Cover Story: Want to make partner? Good. Luck.

Making partner is like a shot of adrenaline. The pressure to land clients raises the stakes, and a share of the firm’s profits offers a chance at a significant pay bump. Getting there, however, has never been harder. Ambitious associates are staring down a sluggish economy. And for racialized lawyers or those at smaller firms, it can be even trickier. But some lawyers have made it, despite the odds. Below are three in-depth playbooks for making partner, based on the success stories of those who’ve ascended the ranks in the modern legal profession.

  1. How to make partner in weak market
  2. How to make partner as a racialzied lawyer
  3. How to make partner at a small firm

 


This story is from our Spring 2016 issue.

We ask six big industry players — How do we make law a well-oiled machine?

The players

Les Viner, Anne Sonnen, Peter Lukasiewicz, Kevin Coon, Lisa Borsook, Brian Hilbers

 

Daniel Fish of Precedent Magazine

Meet your moderator
Our panellists had the answers, but one man had all the questions: Daniel Fish, Precedent’s discerning news editor, led the roundtable discussion. Read his editor’s notes below as he guides us through an idea-rich dialogue about how to make law’s future a bright one.

 

The future of national firms

Daniel: Do you think a young lawyer starting out now could build a national firm in his or her lifetime?

Peter: In the sense of a full-service model, I think that’s unlikely. One of the issues facing our profession is that there are too many lawyers chasing too little work — particularly in the large firms.

Anne: I think it would have to be a law firm based on a different business model. It might have a relationship with an offshore company — who’s going to do due diligence and e-discovery — and a bunch of contract or salaried lawyers. [Ed. note: A few innovative start-ups have already given these strategies a try, with some success. But will they replace big firms altogether?]

Daniel: Since the 2008 recession, firms have had to survive a tight economy with fewer deals. How will that continue to affect the legal industry?

Les Viner of Torys

Les Viner, managing partner, Torys LLP

Les: In the law profession, the definition of quality has changed to include cost. If quality means outstanding work and service, it has to be at the right price as well.

Anne: At BMO, we tell our firms all the time: ‘We have a productivity initiative to reduce legal spend and we will meet it.’ And we already are.

Kevin: We, on the firm side, need to drive down costs because clients want to increase efficiency and drive down costs as well. Take document review: should that be done by a third-year lawyer sitting in Toronto at $250 an hour when it could be done by an outsourcing service out of India, Manila or Ireland at $50 an hour? [Ed. note: While Baker & McKenzie sends legal work overseas, Torys will soon insource work to an office in Halifax. Find out the pros and cons of each approach.]

Peter: Since 2008, the large law firms have all gotten smaller as we’ve embraced the need to get leaner and be more efficient. For the first time, we are seriously embracing technology that can improve how we deliver services. And one of the outcomes of that is we don’t need as many people as we thought we needed. [Ed note: In fact, Gowlings uses a software program called GhostDraft that helps lawyers write legal agreements faster.]

Diversity in the profession

Daniel: Lisa, as an executive partner — and one of the first female managing partners at a mid-size Toronto law firm — what were things like for women when you started to practice law?

Lisa: I worked in a hospitable environment. But on the client side, perhaps, they were less open to the idea of being counselled by a woman than by the men I worked with.

I remember a closing I did in 1986. I had prepared all the documents and we met over the course of five days to hammer out the details. I played an integral role on the legal team. But at the same time, I was still expected to make photocopies and get everybody coffee.

Daniel: And now?

Lisa Borsook of WeirFoulds

Lisa Borsook, executive partner, WeirFoulds LLP

Lisa: Things have changed dramatically, but we have so far to go. I mean, the statistics on the number of women who leave private practice is a little daunting. [Ed. note: In Ontario, women make up only 35 percent of lawyers in private practice and 20 percent of partners.]

Daniel: Are you optimistic that the percentage of female partners will rise in the future?

Lisa: I am optimistic. I will say, though: the demands on partners, both women and men, are extraordinary. I’m concerned about how the profession will tackle those challenges. People don’t want to work 24/7 for 30 years. I can see why, if I was a young person, the prospect of spending 10 years working a lot of hours to make partner might not be as desirable as other professions.

