During the past six months, it's become obvious that the law profession/business is being held hostage to the Profit-Per-Partner [PPP] model. We know that causes layoffs, announced and stealth.
Now we know it also is driving talent to the exits. Today's headline on THE WALL STREET JOURNAL Law Blog is "A Lawyer Hemorrhage at Thacher Proffitt: Ten Partners Walk." In this article by Dan Slater, if we read between the lines it seems that good lawyers are getting fed up with organizational cultures whose primary value is increasing the compensation of those at the top. Sooner than later this issue will get the attention Chief Executive Officer compensation has been receiving from every corner of society, ranging from government to media to Wall Street.
Nothing wrong with watching the bottom line - aggressively. Nothing wrong with tying rewards to performance tied to firm profits. But the excessive push for profits per partner is counterproductive for any of this.
For example, the impact it has on client fees is encouraging those clients to think outside the outside law firm model. They are taking more work in-house, farming more out to low-cost firms overseas, and figuring out how technology can free them from the seemingly greedy arms of BigLaw. The best and brightest associates and partners are going to game the system: Being trained/making contacts and then taking a lateral to a firm more concerned about client solutions than money. After all, many enter law for the intellectual challenge and the shot at making a difference.
Law could see itself getting stuck the same way GM, Microsoft and The Bear did. Those organizations sucked money from the brand and let the brand wither.
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