Can Partnership ''Survive'' in Modern Giant Law Firms?

In 1980, the 250 largest law firms in the country averaged only 95 lawyers. By 2001, however, that average had risen to 417.1 and the growth was much greater among the largest of the large firms. Indeed, by 2001, the 20 largest firms in the U.S. averaged 1,220 lawyers, and there were 12 firms in the country with more than 1,000 lawyers.

This extraordinary growth has, not surprisingly, caused many law firms to reorganize their governance and management systems to marshal their resources, market their services, and manage their client relationships more effectively.

It has, in short, encouraged more business-like behavior in organizations that historically often prided themselves on shunning "commercial" practices.

The move toward more centralized governance and management systems has also, however, placed increasing pressure on the concept of "partnership" as the organizing model for large law firms of the future. Indeed, it has led many thoughtful commentators to question whether partnership can ultimately survive as the dominant form of law firm structure.

History
Before tackling this question, it might be useful to look at how we got to the partnership model in the first place. The organization of law firms as partnerships has its roots deep in the history of English law, in the traditional role of the English barrister as the "personal representative" of his client. To assure the effective operation of the adversary system, barristers were required to take oaths to the courts to conduct themselves objectively and in the best interests of their clients, without any conflicts of interest whatsoever. As a consequence, barristers were required to operate as individuals and were not permitted to be in partnership with others. They were personal representatives of their clients, and they were liable to both the courts and their clients for the conduct of their office.

This idea of the lawyer as personal representative was transplanted to the new American republic, along with the English Common Law itself. American law early on rejected the notion that lawyers should be required to practice only as separate individuals. It did, however, embrace the concept that lawyers should have personal relationships with their clients and should remain personally liable to their clients for their actions.

That led inexorably to the requirement that associations for the practice of law could only take the form of partnerships, since only that organizational structure preserved the full personal participation and liability of the lawyers themselves.

In the late 19th and early 20th centuries, as the American bar first began to organize itself on a national basis, the partnership model was effectively incorporated into law in most states (either by statute or in rules of practice) through the adoption of prohibitions against limitations on personal liability for lawyers.

Motivated by a strong desire to enhance the status of lawyers as "professionals," state bars across the country promulgated rules forbidding lawyers from engaging in a wide variety of activities that would be common for other types of business organizations. The current Rule 5.4 of the ABA`s Model Rules of Professional Conduct reflects these prohibitions: forbidding lawyers from sharing legal fees with nonlawyers; prohibiting lawyers from forming partnerships with nonlawyers for the practice of law; and banning lawyers from practicing in any type of association in which a nonlawyer has any ownership interest, is a director or officer, or has any right to direct or control the lawyers` professional judgment.

Basic Organizational Model
The basic organizational model adopted by most law firms in response to these regulatory restrictions was the general partnership. Beginning with the rise of small commercial law firms in New York in the late 19th century and continuing through at least the 1970s, the general partnership was essentially the only form of organization for lawyers engaged in private practice.

Many of the governance and management issues confronting law firms today are attributable directly to the fact that most lawyers still think of the general partnership as the organizing paradigm for law firms.

The traditional attributes of the general partnership model are well-known.

First, the structure is a pass-through mechanism focused on individuals, with full imputation of knowledge from one individual to another. Thus, every partner is presumed to "know" everything that every other partner "knows."

Second, all partners participate, on a proportional basis, in the profits and losses of the partnership. They share both the "up side" potential as well as the "down side" risks.

Third, each partner has the authority to bind all other partners by his or her actions. Thus, each partner shares the liability for mistakes of other partners.

Fourth, each partner has full liability to third parties for the actions of his or her partners. There are no limitations on personal liability.

And fifth, all partners participate, on a proportional basis, in the governance and management of the partnership.

Problems
While the general partnership model worked reasonably well when law firms were relatively small, it has not proved a useful paradigm as firms have grown. The decentralized management style embodied in the model was perhaps tolerable when firms had a single office and a couple of dozen partners. It is far less functional in firms of several hundred partners spread over multiple locations that must respond rapidly to changing market conditions. Other problems with the partnership model are also exacerbated by size:

• The imputation of knowledge principle embedded in the model poses virtually insurmountable problems for large law firms, particularly if considered in the context of "positional" conflicts of interest;
• The imposition of near limitless personal liability on every partner for the acts of every other partner creates serious concern in large firms where it is impossible for any partner to be fully aware of all of the firm`s activities;
• The inability of law firms under the current model to access traditional capital markets has forced many firms to rely increasingly on debt as a means of funding expansion, with the result that debt levels in many large firms are now alarmingly high; and
• The general antipathy and resistance of many lawyers to "commercial" practices has been a serious roadblock in many firms to the development of effective management and client service strategies.

