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As New Jersey’s legal community entered the 21st century, most firms, even some of the largest ones, were governed by a rubric that would just as well suit lawyers in the Victorian age: Founders rule, and those who administer the firm serve at their pleasure. That power structure is hardly surprising, since all but a handful of the state’s firms are of relatively recent vintage. They coalesced around a small group of founding partners and their immediate successors, many of whom survive and maintain cults of personality. But as those leaders retire or die out, and as their firms — pressured by intrusions by out-of-state competitors — grow and diversify, new management structures are being weighed. Among the new practices slowly catching on is the placement of term limits on managing partners. Advocates of the practice say it ensures an influx of new ideas, guards against generational conflict within the firm and promotes smoother leadership successions. Firms with term limits are still in the minority nationwide, says management consultant Joel Rose. Firms sometimes adopt a term-limit policy after a “palace revolution” in which younger partners decide it is time to forcibly remove a long-serving leader, says Rose, of Cherry Hill, N.J. At Philadelphia’s Fox, Rothschild, O’Brien & Frankel, members of the executive committee and managing partners of branch offices can serve for a maximum of five years, says Jack Plackter, managing partner of the firm’s Atlantic City, N.J., office. After stepping down, those managers can reassume their posts after a one-year hiatus, says Plackter, whose firm adopted term limits two years ago. “We don’t think anyone should be there forever,” says Plackter. “New people bring a lot of perspective to the job.” The key to the success of Fox Rothschild’s management structure is that managing partners in the firm’s eight offices get extensive assistance from the staff on details like office leases, says Plackter. As a result, managing partners don’t have to put the practice of law on a back burner, and they face the same billable hour expectations as other partners, he says. “There are different ways to attack the problem. This works great for Fox Rothschild,” says Plackter. Several large Philadelphia law firms have adopted term limits for managing partners, including Morgan, Lewis & Bockius; Saul Ewing; Dechert; and Schnader Harrison Segal & Lewis. But term limits have plenty of detractors as well. Such policies can force out qualified managers in favor of those without the proper skills, says another law firm consultant, Edward Poll of Venice, Calif. “Not everybody in the firm is a capable business manager. It seems to me that those who do it well should be the ones to do it,” he says. Managing partner John Eagan, of Norris, McLaughlin & Marcus in Somerville, N.J., thinks firms that impose term limits do so because they have an unpopular managing partner, but in so doing, “it becomes a way to effectuate change without dealing with the problem.” At McElroy, Deutsch & Mulvaney, the partners have studied the term limit model with its rotation of managing partners and decided it is not the right fit. Such a system would wreak too much turmoil in the lives of the Morristown, N.J., firm’s mid-career litigators, says managing partner Edward Deutsch. A founder of the 19-year-old firm, Deutsch, 56, feels someone nearing retirement is best suited to give up a portion of his or her practice to manage. He has told his partners he is willing to continue as managing partner until 2007. Likewise, Glenn Clark, managing partner of Morristown’s Riker, Danzig, Scherer, Hyland & Peretti, says his firm rejects term limits because it would be hurt by too much on-the-job training among leaders. “By the time you figure out the job, it would be someone else’s turn to take over,” he says. At Newark, N.J.’s Sills Cummis Radin Tischman Epstein & Gross, Clive Cummis, 73, had been chairman for three decades and would have held the post for life had he not wound down his practice to devote himself to a major client, Park Place Entertainment Corp. In 1998, he became Park Place’s secretary and executive vice president for law and corporate affairs but still held a seat on Sills Cummis’ 15-member management committee. In late 2000, partners voted to keep him on the committee for one final two-year term. The current managing partner, Steven Gross, 64, has held that post for 10 years and expects to continue until retirement. Gross says rotation of managing partners can impair strategic planning. He says his firm’s recent expansion to service overseas companies doing business in the United States would not be possible without stable leadership. “A firm has to be able to adapt to the different economic cycles while retaining collegiality and retaining partners,” Gross says. “If a leader is isolated, they ought to stop serving at the pleasure of the firm.” Advocates and opponents of term limits for managing partners agree on one thing, though: Shareholders should elect managing partners to terms of three years or so. Most of those New Jersey firms do that, or they elect an executive committee that picks a managing partner. The exception is McElroy Deutsch, which Deutsch says will institute such a system after he steps down. The debate over term limits for managing partners points up a challenge facing law firms — getting qualified partners to take an interest in management. Management consultant Rose says the disdain many lawyers feel for things like profit-and-loss statements is a reason many managing partners stay in their posts so long — no one else wants the job. Spreading around management responsibility helps to groom future managing partners and to make management more responsive, says Rose. At Cole, Schotz, Meisel, Forman & Leonard in Hackensack, N.J., where the two managing partners are elected by shareholders every five years, there is no term-limit policy but the firm seeks an inclusive management structure, says co-managing partner Michael Forman. “We try to spread it around — it’s not a dictatorship by any means. I think [managing partner] is a desirable position here. We’ve got a bunch of bright, talented people and they’re capable of stepping in,” Forman says. “I can’t imagine one would not be interested in the well-being of his business and the people he cares about.” At Newark’s McCarter & English, the state’s largest firm, however, adopted a revised structure last October that Chairman Andrew Berry describes as “stronger, more centralized.” Term limits were not discussed extensively when the firm debated changing its structure, but the goal of the change was to improve the firm’s strategic planning ability. To accomplish that, the firm added the positions of deputy managing partner and chief operating officer. “The perfect New England town democracy is a difficult model to sustain, given the competitive business and economic pressures that attend the management of a large law firm,” he says.

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