As our entry Barbarians at the Partnership Gate? on January 10 predicted, the great partner smack down is getting under way, and the first out of the box is Howrey’s announcement last month that it was dismissing up to 10% of its partners. Mayer Brown’s recent firing of 28 lawyers included counsel, another tier of long-term lawyers, in addition to associates.
Howrey’s Managing Partner Robert Ruyak was a panelist at the Georgetown Center for the Study of the Legal Profession’s conference entitled "Law Firm Evolution: Brave New World or Business as Usual?" last month. He and other managing partners there acknowledged that, in addition to pruning partner ranks, lower compensation expectations are likely part of the longer-term fallout of the recent downturn. Those lower levels will put partner compensation, Ruyak pointed out, closer in line with the historical pace of increases that existed before the irrational exuberance that we all enjoyed over the last decade.
Managing your partners’ expectations regarding compensation over the next few years will be a monumental task. Partners are going to be expecting, impatiently, for compensation to rise and will look to push out older partners, drastically reduce expenses, and advocate for anything else, short of scorching the very earth they occupy, that will help drive up compensation. Firms must be well-equipped to deal with the conflict, attrition and problematic morale that compensation issues will generate.
Now is the time to start that process of managing expectations. The first step is to reassure partners that the firm has a strategy for stability and and even growth over the next years ahead. Are you prepared for the first step?