In light of these problems, it is not surprising that, over the last 20 years or so, there has been increasing erosion of the partnership model as the organizing structure for law firms.

The process began with the Supreme Court`s 1977 decision in Bates v. State Bar of Arizona, which was the first step in breaking down many of the bar`s traditional "guild" rules on advertising and solicitation.

At about the same time, in response to growing concerns over increasingly large malpractice claims, many states approved the use of new organizational structures—e.g., professional corporations, limited liability partnerships, limited liability companies—designed to limit the personal liability of non-engagement partners in connection with malpractice actions.

More recently, a number of firms have moved to restructure themselves as "multi-tiered partnerships" in which a number of "partners` have non-equity status. And, throughout the country, firms have opted for more centralized management systems in which key decisions are increasingly vested in managing partners, practice group leaders, or small executive committees, with comparatively fewer decisions being reserved for the partnership itself.

Coming Trend
It seems clear that this erosion of the partnership model is likely to continue. Indeed, the combined effects of globalization and technological change are apt to hasten the process. The two key points to watch are: (i) possible limitations on the imputation of knowledge principle, and (ii) possible allowance of outside capitalization of law firms (i.e., by nonlawyer and passive investors). If and when these modifications occur, the partnership model will be left as largely an empty shell.

Clearly the legal profession is in the midst of a shift from a litigation-dominated "personal representative" paradigm to a more business-oriented "counselor/advisor" paradigm. This shift has serious implications for the structure and ownership of law firms, as well as for the ethical rules that govern lawyers` practice. The forces that have thus far eroded the partnership model will continue to do so, and the structures in which lawyers practice will, over time, come to resemble more traditional business organizations. The growing size and complexity of modern law firms makes such changes virtually inevitable.
 

  Interested in Learning More About Legal Hiring? Read the Definitive Guide: How to Hire a Legal Recruiter for Your Law Firm: How Law Firms Recruit Attorneys Using Legal Recruiters

About Harrison Barnes

No legal recruiter in the United States has placed more attorneys at top law firms across every practice area than Harrison Barnes. His unmatched expertise, industry connections, and proven placement strategies have made him the most influential legal career advisor for attorneys seeking success in Big Law, elite boutiques, mid-sized firms, small firms, firms in the largest and smallest markets, and in over 350 separate practice areas.

A Reach Unlike Any Other Legal Recruiter

Most legal recruiters focus only on placing attorneys in large markets or specific practice areas, but Harrison places attorneys at all levels, in all practice areas, and in all locations-from the most prestigious firms in New York, Los Angeles, and Washington, D.C., to small and mid-sized firms in rural markets. Every week, he successfully places attorneys not only in high-demand practice areas like corporate and litigation but also in niche and less commonly recruited areas such as:

• Immigration Law
• Workers Compensation
• Insurance
• Family Law
• Trust and Estate
• Municipal law
• And many more...

This breadth of placements is unheard of in the legal recruiting industry and is a testament to his extraordinary ability to connect attorneys with the right firms, regardless of market size or practice area.

Proven Success at All Levels

With over 25 years of experience, Harrison has successfully placed attorneys at over 1,000 law firms, including:

• Top Am Law 100 firms such including Sullivan and Cromwell, and almost every AmLaw 100 and AmLaw 200 law firm.
• Elite boutique firms with specialized practices
• Mid-sized firms looking to expand their practice areas
• Growing firms in small and rural markets

He has also placed hundreds of law firm partners and has worked on firm and practice area mergers, helping law firms strategically grow their teams.

