A recent
post that received a fair amount of attention (or
notoriety, as you prefer) was that recapping a presentation by Prof.
William Henderson of Indiana University School of Law/Bloomington about
the relative profitability of firms that converted to two-tier (equity
and non-equity) partnership models.
In short, the presentation asserted that, based on the weight of the
empirical evidence, firms that had converted to two-tier status had lower
profits per partner than single-tier firms, even correcting for
market segment, etc. Putting aside issues (many of which
astute readers pointed out) such as the inability to conduct the counter-factual
experiment of what would have happened to these firms had they not converted
to two-tier (i.e., they might have performed even more poorly), the
irony remains that the common wisdom of consultants recommending the
conversions and of most firms adopting it was that going two-tier would
increase PPP. At the very least, it seems safe to say that that
goal was not achieved.
So here’s your opportunity—all of you in two-tier firms, that
is—to chime in on why your firm become two-tier. Rules
of the poll: You may only vote once, but you may select more
than one reason for the conversion.
Results to be published in a week to ten days.
