IRAC: What Law School Could Have Taught You About How to Make Partner
Issue: I have been working at a small- to medium-sized law firm for two years now. I’ve been successful in my efforts to prove my skills and abilities to the partners and develop a reasonable client base. What do I need to do to ultimately become a partner?
Rule: “Whatcha gonna do, Jerry? Show me the money!”
Analysis: Law firms are businesses. Businesses require cash to subsist, grow, and thrive. In the law firm environment, consistently paying clients are equivalent to cash. Therefore, your ability to attract, retain, and satisfy a book of profitable clients will be your surest path to partnership in either your current firm or any prospective firm.
A quick lesson in business principles and terminology: “revenue” is the total amount of money that a business brings in (for a law firm, this is effectively the total number of hours billed by attorneys at a law firm multiplied by each of their respective hourly rates). “Expenses” are all the costs to run a business — salaries for attorneys and staff, rent, office equipment and so forth. “Profit” is what’s left over from revenue after the expenses have been paid. Effectively: profit = revenue – expenses.
In a traditional law firm partner arrangement, partners share profits above and beyond salary. By granting you partnership, the partners are acknowledging that the economic value you bring to the firm is greater than your salary. It’s both a selfish and selfless act. It’s selfish because the partners are trying to ensure that they will have a long-term claim on your profits (if they don’t grant you partnership, another firm might). It’s selfless in that the partners are also agreeing to share their profits with you. There is both risk and reward for the partners who offer you a partnership.
In order to “make partner,” you need to build a case, just like you would in any other professional legal endeavor, that the most rational and logical course is for the partners at your firm to give you a larger share of the profit that you are generating and (perhaps a more difficult sell) for them to share their profits with you. The way to do that is to develop and maintain a book of clients that is significant, pays its bills, and is committed to you.
Conclusion: Partnership is an economic arrangement in which its partners share profits. To encourage the partners of your firm to share profits with you, you need to incentivize them to do so by making what it is that you have to share as valuable as possible. You do that by developing a large body of loyal paying clients.
Dicta: This analysis is short-sighted in many ways. First, in determining whether to make someone a partner, firms consider factors other than client base. Nevertheless, in making partnership decisions, a loyal, profitable client base is going to be a prerequisite in nearly every case. Second, the landscape of the legal industry is changing rapidly and dramatically. This discussion is a snapshot of how things largely look now, but even today I know of a number of partners whose partnerships came about for completely different reasons. Nevertheless, the current paradigm of steady, profitable clients remains the key to partnership, and this is not likely to change any time soon.