THERE was never any thing by the wit of man so well devised, or so surely established, which (in continuance of time) hath not been corrupted: as (emong other thinges) it may plainly appere by the common prayers in the Churche, commonlye called divine service.
—The opening of the Preface to The Book of Common Prayer of the Church of England (1549)
Chapter 2 of my book Tomorrowland: Scenarios for law firms beyond the horizon develops the scenario that nothing fundamental changes about law firms despite the market crying out for change. (Chapter 1 presents the scenario that nothing fundamental changes because nothing needs to change.) And what blocks meaningful change in Chapter 2’s scenario? The title of the chapter says it all: “Lawyer psychology and the partnership structure.”
As the world embarks on its frustratingly sputtering and tentative—but, we predict, relentlessly accelerating—steps to move beyond the Covid-19 pandemic, it seemed timely to revisit the train of thought presented in Chapter 2. Why? If you subscribe—with us—to the hypothesis that, akin to the Global Financial Crisis of 2008/’09, the Covid-19 crisis will powerfully accelerate some trends and developments already in the works, then change may be a-comin’. Can law firms embrace it? And if not, what might get in their way?
I won’t spend much time today on the “lawyer psychology” part since I think it’s well-trod ground now for most of us. Compared to the rest of humanity—or even white-collar American professionals—lawyers rank sky-high on skepticism and urgency and low on resilience. This means they are distrustful, jump to conclusions, and take setbacks on the chin. These traits are highly functional in zealous representation of clients—that’s why they’re adaptive, and strongly selected for in lawyers who get to the top of the profession—but they can be disastrous when it comes to internal firm management, governance, and leadership.
These characteristics might be annoying (or even amusing in small doses) but essentially harmless in your typical corporation, run basically as a top-down, hierarchical organization, but the thesis of Tomorrowland’s Chapter 2 is that they can be dysfunctional and even destructive in law firms because of the partnership structure.
From Tomorrowland (p. 34, emphasis original):
I believe the partnership form as lived and experienced today in the vast majority of law firms is a mighty weight on the side of reinforcing the status quo—no matter how strong the rational evidence suggesting a change of course might be. Partnership exerts its potent gravitational pull towards the most conservative approach through the mechanism of instilling a conviction in every partner that he/she is an owner, therefore has a voice, and therefore should be able to veto any proposal posing an upset to their preferred and established way of doing things.
The first problem with partnership as an organizational form begins when law firms grow from small, simple monoline practices typically operating out of a single office to complex poly-functional organizations with expertise in dozens of specialty operating across a regional, national, or global footprint. The problem is simple: Partnerships don’t scale.[Some of our favorite clients of all time—you think we jest??—have been small partnerships of a dozen or fewer who have despite all odds being in favor of a tight-knit jolly band have chosen as their model the massively dysfunctional largeish family with centers of power in attics and basements and among young and old. Why, oh why? But they do it. Dysfunction and optimal function are not just numbers games. Still, you know where the betting man would put the chips.]
Our idealized notion of a tight-knit partnership draws on the metaphor of a family, and while you can have five close family members, or maybe even ten or fifteen, you can’t have 100, 500, or 1,000.
Evolutionary psychology and anthropology have actually confirmed numerical limits on how many people you can have a meaningful relationship with: The number is 150, a/k/a the “Dunbar number”—after Robin Dunbar, an Oxford scholar who stumbled across the number looking at the Christmas-card sending habits of English families (in the pre-social media era) and then began finding it everywhere as a cognitive human reality reflected in everything from the size of hunter-gatherer clans to army companies to, yes, Twitter followers and Facebook friends.
“So what?” you ask: “BigLaw today is in reality organized as top-down, centrally managed hierarchical entities.” Yes, to the extent that the trend of BigLaw becoming BiggerLaw seems relentless, but No if you’ve ever worked in even a smallish corporation. (We’ll come back to this momentarily.)
The gradual movement of BigLaw along the spectrum from Athenian democracy to United States Marine Corps is undeniable. But the top-down controls are highly selective; they’re not impinging on the autonomy of Type A professionals. This was once expressed succinctly and memorably to us by an impatient practice group leader as “You can have your own trial strategy but you can’t have your own billing policy.”)
The problem is that firms haven’t wanted to admit that partnership principles have their limit. It’s doubtless true that the degrees of freedom of partners in BigLaw are not as unconstrained as they were decades ago—may we add, in many ways for the better? Think #MeToo, the louder drumbeat of diversity/inclusion pressure matched by glacial but previously nonexistent action, pressures around representation of toxic clients, heightened transparency across the board, and more.
“Partnership principles” entail bilateral obligations, duties, responsibilities. At bottom it’s a social and not a juridical compact. Law firms are free to subscribe to the fiction that partners remain unfettered self-guided missiles, but one can hope that was never entirely true and it’s less and less so, for admirable and worthy reasons. Subscribing to a pretense that everyone knows is a pretense can be highly functional, but that’s not what firms say and so it’s not how partners behave.
Partners expect to be treated as such, in full; to them the title is not in the least vestigial or symbolic. They want to voice their (emphatic) opinions, exercise their presumed entitlement to an exhaustive hearing, have an extended conversation about it all, and at the end insist on asserting their prerogatives as an “owner”—which, according to any normal partnership agreement, they are. In a way, can you blame them?
