Designing meaningful career paths – to take account of
changes in the structures of law firms
www.peterscottconsult.co.uk
Designing meaningful career paths
 Career paths for associates
when fewer partnership options
available
 Succession planning –
alternative career options?
 Exit strategies
 Does the ABS open up
opportunities?
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Developing career paths for associates when fewer
partnership options are available
 High performance by people is key to gaining competitive
advantage
 High performance requirements , tough economic times and
smaller ‘ownership pools’ mean more demanding ‘gateways’
to partnership - the bar is higher.
 The challenge is how to manage career expectations - and
avoiding unnecessary disillusionment
 Has it ever been any different?
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Do law firms ask their people what they want from
their careers?
 Firm – wide surveys to uncover reasons for staff losses or
disillusionment
 360 degree feedback as part of a development and
assessment process
 For longer term succession planning
 Exit interviews
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Investment in your people to realise their financial
value to your business
 For high achievers who want partnership - transparent and
fair selection processes so people know what they need to do
 Tailored programmes which support their development and
groom them for success
 Intensive fast track coaching programmes for those identified
as having greater drive and potential
 Job sculpting – to help mould roles to match the people
available
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Investment in your people?
Who has a ‘partner development programme’ designed –
 To bring people through to partnership?
 Which continues throughout partnership?
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Retaining talent where partnership is not available?
 Not everyone wishes or is suited to becoming a partner
 External ownership is likely to increase at the expense of
partner numbers
 How can law firms motivate such people and persuade
them that there is still a very worthwhile career in the
firm?
 The experience of the large surveyors and accountants?
 No easy answers
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Managing career expectations
 Is partnership still the ‘holy grail’?
 No stigma to not being a partner
 How to make your firm the place
where people want to work?
 Ask them
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Succession planning - for not being a partner anymore
Planning is the key – for both
the firm and partners
• Economic pressures to
reduce equity
• Mandatory retirement ages
falling
• Lack of career prospects
• Loss of talent
• Repayment of capital issues
• Pension issues
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What not to do….
“Don’t put your head in the sand”
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Aim of succession planning?
To ensure the current and future well
being of a firm by reconciling the
interests of -
 Older partners
 Managing partners
 Younger partners
 Clients
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What should a plan aim to do?
To make optimum use of all productive
resources within a firm – because lack of people resource is a
problem for smaller firms
Firms need to creatively think how best
to use what they have – examples?
- Risk and compliance roles?
- Others?
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Older partners
As part of a plan towards retirement  Make them feel valued
 harness their skills and experience
 Match contribution to reward
 Agree financial arrangements
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Managing Partners
 Need for career paths / parachutes
 Return to fee earning?
 Change of career?
 Is there now a market within the law for managing partners?
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Clients
Firms forget clients at their peril
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Preparing for tomorrow – younger partners - does the
firm have a future?
 What to put in the place of retiring partners?
 Focusing on younger partners highlights future issues
 Does the firm have the ‘people resources’ to achieve its future
objectives / survive?
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Differentiate succession planning from partner culling
Compare –
 Partners who
- still have hunger and energy
- and are fully contributing
 Partners who have taken their foot off the accelerator
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Exit / de-equitisation strategies for partners
 Performance related culling
‘Tell us why you should continue to be a partner in this firm’
 Age related culling
‘Now that you are 50, tell us why you consider you should
continue to enjoy a full profit share’
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Exit / de- equitisation strategies – the impact of reward
structures on a firm’s options
 The potential restrictions imposed by lockstep
 The potential flexibility created by performance – based
reward structures
NB – using reward structures is not a substitute for dealing with
partner under-performance
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Particular techniques
 Out – placement?
 External counselling?
 Help them to set up in
practice?
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Alternative Business Structures – opportunities to
create entrepreneurial roles for partners?
Do you need an ABS for a partner to
be entrepreneurial (or more
entrepreneurial)?
A need to differentiate between types
of ABS for this purpose –
 The ABS with an external investor
 The MDP owned by different
professionals
 The traditional law firm which
takes in non – lawyers into
management positions
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One view is …
 There are many very entrepreneurial and successful partners
in existing traditional law firms - why do you need an ABS?
 Many law firms are already run along corporate lines, and
with a limited number of owners and high leverage, providing
opportunities for the entrepreneur lawyer to flourish.
 And, for the right type of firm which is appropriately
structured, there are opportunities for the entrepreneurial
partners to build and realise capital.
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Another view is that …
 Access to external capital and resources in an ABS owned (or
partly owned ) by an external investor can provide the
ambitious entrepreneurial partner with far greater horizons
and opportunities , including building capital.
 The MDP may open up interesting avenues for successful
future professional practice which do not exist at the moment
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There are also other views …
 Private equity looks to management to grow value in its
investment – what are their views about lawyer managers?
 In MDPs – will the accountants expect to run the business?
 Only time will tell whether the ABS will create the competitive
changes in the legal profession envisaged by Clementi and
provide greater opportunities for entrepreneurial partners.
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Questions?
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