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Historically, partnership in a law firm was the clear and unquestioned goal of almost all lawyers who entered private practice. Now life is much more complicated. In-house positions in corporations have become more attractive, and more associates are questioning whether their firm is the optimum place to spend their most productive years. For the majority, however, partnership is still the brass ring. Unfortunately, most of those who make partner are not prepared for the financial and personal consequences — not to mention the additional stress. Interviews with senior associates and new partners (particularly equity partners) reveal that they frequently face a number of disconcerting surprises, even shocks, when they finally achieve their dream. In most firms, especially the large and midsize ones, partners-to-be are not warned about what to expect. As a result, many experience difficulties making the transition from employee to part owner. The unforeseen frustrations and unhappiness lead some to question their future with the firm. If management prepares new partners for the changes that are in store for their professional and personal lives, they won’t suffer unreasonable stress and reduced productivity in the transition. Besides the prestige and the potential for higher compensation, partners can enjoy more flexibility and control. Also, they are now in a position to address any complaints about the working environment, and can be more responsive to the needs of clients — the ultimate determinant of business success. Here is a brief run-down of the changes that new equity partners might expect to face: • Possible cash-flow problems as they take on the responsibilities of ownership. • Conflicts, competition, and disillusionment with partners. • Even more time at work, less at home. • More administrative duties. • More pressure to generate business. • Greater dedication to client service. Firms make large investments in both time and money to identify, develop, and groom the most promising associates. Somehow, the level of attention tends to drop after partners are selected. (Even aggressively pursued laterals are too often neglected after the initial rush of excitement and publicity.) But the sooner that new and future partners understand what partnership actually entails, the smoother will be the transition from associate to partner. And then, new partners are more likely to perform at the level the firm expects. ISSUES FOR DISCUSSION These are some of the most important issues that should be discussed between management and partner candidates. What are the significant changes in roles and responsibilities? Partners are expected to devote much more time and energy to business development initiatives, and to strengthen their client-service and relationship-building skills. Management must make clear what partners are expected to achieve and how to develop the skills they need. New partners also need to know about other responsibilities of ownership, such as recruiting, training, and mentoring. How new partners handle these added responsibilities will have a major impact on their career success and compensation. What are the changes in compensation and financial responsibilities? The most dramatic change is the switch from a salary and paid benefits. Not only does being “self-employed” have significant tax implications, there are capital commitments and cash-flow planning problems. Although higher compensation is anticipated, it cannot be taken for granted, especially at first. New partners must learn financial discipline. A new partner must adapt to a completely different cash-flow existence. Instead of receiving a salary at regular intervals from which income and Social Security taxes have been withheld and paid for them, new partners must start paying these taxes out of the cash distributions received from the firm. Often, these distributions are irregular in timing and amount. Sometimes partners must either borrow money to live on until the year-end distribution or modify their lifestyle. It always comes as a shock to new partners that they must pay both the employer’s and employee’s portion of the Social Security and Medicare taxes. In addition, partners may be required to contribute to the firm’s retirement plan, instead of the firm making a contribution on their behalf. Then there are capital contributions: Partners are required to pay in a substantial amount, usually several thousand dollars over a period of years, to invest in operations. In some firms, this capital contribution is subtracted from the first few years of partner compensation. No wonder new partners often feel cash-poor. Some actually netted more as an associate than in the first year or so of partnership. What are the sources of tension among partners? As associates, they may have been “protected” by partners who wanted them to be available to work on their matters. As new partners, they become players among whom the pie must be divided. This change in status can have a dramatic effect on relationship dynamics, resulting in considerable stress, anger, confusion, and insecurity. When the curtain is pulled back to reveal the jockeying for power and self-serving actions, many new partners are surprised and dismayed at what they see. They may have had visions of a more ideal form of partnership — or at least more mature and enlightened behavior. These are the issues that firms find harder to address: They don’t want to acknowledge interpersonal conflicts or to spend what could be billable time on dealing with partner relationships. These problems may be the most threatening to productivity, however, and may even cause some valuable people to leave, causing otherwise viable firms to implode. How does partnership affect one’s personal life? For new partners, the time commitment to the firm increases due to added responsibility regarding administrative tasks, business development, and client management. Personal time is quite likely to shrink, which is tough on families as well as couples. The partners’ spouses or significant others may resent the dedication required, especially if they don’t have careers that are as demanding. With two very pressured careers, the challenge to have a life is even more difficult. Couples need to candidly discuss their expectations and ways to shift burdens. CLASS ACTIONS These issues cannot be dismissed as “touchy-feely” things that are not worth the time of smart, busy lawyers. If your firm has not prepared you for the role of partner, get together with the members of your new “class” of partners. Acting as a group is better for everyone, including the firm. • Ask for a group meeting with members of firm management and practice group heads. In advance, submit an outline of key questions regarding finances, business development expectations, and rewards, billable hours, and nonbillable work expectations. • Before the “official” meeting, hold a more informal meeting with your mentor in the firm, if you have one, not only to get a briefing on the issues to be discussed, but also to get a sense of firm politics or interpersonal dynamics. • Ask for an informal meeting with your firm’s human resources manager and/or ombudsman to discuss your concerns and gather information. Remember that information that does not come from the firm’s leaders is “unofficial.” • Don’t rely on e-mail or written memos. Personal meetings are far more effective when it comes to clarifying sensitive issues. Phyllis Weiss Haserot is president of Practice Development Counsel, a consulting, training, and coaching firm helping law firms with business development and organizational effectiveness. She is the author of The Rainmaking Machine (West Group). She can be reached at (212) 593-1549 or at [email protected].

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