Published on 9/1/08
In years past it was a cliché that children dreamed of becoming president of the United States when they grew up. That's likely still the case to some extent, but given today's gigantic salaries in segments of corporate America, it's equally probable that some children dream of growing up to become CEO of a major corporation. With CEO salaries (not including bonuses) being many times larger than the average worker's, it's an attractive aspiration.
Which raises the question: Does anybody (including holders of J.D.s) dream of becoming managing partner of a law firm? The answer is likely "no." Law firm leadership is, in fact, a different undertaking because it involves so many organizational fundamentals, ethical responsibilities, partnership needs and client service requirements that are all unique to the law firm setting and make the senior position in a firm unattractive.
Consider a few of the differentiators between the corporate CEO's and the managing partner's positions:
- Either outside directors or a compensation consultant (perhaps with a pro forma vote by shareholders) set the pay of senior executives. For partners, it is their peers (as represented on the compensation committee) who set compensation.
- The corporate CEO makes the highest compensation in the organization, with pay tiered below that. Managing partners and practice chairs seldom are compensated for management duties.
- The CEO leaves the organization once he retires or is terminated. The managing partner returns to practice once his term ends.
- Senior executive severance packages (golden parachutes) are large and negotiated before entering employment. Managing partner severance packages are minimal and rare; the managing partner must resume practice after his term ends, with compensation at risk unless client relationships were maintained.
Is there any wonder that the corporate CEO position is sought after, while the managing partner slot is often assigned by default? All executives in corporate America had some kind of operational position before they became CEO, and all will agree that once you become the leader of the company, your old job has to be given to someone else.
Yet several years ago, in news stories about the impending (and ultimately rejected) merger between two large firms, the managing partner of one firm had logged 3,300 billable hours in the prior calendar year. Lee Iacocca stopped designing cars when he moved into top management of Ford and then Chrysler, and Bill Gates long ago got out of a software oversight role. Why are law firm leaders expected to continue servicing clients while leading the firm?
Of course, the real dilemma is that law firm managing partners rarely "lead." Firms operate by consensus among partners, and management efforts are often split. There may be a COO (usually a non-lawyer), a CEO-managing partner (and chair of the Management Committee), and then sometimes a chairman of the board (usually a former CEO-managing partner).
If there are ego-generated conflicts among them, the firm can have only chaos and difficulty. It shows again why corporate clients increasingly lose patience with the broken law firm "management" model.