Unmatched Commitment to Attorney Success - The Story of BCG Attorney Search

Harrison Barnes is not just the most effective legal recruiter in the country, he is also the founder of BCG Attorney Search, a recruiting powerhouse that has helped thousands of attorneys transform their careers. His vision for BCG goes beyond just job placement; it is built on a mission to provide attorneys with opportunities they would never have access to otherwise. Unlike traditional recruiting firms, BCG Attorney Search operates as a career partner, not just a placement service. The firm's unparalleled resources, including a team of over 150 employees, enable it to offer customized job searches, direct outreach to firms, and market intelligence that no other legal recruiting service provides. Attorneys working with Harrison and BCG gain access to hidden opportunities, real-time insights on firm hiring trends, and guidance from a team that truly understands the legal market. You can read more about how BCG Attorney Search revolutionizes legal recruiting here: The Story of BCG Attorney Search and What We Do for You.

The Most Trusted Career Advisor for Attorneys

Harrison's legal career insights are the most widely followed in the profession.

• His articles on BCG Search alone are read by over 150,000 attorneys per month, making his guidance the most sought-after in the legal field. Read his latest insights here.
• He has conducted hundreds of hours of career development webinars, available here: Harrison Barnes Webinar Replays.
• His placement success is unmatched-see examples here: Harrison Barnes' Attorney Placements.
• He has created numerous comprehensive career development courses, including BigLaw Breakthrough, designed to help attorneys land positions at elite law firms.

Submit Your Resume to Work with Harrison Barnes

If you are serious about advancing your legal career and want access to the most sought-after law firm opportunities, Harrison Barnes is the most powerful recruiter to have on your side.

Submit your resume today to start working with him: Submit Resume Here

With an unmatched track record of success, a vast team of over 150 dedicated employees, and a reach into every market and practice area, Harrison Barnes is the recruiter who makes career transformations happen and has the talent and resources behind him to make this happen.

A Relentless Commitment to Attorney Success

Unlike most recruiters who work with only a narrow subset of attorneys, Harrison Barnes works with lawyers at all stages of their careers, from junior associates to senior partners, in every practice area imaginable. His placements are not limited to only those with "elite" credentials-he has helped thousands of attorneys, including those who thought it was impossible to move firms, find their next great opportunity.

Harrison's work is backed by a team of over 150 professionals who work around the clock to uncover hidden job opportunities at law firms across the country. His team:

• Finds and creates job openings that aren't publicly listed, giving attorneys access to exclusive opportunities.
• Works closely with candidates to ensure their resumes and applications stand out.
• Provides ongoing guidance and career coaching to help attorneys navigate interviews, negotiations, and transitions successfully.

This level of dedicated support is unmatched in the legal recruiting industry.

A Legal Recruiter Who Changes Lives

Harrison believes that every attorney-no matter their background, law school, or previous experience-has the potential to find success in the right law firm environment. Many attorneys come to him feeling stuck in their careers, underpaid, or unsure of their next steps. Through his unique ability to identify the right opportunities, he helps attorneys transform their careers in ways they never thought possible.

He has worked with:

• Attorneys making below-market salaries who went on to double or triple their earnings at new firms.
• Senior attorneys who believed they were "too experienced" to make a move and found better roles with firms eager for their expertise.
• Attorneys in small or remote markets who assumed they had no options-only to be placed at strong firms they never knew existed.
• Partners looking for a better platform or more autonomy who successfully transitioned to firms where they could grow their practice.

For attorneys who think their options are limited, Harrison Barnes has proven time and time again that opportunities exist-often in places they never expected.

Submit Your Resume Today - Start Your Career Transformation

If you want to explore new career opportunities, Harrison Barnes and BCG Attorney Search are your best resources. Whether you are looking for a BigLaw position, a boutique firm, or a move to a better work environment, Harrison's expertise will help you take control of your future.

Submit Your Resume Here to get started with Harrison Barnes today.

Harrison's reach, experience, and proven results make him the best legal recruiter in the industry. Don't settle for an average recruiter-work with the one who has changed the careers of thousands of attorneys and can do the same for you.

About BCG Attorney Search

BCG Attorney Search matches attorneys and law firms with unparalleled expertise and drive, while achieving results. Known globally for its success in locating and placing attorneys in law firms of all sizes, BCG Attorney Search has placed thousands of attorneys in law firms in thousands of different law firms around the country. Unlike other legal placement firms, BCG Attorney Search brings massive resources of over 150 employees to its placement efforts locating positions and opportunities its competitors simply cannot. Every legal recruiter at BCG Attorney Search is a former successful attorney who attended a top law school, worked in top law firms and brought massive drive and commitment to their work. BCG Attorney Search legal recruiters take your legal career seriously and understand attorneys. For more information, please visit www.BCGSearch.com.