Understanding Money and Control

We have been surveying partner motivations in the Practice Management Course for nearly 20 years, and in that time, they have never changed. The dominant drivers for all new partners are money and control.

Money comes first in large practices, and control comes first for sole practitioners. Some combination / variation of these is nearly always involved in breakups.

Control means different things to different people.

In very large firms, it means the freedom to run a practice group without having to worry about too much else. In a sole practice, control means having the authority over and responsibility for everything, and having the right to run every aspect of your practice as you see fit.

Getting the money / control formula right in very large firms is easy, because these firms are rules-based and there is rarely any doubt in anyone’s mind regarding what we are here for. So too for sole practices.

Deviating from your core motivations brings high risks. For example, if you are a committed sole practitioner and your long standing employed lawyer wants into the business, should you accommodate her? Yes, you worry that a ‘no’ will produce a resignation. Yes – you’ve read all the succession planning material which says do it. But do you want to? And are you prepared to seriously share money and control? If the quick answer to these is ‘no’, then don’t do it, because very quickly after the honeymoon, you will both be unhappy. The key here is know yourself – and understand the risks in moving away from that

Unsophisticated partnerships also regularly run into money and control issues.

Partner A believes he has every right to drop the kids at school at 9am every morning, and leave early Friday afternoon, and sees $300,000 personal billing as a strong performance. Here, control is interpreted as it’s my firm, I’ll work the way I like, and I’ll decide what a fair day’s effort is. This is sometimes referred to as the lifestyle approach.

Partners B and C may regularly arrive before 7am, leave after 7pm, work on new business outside of the office constantly and each bill $550,000. This is the business approach.

Now, both A’s and B/C’s approaches are perfectly legitimate – but not in partnership with each other. B and C will quickly tire of the heavy lifting and financially subsidising A. What A really needs to find is another A who shares similar values about money and control.

So what’s the upshot of all this?

The most fundamental issue in any law firm is a shared and explicit understanding of what we are here for, what constitutes acceptable performance, how we agree to work and how decisions are made.

These things are always best formalised in the normal armoury of a partnership agreement, business plan, annual budgets, performance plans and so on…

But even more importantly, know yourself, and go into business with people who are there for similar reasons. Or – don’t go into business with anyone…

 

Published: Queensland Law Society – Proctor, June 2015 (p.56)

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