The Partner drain: what’s going on?
Despite the onset of instability in the global financial markets in 2015, the last year has seen a spate of lateral partner hires across Asia, particularly in Hong Kong. Most of these moves are from City (UK)/small US law firm offices to larger US law firms, and some partners and of counsels are establishing local Hong Kong offices in association with PRC law firms. It’s a trend that is set to continue as, by and large, the US firms continue to 'pick off' senior lawyers who are both technically excellent and have a substantial book of business. So why are law firms seemingly unable to keep some of their best talent?
From working with, and speaking with, a wide spectrum of international law firms in Asia, there are a number of factors in play. Not all apply in the same instance. It could be one main factor, it could be a combination. But certainly there are ‘pull’ factors of US law firms that appeal to legal talent that UK and other international law firms aren’t offering, and there are common ‘push’ factors that either international law firms are overlooking, ignoring or simply feel unable to address. Here are the common grievances that I hear from partners and other senior lawyers.
Many a time I hear frustrations from Of Counsels, Consultants and Senior Associates how they are passed over time and time again for promotion. In the most basic sense, it’s a case of, ‘get in line’. Often, there are multiple lawyers at the same level in the same firm, vying for partnership, but the partnership rules or policy are such that the firm is only willing to promote a certain number of senior lawyers to partners in any given financial year. If another firm 'dangles the carrot' (of partnership), even at junior partner level, it’s not hard to see why law firms are losing their best talent.
Partners protecting their own turf
Naturally, a partner will wish to ensure an optimum level of relationship with their client, so as to ensure that the business comes their way, rather than to another law firm. Sometimes, this may spill into over guarded jealousy to such an extent that the partner is involved intimately on every matter, or on the biggest matters, preventing senior lawyers in their team from developing meaningful and deeper relationships with those clients.
For some of the bigger firms, the relationship between law firm and client is institutional, so unless a team of partners walked out en-masse, that relationship is there to stay. The upshot of that is, unless a partner retires, a lawyer in that team has less of a chance to make it up to partnership. It's a vicious circle, in that they are viewed as simply to service client matters, not the client relationship, and cannot gain leverage for partnership as they don't have their own client base, because they simply don't have the time (or encouragement from the partnership) to develop new client relationships elsewhere.
Your office structure inherently creates obstacles
For smaller firms, it may be an (informal) policy of ‘one in, one out’, whereby the local or head office is unwilling (or unable) to approve further investment in partner growth unless an existing partner leaves. Understandably, it puts the local office between a 'rock and a hard place' in that partner promotions and later hires can increase costs overnight without the guarantee of an upturn in business.
Your team structure creates obstacles
Some law firms are simply too ‘top heavy’ or have too flat a structure of their teams, with not enough time and finance into hiring and training staff at different levels. If a senior lawyer is still an associate by the time they reach 10 years' post-qualified experience (PQE), and their billing, business development, rainmaking or client relationship management skills are not being recognised or credited, the onset of disillusionment will soon set in.
All you need is love?
Occasionally, a partner is hired externally into their team without seeming regard to the ambitions and feelings of lawyers in their own team. This inevitably delays or dismisses the chance of a senior associate or Of Counsel promotion in that firm or, in the case of an existing partner, the chance to step up to equity. Obviously the firm may well have its own reasons which are discussed at senior management or committee level, but their reasons may not necessarily trickle down to those affected.
Some firms fall into the trap of saying to senior lawyers, “let’s see how it goes in the next 12 months”. But to the senior lawyer in question that appears non-committal and isn’t based on any objective criteria or offer of support. This alone can create a flight risk in some of your senior staff.
Lack of an active firm-wide network
For larger firms, the frustration of partners and Of counsel might be borne from a lack of investment in complimentary teams that are a natural source for business referrals (e.g. corporate with any one of banking, insolvency, white collar fraud, competition or IP, shipping litigation with their non-contentious counterparts). Some partners have also expressed a lack of a strong referral network within their own firm across other offices, an aspect which some US law firms do particularly well. This may have something to do with the corporate structure of some firms (a Swiss Verein structure whereby each office is an independent P&L centre, whereas other firms operate under one central P&L).
Your human capital strategy needs to raise its game
US law firms who pay their fee earning staff NY rates are going to attract partners with the allure of more money. But job satisfaction and pride in, and commitment to, your law firm’s brand shouldn’t be determined by this one sole factor.
Major international law firms as well as the smaller offices of international law firms (UK and US) can offer to junior to mid-level lawyers an environment for growth and development, with partners, of counsels and senior associates closely supervising their junior colleagues. And they do this exceptionally well, which is why the US law firms with medium to large operations in Asia are targeting these firms.
However, what doesn’t seem so obvious is a strategy that enables the mid-senior level lawyers to progress beyond senior associate, or to recognise the rainmaking or client enhancing abilities of a partner or of counsel.
"there are common ‘push’ factors that either international law firms are overlooking, ignoring or simply feel unable to address"
Moreover, for the more senior partners, I have met numerous candidates over the years who, having worked to the 1,800+ annual hours target for 15-20 years, feel they want to achieve things they had to set aside in order to pursue their career, like volunteering, writing, or some other passion they had when they were younger. This is a factor that points to all law firms generally, but in the pursuit for greater revenue and profits, there comes to a point where a partner will simply join another organisation to be paid more in order to, for example, retire much earlier.