Guest post by Mark Beesley, head of Lime and Corclaim’s volume and consumer business, part of Shakespeare Martineau
Back in the day, when I entered the legal profession, an age of the Telex and elephantine batteries operating mobile phones, most articled clerks, as they then were, eyed achieving equity status.
That was expected. The best people, often faithful time-servers, toiled to ensure that they were not overlooked and that the prize would be theirs.
It was a very different world, a very different profession. Indeed, it was far more of a profession at that point, in contrast to the world of commercial legal enterprises you see today, where profit and margin are the Holy Grail of sustainable success.
Jump forward to the present day: a career in law no longer guarantees job security for a lifetime and is far more demanding of change and innovation. Technical excellence is a given and employers are looking for people who stand out with a skillset above and beyond that.
Today the prized assets that set individuals apart from the crowd are: technical innovation; the ability to generate new workstreams; the ability to develop teams and provide creative ways of delivering the law in partnership with clients as part of their team; and the ability to understand how to promote a legal practice in this age of social media, instant decision making, and microscopic attention spans.
When meeting the new generation of trainee solicitors, one is increasingly impressed with their network of contacts and familiarity with modern trends on social media. Often, these newbies arrive with an ambition which is far removed from achieving equity, and career goals often take second place to life goals where money earned is a means to an end.
In a true meritocracy, whilst the capital investment of the equity partner should lead to a shareholder reward in addition to the normal remuneration cycle, those earning the highest sums within the business do not necessarily need to be lawyers.
Instead, in a law firm run in a corporate style it could be the chief executive or financial officer at the top of the organisation; it could be the person who holds the most significant client relationships, but who might not want to be tied down to the traditional equity role and the risk and distraction that provides; or it could be the Google analytics expert who is able to monitor business trends, ensuring the profile of the firm is kept at the forefront of social media consciousness.
The point is, the big bucks should go to the firm’s most valuable assets, as opposed to time-servers or those who have the most significant capital invested in the firm.
This echoes life in the corporate sector. Why would any law firm not want to reward its biggest assets? Having said this, the decision to do so, and to pay people beyond the scale of equity, is not one to be taken lightly; there is still a premium on those who are genuine owners of the business, who have responsibilities to care for and nurture that business and lead it to greater success.
They, of course, have an expectation, as well as a right, to appropriate reward from the investment they make.
It involves a real change in mind-set to accept that people may be more valuable within a law business than the lawyers themselves.
Often those people are themselves at the greatest risk. They arrive with a fanfare, with high pay and even higher expectations, and the pressure on them to perform is there from the outset. It is no easy way to make a living.
The cream will rise to the top, and it takes a real effort to maintain a value to the business which will lead to the top level rewards.
This move away from traditional modelling is a good thing. Millennials moving in to the law will often have more varied career goals: earn the money early, retire early and travel, or at least refuse to be tied down to a firm for life.
Those with the greatest talent, and the ability to provide something innovative or different, should, and will often be those to whom the highest rewards follow. Loyalty, in itself, is no longer the most prized asset.
Some may rue the passing of such laudable aspirations, but few will turn down their share of the reward which is generated by those that can drive the business forward.
It is a natural evolution: non-equity, earning the highest awards, will themselves be replaced in due course by the next generation of skillsets proving themselves increasingly vital to the success of the enterprise.
There will still be those law firms that sit tight on the expectation that equity status means the top of the tree and the highest rewards. A number of those businesses will still continue to thrive and be successful.
Many of them, however, will look increasingly quaint, as modern life moves apace, and subsumes them in its wake. Surely, one cannot argue with the concept of those who are most valuable to a business being those who take, financially, the most from it?