More from the redoubtable FT about what may transpire from
marketplace forces released after (the widely expected) adoption of
the Clementi Commission recommendations in the UK. (If you don’t
know what the Clementi Commission is, as one of my law professors would
have scolded with juicy delight, "you haven’t been paying attention,"
but I choose to view life through a mellower lens, so take a look here.)
We start from the premise that the prospect of injecting public capital
into a law firm—or even admitting non-lawyers to the ranks of
equity ownership in a private firm—is anathema to a large swath
of the profession. Indeed, as Sir David himself puts it, "Certain
lawyers dislike being described as part of an industry. They see a
conflict between lawyers as professionals and lawyers as business people.”
Rare
is the expressive pith with which this captures much of what this blog
aspires to be about. Are the "profession" and the "business"
strange bedfellows? I would answer with more than a resounding, "No;"
I would answer that the virtues of each enhance the strengths of the
other.
But let’s clarify what engages our attention here: Not that
the UK equivalent of the American Automobile Association, or the supermarket
chain Tesco, are making noises about starting up their own branded
law firms to serve the consumer masses. Rather, we’re interested
in the implications for the Magic Circle and blue-chip firms.
Far and away the most important, I believe, will be the pressure—indeed,
the inevitability—of allowing and inviting professional managers
in firms to become equity participants. The implication is clear:
Participating pari
passu in ownership with a firm’s senior lawyers "puts you in a
different place mentally," as one such aspiring manager nicely puts
it.
That running a major law firm today is largely like running any other
big company can no longer be denied. And senior management’s
expectations about the availability of the full arsenal of compensation
tools, including equity, should be no different. When this happens,
it will have profound cascading effects analogous to the opening up
of the market for lateral partners in the 1980’s—which, it is
not too much to say, changed everything.
