Partnership: What's in a Name?

onJuly 29, 2008 at 4:25 PM

[Ed. note: This post is by FROLIC & DETOUR, one of the finalists in ATL Idol, the “reality blogging” competition that will determine ATL’s next editor. It is marked with Frolic & Detour’s avatar (at right).]
Why was ATL so fascinated by Shinyung Oh? Partly because it was juicy drama, and partly because she’s practically the only lawyer who’s given the world a straight story about a big-firm layoff. Partners and associates alike accept severance packages that keep them quiet, and while you can’t blame them for taking the cash, no one else can learn from their experience. We all figure that firms’ PR departments are feeding us BS when they claim that layoffs have always been part of the annual review process, but we haven’t had any eyewitness testimony on that point.
Today, ATL breaks the silence with an exclusive insider’s view of partner layoffs. Out of the dozens (hundreds?) of AmLaw 100 equity partners who’ve lost their jobs in this recession, we found a small number who were willing to talk to ATL about their experiences. According to their co-workers, our sources were well liked and doing good work when the axe dropped … they just didn’t have clients of their own. The picture they painted for ATL includes one piece of good news: well-informed young lawyers (i.e., ATL readers) have a pretty good understanding of how partners have become vulnerable to layoffs. On the other hand, it’s no cause for celebration that we were right about how dismal the picture has become.
Read more, after the jump.

Based on what the former equity partners had to say, those firm press releases are just as misleading as they sound. (As one ex-partner put it, “You can’t expect candor in a for-profit environment,” which pretty much says it all.) This year’s layoffs are just the latest expression of a drastic change that’s taken place in the last ten years or so. In the ’80s, unprofitability was never a good enough reason to kick a hard-working partner to the curb. But in the late ’90s, the climate began to change, as large firm mergers and overall firm growth accompanied the dot-com boom. Decisions to expel equity partners, like other major decisions, come from the top down, not from a vote of the partnership. By the early 2000’s, “service” partners — those who focus on winning cases and closing deals rather than on client relationships — understood that they were vulnerable, and our sources weren’t shocked when they got the bad news.
The former partners we spoke to don’t place all the blame for the cultural shift on management committees. They told us that 20 years ago, it was unthinkable for partners to jump ship and take clients with them, or for corporate clients to hop from firm to firm. We don’t know if the chicken or the egg came first, but we do know that firms treating partners like expendable employees goes hand in hand with partners treating firms like interchangeable profit mills. Lack of fiduciary loyalty is a two-way street.
So what’s a laid-off partner with twenty years of experience to do? Apparently not jump to another firm; our sources said that most headhunters simply would not talk to them unless they had at least half a million dollars in portable business. In other words, when it comes to new opportunities, jobless associates are much better off than jobless partners. One former partner, who was elected before partner layoffs existed, wondered if starting up a small firm with law school friends might have been a better long-term plan.
The ex-partners warned that young lawyers and law students considering the big-firm route should make that choice with open eyes. Many students already know that making partner is a long shot, but our sources said they also need to grasp that becoming an “equity partner” is basically a promotion from one type of employee to another. One source pointed out that when choosing between law and business school, risk-averse students generally pick law, but they are fooling themselves if they think they can earn job security at a big firm just by winning cases. Today’s big-firm lawyers need the same entrepreneurial mindset that MBAs take for granted.
Of course, a lot of young lawyers (like me) go to big firms so we can take the money and run, and draining the partnering out of partnership won’t scare us away. But based on our conversations with former “partners,” maybe firms ought to find a better job title for a lot of their senior attorneys.