In the continuing—and to-be-continued for quite some time, judging by the rate comments are com ing in—discussion about the virtues and vices of firms switching to a two-tier partnership model, here's one more data point. The results of the poll I launched about 10 days ago:
Here's what we see: The most popular response, by a reasonable margin, was "to retain valuable associates we would otherwise have had to lose." Second to that is an arguably related purpose, "to provide a period to additionally evaluate people." These two together captured 58% of all votes, whereas "to increase profits per partner" received only 13%, and actually tied with "to provide an alternative 'lifestyle' career track."
Now, the question is whether we're witnessing revisionist history in action, or whether our respondents are being perfectly candid and all the posturing by the consulting industry about how going two-tier would boost PPP was smoke and mirrors: Smoke and mirrors, I might add, which our readers saw right through if these responses are accurate about firms' actual motivations at the time of the switch.
Option A: Revisionist History. This would posit that the popularity of the rationale "to increase PPP" at the time of switching to two-tier status was real. But now that we know that such a switch, in and of itself, does no such thing, rather than eat crow people are simply positing that different factors were at work.
Option B: People Are Truthful. This would posit that the readers of "Adam Smith, Esq." are responding accurately to the poll and that boosting PPP as a rationale was, at the very least, grossly oversold by the consultants. Firms that switched did so primarily for the utterly defensible and arguably humane reason of providing a way to "keep valued associates."
I lean rather strongly towards Option B. Not only do I have a pronounced preference for believing the "Adam Smith, Esq." community is by default truthful, I also, following Occam's Razor, prefer the simpler to the more baroque explanation.
So what does this tell us? By and large, it supports Prof. Bill Henderson's theory that one primary reason firms shifted to two-tier status was to keep rainmakers happy (and on-board) by concentrating voting and economic power in the partnership in their hands, while also retaining enough competent, senior-level lawyers to actually get the firm's work done. The motivation for the shift, in other words, was more qualitative than quantitative.
That is to say, two-tier firms enjoy the ability to offer productive, profitable senior attorneys a career track that may constitute a long-run stable equilibrium choice both for those lawyers and the firms. In a single-tier firm, those same lawyers (who by hypothesis are not rainmakers) would be shown the door.
November 27, 2005 2:27 PM
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