Journalists are sometimes criticised for making lawyers overly focused on profits. The theory is that the profession has become overly bent around the one metric of profits per equity partner (PEP) and that the media has played its part by publishing those numbers. Personally, I think the idea that the media introduced greed to an innocent and unsuspecting profession is nonsense. The legal profession has grown rapidly in recent years, and when that happens to any industry you get more transparency. That’s a natural development of a healthy business services market, and it comes with the territory. I also don’t know of any industry where a core measure of profitability hasn’t become well established.
But there’s a more fundamental reason that I don’t believe the media is to blame for creating the PEP monster: the basic truth is that many senior lawyers really – and I can’t stress this enough – really care about PEP. That is less about greed and more because they see it as their share price, the key indicator of their own success and status. And lawyers, being a competitive bunch, care a lot about status. As such, this year I’ve seen partners at firms where PEP has tumbled act like naughty schoolboys, as if they’ve let themselves and the profession down because profits have fallen in what is, lest we forget, a very sizeable recession. But so what? Obviously profitability is important and firms must remain competitive with their peers over the medium term, but that won’t be defined by one or even two years.
