Partnership structure is under fire from a sea of self-proclaimed professional service firm management experts. Some, like Mark Brandon, bring a well-measured view. Others are more apocalyptic.
- They cite the burning platform of reduced fees, rising costs and increased competition from eat-what-you-kill US firms.
- They raise the spectre of Alternative Business Structures eating your lunch, and offshore powerhouses doing your work at 10% of the cost.
- The solution, they would tell you, is a raft of professionals who really understand how to run a business.
‘Move over grandpa, let the big boys play with the train set.’
But there’s a great deal to commend partnerships
At its best, the partnership structure is like a flock of geese flying long distances in V formation: power, efficiency, direction, mutual support. They take turns to lead, honk encouragement and protect the weakest members.
But at its worst the partnership model in action looks like a group of chickens in a chicken run, each pecking out an existence, each in competition with each other and each waiting expectantly for the next batch of food to arrive.
So what makes the difference? What differentiates the geese from the chickens?
Leadership and direction. The geese are going somewhere. When on the ground geese are very similar to chickens – albeit louder and smellier. But once in the air they gain a sense of purpose. They know where they are going, and can all fly in the same direction. Without this shared purpose they too are grounded.
With leadership and direction a partnership structure is fine.
Whatever the form of governance – whether partnership, LLP or corporate – the central issue is one of taking the firm somewhere (direction), and bringing people with you (leadership). The clear leadership from the board of directors in a corporate structure can be just as illusory as the leadership emanating from a law firm management board. Governance brings no magic. Form should follow function, and just changing the wrapping is not going to help.
Once leadership and direction is set it is the task of management – whether professionally-trained or owner-inspired – to organise the firm so that it achieves maximum efficiency in pursuing its goal. Most firms may demonstrate a weakness in execution of strategy – few lawyers want to manage or be managed – but we mustn’t think that changing governance will change the culture.
The central problem is that too many firms are collections of chickens. They just peck the ground around them. They are unwilling to join together, set a firm direction and head for it. They want to stay where they are, hoping that the regular supply of food will not run out. However winter is coming. The food is getting harder to find.
Firms need get into the air and migrate to climates where they are suited. Changing the way the flock is organised may help, but the central challenge is getting airborne.
Jamie Pennington’s consultancy, Pennington Hennessy, provides mentoring, coaching and training to law firms. You can read his blog here.