. Among other things, this infuriates clients and reinforces the extreme short-termism endemic among firms.

A bit of elaboration on each point.

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