How partnerships ain’t all they cracked up to be

There’s never been a legal story in Canada that’s had the impact of the death of Heenan Blaikie. In a world of social media, constant connection, and instant messaging, we all watched the breakdown unfold almost in real time. It was the biggest law firm collapse in Canadian history and almost everyone I know is either personally affected or knows people personally affected by it.

There has been and will be much written about the failure of this national law firm, which at its peak boasted more than 500 lawyers, but I’m going to focus on the concept of law firm partnership. Once the Holy Grail of lawyerdom (for those not focused on becoming judges, of course), partnership in a law firm is still a badge of honour, worn proudly by most but understood by few.

The partnership model may not be totally broken but it is not holding up well, particularly in larger firms that are daily embroiled in the fight to stay alive under pressures of both economic and client expectations. No one may want to say it, but greed and partnership do not go hand in hand — and it’s all about the money nowadays. As one colleague said to me: “For some partners, the ‘for better or for worse, for richer or for poorer, in good health and in bad, till death do us part’ is always added with the postscript ‘or until a competitor law firm offers me an extra $50k.’” Not to mention the practice-related and geographic differences that exacerbate the ‘why should I be supporting those partners who bring in less than I do?” attitude. Heenan founding partner Roy Heenan repeatedly said that rivalries and inter-office conflicts, particularly between the Toronto and Montreal offices, killed his firm.

Trust is inherent in a partnership and the greed factor makes that next to impossible in a large or complex partnership because the trust has to extend outside the business relationship. Beyond a certain number, some say it’s probably 150, people can’t know each other well and therefore will never be able to build that trust. As well, far too many partners see a disconnect between their individual interests and group interests thus even if no one actively dislikes each other, it is not an opportune foundation to build and maintain trust.

Large firms simply don’t lend themselves to the type of equality needed for a traditional partnership to flourish. Firstly not all partners are created equal, some have access to more information than others, there are now gradations of partnerships where you’re a partner in name but not really an owner — and may never become one either. As another colleague said to me: “People have to want to behave as partners, as equal owners in the business. How really true is that of most major law firms? True, everyone wants to divide up the pie, but most partners don’t truly take control of their business, relying on others to do the lifting.”

That brings us to law firm management. Not every partner can have a say in how things run. And many law firms are still run by lawyers — they’re not called managing partners by mistake. But lawyers are not managers. Most are not even trained in business and are probably the worst choices to lead large, multimillion-dollar operations like large, complex law firms. Some firms have moved to a model of executive committees and a few even are run by business professionals, however, there continues to be underlying stresses and strains because lawyers don’t like being managed. Partners even less so. Change is inevitable and lawyers are not good at change. They need to become better at it, especially in Canada, if they want to survive.

As the 2013 Peer Monitor Report on the State of the Legal Profession states: “Plainly, to be successful in today’s world, most every firm of any significant size must respond to the changing competitive realities of the market by centralizing many of the decisions previously made in more collegial ways and by embracing a consistent strategic vision that is uniform across the firm and that drives decisions and actions in all of its practice areas. At the same time, a firm must preserve the essential qualities that nourish and support great lawyering, including structures that preserve the independence of professional judgment and the autonomy of lawyers to act in the best interest of their clients.”

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