Legal young guns flee outdated partnership model

Hannah WoottonReporter

Aug 14, 2019 – 6.08pm

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Legal young guns are looking to jump ship from corporate law firms in greater numbers than ever before as they seek workplaces that let them put both their clients and work-life balance first.

Long hours are a common reason for the shift, but young lawyers also cite an outdated partnership model that limits big firms from innovating and progress.

Sian McLachlan, now a lawyer at disrupter commercial law firm LegalVision, turned her back on a top-six firm after over half a decade of climbing its ranks. She was not only burnt out by the hours it demanded of her, but also felt that the partnership model constrained her ability to provide clients with the products they wanted.

Sian McLachlan says she can offer more dynamic products to clients since leaving a top corporate law firm. Jeremy Piper

In her experience, requiring 60-plus partners to sign off on funding meant it took a long time to develop new products that were responsive to clients’ needs. In an innovation-focused market, many clients felt that they were not getting the type of services they wanted.

“Equity partners have three to five years to reap the rewards of their 30-year career in corporate law, so there’s no incentive to invest in technology and innovation for the future,” said Demetrio Zema, who was building a promising career in commercial law firms before founding legal start-up Law Squared.

Ms McLachlan said it was easier to be dynamic at an incorporated company such as LegalVision because “you don’t need to get all of the partnership to say, ‘We’ll give a portion of revenue towards that development’”.

Culture problem

Mr Zema said the focus on revenue imposed by the partnership model, which is the key performance measure for most partners, was also creating a culture problem that was driving young lawyers away.

The money junior lawyers bring into a firm is commensurate with the hours they bill, meaning their worth is determined by how much they work. This made some young lawyers feel they were viewed as expendable, Mr Zema said.

While some firms have removed billable targets for some teams, Ms McLachlan, who worked in such a team, said hours worked was ultimately a key performance metric even if it wasn’t said aloud.

“A lot of partners at the top-tiers are trying to change things and they know things need to change, but there’s a lot of established infrastructure there so it’s going to take a long time,” she said.

Lisa Gazis, the managing director of legal recruiters Mahlab, said law firms were generally “very concerned” they were losing young talent and were looking at retention strategies. However, client expectations and resourcing made it difficult to address work-life balance concerns.

Finally, the “partnership track” is proving an increasingly difficult and long race to win.

“Private practice is losing lawyers who were looking at partnership and are seeing it as too elusive and difficult to obtain,” Ms Gazis said. “They’re working harder with no guarantee of partnership, and they know that and don’t want to get into that queue.”

Partnership can come at a huge personal cost as lawyers put their lives on hold in their pursuit of the title, she said, and young lawyers were less willing to take the risk of making that sacrifice and not succeeding.

Among those unwilling to pay that price, Ms McLachlan said “many have realised you can still have a job that’s very intellectually stimulating but that focuses more on the client”.

Hannah Wootton is a reporter for the Financial Review. Connect with Hannah on Twitter. Email Hannah at hannah.wootton@afr.com