Here we run into what I’ve characterized as the difference between “facts” and “truth.” (Just to clarify, folks, I created this coinage while Obama was President.) The Partnership 101 fact is that equity members are owners, but the truth of today’s nation- or globe-spanning firms is that partners’ rights are fenced in by the realities of scale. What does this mean?
You can petition management for changes, and vote on certain substantive questions, but if the firm chooses a course of action that poses irreconcilable differences with your preferences, your right to object or dissent (“Voice”) has been exhausted to no avail. The only permissible choices remaining for you are to leave (“Exit”) or stay faithfully on board in light of the overall package (“Loyalty”).
But the great majority of BigLaw partners would—we’re talking messy reality, not Platonic organizational ideal—stoutly resist stopping with Albert Hirschman’s famous Exit/Voice/Loyalty triad. That may be fine for the corporate world, where the CEO can pull rank on the EVPs, they on the SVPs, and so on down the line. “But not me as a partner in a BigLaw firm.” There has to be another way, a way to get one more bite at the apple.
Lest you think I lay the blame entirely at the feet of the partners for misapprehending what their title really means, firms are equally culpable: 99 out of 100 boast of how their “collaborative,” “collegial” “culture” sets them apart. If that’s not exalting the values of a powerful, almost romanticized view of partnership, what is?
Now I think we’re getting somewhere: The idealized notion of a high-functioning partnership aspires to the condition of “we few, we happy few, we band of brothers” (Henry V, Act IV Scene iii(3) 18–67). It is, admit it, a romantic vision.
What’s omitted, alas, is the critical ingredient of symmetry, mutual obligation, reciprocity, and stewardship: Uncompromised and bilateral commitment, in other words. (That “merry band” in Henry V was going into battle, after all, many never to come back; we’re asking a bit less here, but that hardly deprives the metaphor of power.) At root, we’re talking about the tension between “WIIFM?” [what’s in it for me] vs. the bilateral social compact.
The concept was memorialized nearly 60 years ago in Judge Simon Rifkind’s “Statement of Firm Principles” for Paul Weiss:
Our objectives are, by pooling our energies, talents and resources, to achieve the highest order of excellence in the practice of the art, the science and the profession of the law; through such practice to earn a living and to derive the stimulation and pleasure of worthwhile adventure; and in all things to govern ourselves as members of a free democratic society with responsibilities both to our profession and our country.
Now ask yourself this—and answer, Scout’s Honor, in the context of your own firm: Is our partnership at all akin to the band of Henry V, a “one-firm firm” even or especially when the going gets tough?
Or in reality does it more closely resemble a “hotel for lawyers,” a place where people can come and go at will with few strings attached, temporarily sharing some overhead, not having to worry about putting together their own financial, billing, or document management systems, and being able to draw from a more or less trained pool of more or less capable associates?
One wise Managing Partner of my acquaintance characterized that bargain thus:
Be careful not to confuse the career aspirations and personal preferences of the current incumbent owners with the mission of the organization. That is not strategy—it is career planning at best, and a bunch of lawyers simply sharing overhead disguised as an enterprise with purpose at worst.”
If your firm is closer to the hotel end of the spectrum than the Henry V end—and my own cheerless conclusion is that 90+% of BigLaw firms are in that wan and pallid neighborhood—then a reasonable person might ask, “Why the fiction of these partnerships? Why not just be forthright about matters and adopt the governance model of a corporation?”
Voicing this recommendation out loud is best avoided. It doesn’t do justice to the reactions I’ve encountered to call them “skeptical:” They go well beyond that familiar territory into some different planetary orbit altogether, somewhere between incredulity and incomprehension. You have offended the demigod of the Partnership Ideal.
Not for the first time can Scripture give us insight into human behavior.
In Exodus 32, the Israelites, in their Exodus from Egypt, became restless and impatient when Moses left them to ascend the mountain and stayed there too long. They petitioned Aaron to make a golden calf, which he mounted behind an altar, and they offered burnt offerings and brought sacrifices before “sitting down to eat and drink, and rising up to revel.”
When I was younger, this story baffled me every time I heard it: The Israelites had the real thing—they had Yahweh, the Hebrew God of Abraham and Isaac. Why did they need a false idol?
Because the real thing is hard, “a jealous God,” “visiting the iniquity of the fathers on the children, to the third and fourth generations” (Exodus 20:5) One can understand, if not embrace, the undemanding phony image, inert and content to see the people eating and drinking and reveling. This is a lot easier to take than the firebreather demanding sacrifice.
So yes, real partnership is hard, and therefore rare.
And why does this matter?
Because false, inch-deep partnerships are, finally, not fit for organizational purpose.
If we step back, I believe all can stipulate that a primary goal of a business enterprise is to define, articulate, and pursue a distinctive strategy. So query whether the partnership form or the corporate form is more “fit for purpose”—that is to say, more likely to advance the goals of the firm’s strategy?
The Platonic ideal of partnership is powerful indeed. But in 2021 it’s the rarest of firms that can, or does, live it. The short run seduces almost every time. Wouldn’t we be better off to emerge from Plato’s Cave and take an honest look at the partnership form in the unforgiving bright light of day?
Because until we do, the dynamic of latent centrifugal forces ready to spin up inside a firm like a dormant virus will remain with us, ready to strike at a moment of weakened resistance. All we require is the courage to take a hard look.