Daniel: So what can firms do to make a career in law more attractive?

Lisa: At WeirFoulds, we have substantive conversations about these issues. I have open conversations with my female associates about how to juggle the demands they’ll have in their career and in their home life.

Daniel: And what will encourage firms to increase the number of women in leading roles at law firms?

Anne: In Canada, we are the first financial institution to ask our firms to release diversity statistics to us — and many of them have agreed to, so kudos to our firms. It’s better for our shareholders — we make more money and better decisions when we have diverse teams. So we expect diversity from our firms. [Ed. note: BMO demands five key statistics from firms. Find out what they are.]

Kevin: What Anne’s indicated is what we’re all seeing: companies around the globe — the United States in particular — want to work with firms that reflect the way they look in terms of diversity. This is taking off.

Brian Hilbers of Bruce Power

Brian Hilbers, chief legal officer, Bruce Power

Brian: Diversity is very important at Bruce Power. We have diversity targets, which we’ve actually exceeded. And we’ve gone to our major law firms and explained where we are on our diversity targets and what we’re looking for.

Anne: Here’s another thing we’ve done: we select our relationship managers for a lot of our firms. This is our go-to person if there’s an issue. Firms used to say, ‘I’m giving you X.’ Now, we say, ‘No thanks. We want to interview two or three people and here’s what we want them to look like.’ [Ed. note: Bank of Montreal asks a lot of its firms. But the bank gives a lot, too — it published its own diversity numbers (and targets) to the public. For instance, we know that 30 percent of the bank’s executives are women and BMO wants to increase that to 40 percent by 2016.]

Daniel: In that case, firms need female associates to advance at the pace of their male counterparts. Otherwise clients won’t have any women to choose from. How can firms accomplish that?

Lisa: Well, we no longer judge lawyers against colleagues in their same year of call. We now have a totally different system. We create benchmarks of accomplishment in each practice area. As long as they are continuing to move forward, length doesn’t matter. As long as they are progressing, we consider them to be a capable colleague.

Daniel: So even if associates fall behind the rest of their year of call — say, to have a child, or to take care of a sick parent — they’re still advancing, rather than being forced out of the firm.

Lisa: Absolutely.

Les: You’re able to match people’s aspirations at different phases of their life to suitable roles in the firm. And, hopefully, you end up with less attrition. Which is good for clients: they like seeing people they like for long periods of time. They don’t like turnover.

Heenan Blaikie and the future of partnerships

Daniel: Let’s talk about Heenan Blaikie. When that firm collapsed earlier this year, did that make you think more critically about your own businesses?

Peter Lukasiewicz of Gowlings

Peter Lukasiewicz, managing partner, external, Gowling Lafleur Henderson LLP

Peter: Candidly, I think succession was an issue at Heenan. We’ve all learned lessons from Heenan, and the lesson for me is the importance of leadership and building a culture within the firm that defines the direction of the business. It’s part of the larger change in law firms: we’re running businesses that are as large as companies on the TSX. And we are learning how to run those large businesses. [Ed. note: Two years before the meltdown, founding partner Roy Heenan stepped down as chairman and didn’t appoint a replacement, leaving the managing partners in Toronto and Montreal to jockey for authority.]

Anne: I don’t know any of the details about Heenan, but we continue to hear more rumbling of this sort of thing at other firms and that, if Canadian firms do not continue to innovate, there won’t be many left: they’ll be gobbled up by the larger international firms. [Ed. note: And innovation can come in many forms — even just learning how to use existing technology better.]

Daniel: So, what will partnerships look like in the future?

Les: Many lawyers live in a very binary world: are you an associate or are you a partner? That’s very unsophisticated. We’ve abandoned the so-called up-or-out model, where after so many years you’re a partner, or not a partner and you leave. Now, we want to create customized roles.

Peter: As much as it pains me to say, the accounting firms figured this out a long time ago. If you go into most accounting firms, they’ve got half a dozen levels of employees with a number of different forks in the road. We’ve got to be just as creative when managing employees. 

