This article describes proven strategies that we have recommended to clients to effectively implement the two-tier partner structure.

Partners in a great many law firms have recognized the value of creating a two-tier partnership structure — as opposed to the “up or out” alternative — for dealing with those long-tenured associates the firm has invested a lot of money in developing, yet do not satisfy all of the objective and subjective criteria to become equity partners.

During recent consulting assignments with mid-size and larger law firms, managing partners who are keenly aware of the need to develop more effective methods to integrate nonequity partners into their firms’ career development programs have expressed some frustration with the less-than-effective implementation of the two-tier partner system in their firms.

To quote one managing partner, “It is one thing to attract and spend a lot of time and money training high-quality associates and progress them to nonequity partner status, but it is more challenging to integrate them into the firm to enable them to feel as though they are more than” higher-paid associates.

By the time an attorney becomes a nonequity partner, a law firm has invested heavily in time and money to train him or her. Nonequity partners should be among the most profitable attorneys in the firm. They have experience and the partners should assign work to them and expect high-quality work product with minimal oversight and direction. Further, they should be capable of supervising younger attorneys and managing/coordinating certain nonbillable matters for the firm.

Problems Reported by

Nonequity Partners

Below is a composite of the key perceptions that were offered to the author by nonequity partners about their firm and its equity partners during a recent consulting assignment.

During personal and confidential interviews, a majority of the nonequities said that equity partners were excellent lawyers and basically “good people,” except for the fact that they did not know how to supervise and develop attorneys.

They also said they would like to become equity partners in the firm, if only the current equity partners could “get their acts together.”

Nonequity partners said equity partners were not nearly as interested in the professional development of the nonequities as they claimed to be. They (equity partners) were more interested in the nonequities’ billable hours and collected billable hours.

Nonequities also said that during pre-employment interviews, equity partners misrepresented the type of personal and professional development the nonequities would receive.

The nonequities did not feel as though they were an integral part of the “team” serving the firm’s clients; i.e., they were told only what they had to know to complete the assigned work, rather than being told the rationale for the assignment and the broader scope of the client project.

The nonequities said they were among the last to know what the firm’s plans were. One common complaint echoing these concerns was that the secretaries knew more about what was happening at the firm than they did.

According to the responses, the nonequities were not making adequate contributions toward satisfying the client’s objectives.

Nonequities also complained that a considerable amount of the work assigned to them did not provide appropriate intellectual and personal challenges.

According to the responses, more experienced nonequities were not given sufficient independence and responsibility for their work and were instead micromanaged by equity partners, who failed to provide open and honest communications and constructive feedback about the nonequities’ work.

The nonequities were not given adequate opportunities to develop and use their skills and talents in areas in which they excelled.

Nonequities also said equity partners talked about opportunities for partnership, but were unwilling to discuss the criteria for making equity partner or the length of the equity partner track that was likely applicable to the nonequities.

Strategies to Enhance

the Integration Process

Equity partners should conduct personal meetings with the nonequity partners to determine to what extent the nonequities perceive the firm’s stated values about “open communications, and concern for quality of life and professional development” as an accurate representation about how associates are treated, professionally and personally.

Equity partners should also seek to determine whether the nonequities believe their opportunities for advancement — professionally, personally and financially — are better than, worse than or about the same as opportunities available to their peers for performing similar kinds of work by other law firms and corporations.

Do the nonequities believe their “total” compensation (cash and benefits) is more than, less than or about the same as the “average” total compensation paid to their peers, for performing similar kinds of work and demands on their time, by other law firms and corporations?

Do the nonequities believe that the equity partners’ demands about their billable time and expectations of their total time commitment are reasonable when compared to other law practices performing similar kinds of work in private firms and corporations?

Do the nonequities perceive the present methods followed by some equity partners for assigning work as being conducive to providing to them “stable, diverse and challenging workloads”?

These meetings will also allow for individual differences among the nonequities while ensuring that such differences do not interfere with collaboration at the firm. Strive to work with the nonequities to gain an understanding of professional and personal objectives they want to achieve, and how the firm can assist the nonequities to achieve their objectives while ensuring that such differences do not interfere with collaboration at the firm.

Equity partners should make the nonequities’ professional and personal development a high priority. The lines of communication between the equity partners and the nonequities have to be open, reasonable and candid. For example, equity partners should invite the nonequities to attend many of the equity partners’ meetings and retreats. When the equity partners intend to discuss issues that should not be heard by the nonequities, the latter should be excused from the meeting.

Equity partners should also reassess the firm’s nonequity partner career development program and decide which programs are working, which ones need to be tweaked and which ones may require major surgery.

They should develop objective and subjective criteria to evaluate the nonequities’ professional performance and personal characteristics so that the equity partners may offer constructive recommendations concerning their performance and career development.

They must also designate one equity partner to head a committee of equity and nonequity partners to develop a coherent approach for the professional and personal development of the nonequities, including developing strategies to address the nonequities’ concern, including enhancing the quality and frequency of communications.

Equity partners need to recognize the individual lawyers’ effectiveness can be an insurmountable mode of ensuring excellence. A well-timed “Great job” for a good performance is a much more effective motivator than a kick in the pants when things go poorly.

Equity partners should also make it clear that, while individually, the nonequities have free rein to excel, collectively they are the keepers of the firm’s future. The firm will grow if it permits its nonequities to perform for their individual benefit and for the firm. Therefore, the equity partners must provide an environment in which both the equities and nonequities will thrive.

After the equity partners agree to the above, integrate the above program into the firm’s career development program to be presented at separate meetings to the nonequity partners and to the associates. •

Joel A. Rose is a certified management consultantand president of Joel A. Rose & Associates in Cherry Hill, N.J., which consultsto the legal profession.