An equitable life? Slightly larger pie, fewer slices
Whether you buy into Maslow's hierarchy of needs, Herzberg's two-factor theory or another of the many motivational schools of thought pushed out by numerous management improvement books, there is a clear consensus that recognition and promotion are two key factors to getting the best out of your workforce. In a law firm environment, of course, the clearest example of recognition comes in the form of making partner, with the zenith being the equity ranks. So Legal Week research this week, which shows that the number of partners climbing to the equity at the top 20 UK firms has fallen year-on-year since the onset of the recession, will not make happy reading.
September 05, 2013 at 07:03 PM
3 minute read
Whether you buy into Maslow's hierarchy of needs, Herzberg's two-factor theory or another of the many motivational schools of thought pushed out by numerous management improvement books, there is a clear consensus that recognition and promotion are two key factors to getting the best out of your workforce.
In a law firm environment, of course, the clearest example of recognition comes in the form of making partner, with the zenith being the equity ranks.
So Legal Week research this week, which shows that the number of partners climbing to the equity at the top 20 UK firms has fallen year-on-year since the onset of the recession, will not make happy reading.
While the number of partners at the top 20 firms has risen 31% since the start of the downturn, the number of equity partners has grown just 15%.
Indeed in 2006 more than two thirds of partners working at this top band of firms were part of the equity. In 2013 this number had fallen by almost 12% with the broader figures hiding big drops in equity partner numbers at firms including Ashurst, Hogan Lovells and DAC Beachcroft.
Set against this is the performance of average profits per equity partner (PEP) across the group, which has climbed 18% over the period as fewer partners take home a greater share of the profits.
So while expansion may be throwing up opportunities in the wider partnership for some, the continued push to increase PEP means the route to equity is still barred for most.
Added to the woes of those seeking equity is the cost of servicing an increasingly international client base and growing pressure on fees in an increasingly competitive market, all of which is driving down margins – not to mention the impact of lawyers failing to make partnership at the top firms spreading their search further down the rankings.
Combined, all this creates a vicious circle – the harder partners strive to make equity, the less they want to give it up when they get there.
For sure, firms have been making increasing efforts at finding alternative routes to partnership, with roles such as of counsel and consultants gaining varying levels of traction across the City. But that still leaves a large proportion of hard-working junior lawyers striving for partnership and struggling to make the grade as equity partners close ranks.
So as the City this week takes on collective post-holiday blues, managers would do well to dust off the other motivational tactics in their arsenal and start offering some carrot with that stick.
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