This week it will be Halloween. This signals mid-autumn in the Northern hemisphere and law firms are preparing for the big Q4 partner meeting. On the agenda will be the budget, new partner promotions and for many firms the election of the new managing partner. If you are the candidate, you might want to read this article before you formally get elected as the next MP. We will give you one good reason why you might want to think twice.
Different law firms have different policies when it comes to the ideal profile of the managing partner. There are firms that favor partners who are at the end of their career, and those who favor young partners who still have a personal stake in the future of the firm. Some law firms tend to appoint a strong partner, while others favor a weak partner, that does not have a great practice. Whilst there is something to say in favor of any of these systems, this article is primarily aimed at the young partner who has a strong practice and is aspiring to be the next MP.
Our data show that 32% of managing partners leaves the firm within 3 years after their term has ended. This should definitively be something to keep in mind before you accept to take the role. After leaving the firm it is very unlikely that you will be able to make the same amount of money at a company or in any government or judiciary position. So, if you are 45 today, you will be 49 after your first term and 53 after a potential second term. If then, for whatever reason, you leave the firm at the age of 55, you will have at least 10 years left in which you have to earn a living. Let’s assume, you made 750.000 as a partner (obviously this could be much more in reality) and you are able to find a decent job in which you will make 250.000 (which is more than any judge, academic or government official will earn), you will lose no less than 500.000 annually. This will mount to 5 million over ten years. So, in order to become managing partner, you are in fact potentially investing 5.000.000 of your own money. Are you sure you are willing to do this? And what about your partner at home, does he/she buy into this?
Becoming managing partner could easily cost you 5 million!
Over the years I have had conversations with many managing partners. Obviously, none of them entered the role with the intention to leave the firm soon after the term had ended. So, why is it that unintentionally one thirds of managing partners leaves the firm after their term has ended?
As a managing partner you will lose your practice, or -best case scenario- you will not be able to maintain or grow your reputation in the market. In some firms the managing partner role is a full-time role, in which case the MP will certainly lose his/her practice. Running a successful legal practice is something that requires 100% dedication. In some firms, for that reason, partners are not allowed to work part-time. Whatever way you look at it, at the end of the term there will hardly be any practice left and the then former MP will have to start from scratch all over again. Few are willing to do this at the age of 50-plus and even fewer succeed.
Managing Partners have to learn not to get bogged down in details. For most newly elected MP’s this will be a steep learning curve. As a lawyer you are primed to focus on details, as this is where crucial flaws or opportunities will be hidden. Once a lawyer has ‘unlearned’ to be obsessively focused on details, it is almost impossible to get back in this mode again. I have spoken with ex-managing partners who literally got anxiety attacks when working on a large, detailed and complex piece of legal work. Once you have acquired the ‘helicopter view’ there is probably no turning back.
You will have made enemies within the partner group. Being a managing partner means making tough decisions and breaking some eggs. Some of the partners might not like this. There is very little they can do as long as you are the MP, but after your term has ended it will be ‘pay back time’. I know former managing partners who at some point dreaded going to the office as they felt abandoned and isolated. One of them, got an office at the end of the corridor where no one ever came to say hello.
It can be hard to be stripped of the status and the power. For someone who has been in the center of power and attention for a longer period of time, it can be a raw experience to get back to the rank and file. As an MP you are treated as the most important person in the firm. Many of your co-workers will try to flatter you in order to make you like them and at some point do them favors. You might get the impression that you are smart and a great leader. You get to represent the firm to the outside world. You will meet important people, attend prestigious events and get to travel and see the world on the firm’s expense. Losing all these perks could be hard to handle. Some former managing partners cannot deal with anonymity.
Make your investment worthwhile: don't become a 'caretaker' MP
Now you know that accepting the managing partner role might cost you 5 million of your own money, why should you even consider it you might ask. Well despite all the negative arguments, there might actually be one good argument do it: make your firm a better firm. The younger partners should be the ones in charge of the future of the firm, as they will be the ones that are part of that future. Do not be a ‘caretaker’ managing partner. Be ambitious, set clear goals and make sure you reach them before your term ends. Only if you can leave the firm in substantially better shape than you found it, your investment will have been worthwhile. So, increase the profit, raise the reputation, get better clients, and improve the overall quality of the partnership. If you are willing to do this, go for it!