Kevin Coon of Baker & McKenzie

Kevin Coon, managing partner, Canada, Baker & McKenzie LLP

Kevin: Since the dissolution of Heenan Blaikie, many lawyers seem nervous about becoming equity partners. Some job applicants — not from Heenan, but other firms — have said, ‘I don’t have any problem not being a partner, because I don’t want to put any equity at risk.’ Before Heenan fell, I’d never heard that issue expressed.

Daniel: As law firms try to be more creative, does that change the kind of students and young lawyers you want to hire?

Kevin: I’m really conflicted. The Law Society tells us we have an obligation to participate in the on-campus interview process — a significant commitment for firms. But if we pulled out of that process, we wouldn’t have a problem finding top legal talent. We get applicants from around the world. And, quite frankly, many of those students are the ones that we’re attracted to. They have a global outlook. Maybe they’ve spent a summer at a bank in Zurich. Soon, I think some of the historical big firms are going to pull out of the system.

Les: We need a much more sophisticated talent- management paradigm. And the starting point is: you can’t have 17-minute interviews to hire your talent. That’s a total crapshoot.

The death of the billable hour

Daniel: As clients continue to demand lower costs, will firms start to move away from the billable hour?

Anne: Yes! Our goal is to move all of our external spend off the billable hour rate. We have whole teams that will not open a file with a firm if it’s on the billable hour.

Les: We are prepared to embrace fixed-fee pricing, but it’s a lot of work. The firm and the client have to invest a lot of time together to get it right. So, to me, the barrier is accepting that there will be mistakes made along the way.

Anne Sonnen of BMO Financial Group

Anne Sonnen, deputy general counsel,
BMO Financial Group

Anne: It is a long and hard journey. We spend hours with folks at the table figuring out how to do it.

Peter: You’re not going to always get it right. But if you have a sufficient number of fixedfee arrangements, there will be some winners and some losers. Overall, it will balance out. And that’s what you’re trying to do: manage the legal spend and deliver predictability. I expect in less than 10 years, it will be the norm. Look, [Peter points out the window at a nearby skyscraper] if you can build that building on a fixed price, why can’t you deliver legal services on a fixed-price basis?

Lisa: I think the genie is out of the bottle here. There’s not much point in debating whether or not the change that’s occurred in the legal industry in the past 15 years is something we can reverse. [Ed. note: On the other hand, perhaps the debate still has some life: at least one lawyer was willing to admit the billable hour will keep breathing in the coming years.]

Daniel: Is there resistance, though?

Kevin: Daniel, there is resistance. But the reaction from Anne is indicative of what all law firms must react to. We’re cognizant of what our clients want: predictability, quality and lower costs. Those of us who don’t respond will be left as dinosaurs.

Brian: What we’ve looked at in certain circumstances is value-based billing, where, if we’re successful, then I’m willing to pay for that success.

Daniel: If you’re charging based on value, you’re almost shifting unpredictability onto the firm.

Brian: Yes, you’re right. But from my perspective we should both sink or we should both swim together.


Illustration by Raymond Biesinger; Photography by Margaret Mulligan

Torys to open a Halifax office, where lawyers will be off the partnership track

Historically, when lawyers joined a top-tier firm, they knew the deal: work hard, find clients and you’ll make partner — but if you don’t get there after a certain number of years, you have to leave.

These days, however, some firms are creating alternatives to the so-called up-or-out model.

Consider the approach of Torys LLP. In the fall, the Bay Street firm will open a small office in Halifax, and from day one every lawyer — Torys expects to start with a staff of around six — will know that partnership is not in their future. But, unlike their big-city counterparts, those lawyers won’t be responsible for bringing in new business.

“It won’t appeal to someone who wants to move up the ranks in the traditional law firm way,” says Chris Fowles, a partner at Torys who is moving to Halifax to head up the office. But he hopes it will attract talented lawyers who would rather focus on the practice of law, rather than building a client base.

And, in Halifiax, they can do just that.

