When I talk with law firm partners about the legal market, they usually want to know what other law firms are paying their partners. That’s a fair question. We want to be paid fairly for our efforts. But partners are looking for much more than compensation comparisons. There are a multitude of factors that motivate partners to change firms. Here are the top factors that may cause partners in Maryland to change law firms:
Conflicts. The larger the law firm, the more likely there will be conflicts between existing clients and potential clients. Conflicts often can be resolved favorably for all parties. But in some circumstances, lawyers may lose opportunities to represent major businesses. A partner may lose an opportunity to work with Verizon if the firm represents AT&T, for example. Consistently losing such battles also may cause partners to explore the market due to the perceived impact on their business.
Misaligned priorities. Sometimes a firm has outgrown a partner and other times a partner has outgrown a firm. These conditions are the most difficult for “lifers” to acknowledge because loyalty (a good thing) sometimes prevents lawyers from moving on as quickly as they should.
Keys signs a firm has outgrown a partner: (1) new partners are given more support and client development opportunities than the existing partner; (2) the partner is overlooked for or stripped of leadership positions; and the partner’s practice is no longer a part of a firm’s new strategic plan.
Key signs a partner has outgrown a firm: (1) the partner turns away work because the firm lacks the expertise to handle the matter; (2) a client won’t give the firm work because it is not known in that practice area; and (3) the partner has grown to lack confidence in the firm’s management or disagrees with the firm’s strategic direction.
Billing rate issues. Lawyers representing local, regional or national clients, including middle-market businesses, must be conscious about billing rates. Partners look elsewhere when rates in their firms continue to climb and the firm does not permit alternative fee arrangements. Partners who begin losing clients or are unable to attract new clients due to rate pressure ultimately will leave their firms, even if they are “lifers.”
There are many firms in Maryland whose billing rates are more flexible and lower than their counterparts, creating an opportunity for partners to provide the same service for their clients at lower rates, and ultimately to develop more business from existing and new clients.
Better platform. As partners grow their business, they sometimes need more support than their firms can provide. A partner may need a national practice with offices in other cities rather than a local or regional practice. The firm may have initiated a new strategic plan that will no longer support a partner’s practice. Another firm may be better known for the partner’s practice. Or the business development platform of a large or medium firm may be much more aligned with the needs of a partner working in a mega firm.
Bigger does not always mean better. We have witnessed many lawyers double and triple their practices in a few years after moving from a mega firm to other BigLaw firms due to fewer conflicts, greater rate flexibility and more cross-selling opportunities.
Compensation and culture. I put compensation last on my list because partners will not leave their firms for more money alone. Other factors, including the ones listed above, need to coalesce. Sometimes, partners will take less money in base compensation at a new firm for the promise of a longer-term opportunity. But more often, partners will join a new firm because the compensation, the ability to provide cost-effective service to clients and the opportunities for cross-selling, bringing in new business and leadership are all greater at another firm.
Partners working at smaller firms will typically earn more money at a mid-sized or a BigLaw firm with a larger platform. But mega BigLaw partners have been pleasantly surprised to learn they will earn considerably more money in base and bonus compensation at AmLaw100 – 200 firms. Plus, they move from a firm where they are just one of many to a firm where they become valued stars. It’s a win-win. More money, fewer conflicts, and greater collaborative cross-selling opportunities.
Confidentially exploring the market is the only way to determine whether another platform is better for partners and their clients. Sometimes having conversations with other firms will reinforce lawyers’ commitments to their firm. Other times, conversations with other firms will solidify their resolve to make a change.