At the new location, which is part of Torys’ broader strategy to cut costs, lawyers will provide legal services — such as contract writing and due diligence — to clients across the country at reduced rates, taking advantage of the low overhead in Atlantic Canada. “Most of the work will come from Toronto,” says Fowles. In other words, Torys isn’t moving to Halifax to find clients — they’re going there to get work done.

As a result, there could be an opportunity for more work-life balance. “They’re still going to be working regular business hours,” says Fowles. “But they won’t have the same cocktail party duties they might otherwise feel they’d have to do if they were on the partnership track.”

Fowles says plenty of firms are making an effort to accommodate lawyers with less traditional career goals. “Generally speaking,” he explains, “law firms — even in Toronto — are starting to move away from the up-or-out model.”


Read more: After the collapse of Heenan Blaikie LLP, founding partner Peter Blaikie told Precedent that, in fact, there are many partners who would prefer to be senior associates.


Photo by Chaf Haddad

Peter Blaikie to young lawyers — think twice about becoming a partner at a large firm

Less than a month after Heenan Blaikie LLP announced its dissolution, the firm is officially dead: its offices, once home to more than 500 lawyers, will be empty by the end of the day.

Precedent spoke to Peter Blaikie, the firm’s co-founder and managing partner until 1993, who has the following advice for young lawyers today: partnership, particularly in a large firm, is not for everyone. And for some people, it’s probably a bad idea.

Most partners, he explains, have no interest in taking on the responsibilities of ownership — which is what being a partner is all about.

“My instinct is that the vast majority of partners at law firms do not think of themselves as owners,” says Blaikie. “They don’t ask questions about how the place is run, or think about where the firm is going or what the vision is.”

If a lawyer has no interest in these issues, he says, then there is no good reason to become a partner. “I think some partners would rather be non-equity partners or senior associates than full partners.”

Even money, says Blaikie, isn’t a sufficient reason to join partnership.

As Blaikie explains, if the finances of a firm go sour, partners are on the hook — something that the recent history of Heenan Blaikie makes clear. 

“I haven’t the faintest idea what the final result will be of the dissolution of Heenan Blaikie, but there are certainly many partners who still have skin in the game,” he says, adding that many former Heenan partners are likely to lose the capital they contributed to the firm in order to join partnership.

Moreover, says Blaikie, anyone whose sole motivation is money shouldn’t be practising law.

“Let’s be honest about it, you can be sure that lots of senior partners at Canadian law firms earn more than $1 million a year,” he says. “But that’s chump change in comparison to what you can earn in the investment world. If all you want is money, you might as well go to Wall Street and work at Goldman Sachs.”

In the end, says Blaikie, young lawyers need to ask themselves if they are prepared to accept the responsibilities and risks associated with partnership.

And therein lies the problem: Blaikie says the transition from associate to partner often happens without much thought.

“If you’ve been at a firm for nine or 10 years, and you’ve done good legal work, and you’ve been billing whatever the firm requires, and some clients think of you as their lawyer, then you’re going to become a partner almost automatically,” he says. “And I don’t think that’s a good idea for a great many people. If partnership on a Bay Street firm is a law student’s sole ambition, I personally think that’s a mistake.”


If you’re curious about what it costs to become a partner, read our previous story on capital contributions — or check out the entire Precedent Partnership Guide

Buying into the buy-in

Q: How do you buy into a partnership?

A: In rare cases, the capital loan comes out of your annual draw (this can be up to half of the amount), but in all of the cases I’ve seen, the firm arranges a loan through a bank. Typically the bank provides the loan at the prime rate of interest, which is currently three percent. So if you buy in at $100,000, you’d have to pay back $3,000 a year in interest, but the firm covers that interest, so it’s a wash.

Q: How much does it cost to buy in?

A: Anywhere between $50,000 and $500,000. I typically see $100,000 to $200,000 for mid-size firms.

Q: Since the firm pays the interest, should partners be in any rush to pay off their loans?

A: There’s not a lot of incentive for new partners to pay down the debt. Still, there’s nothing to stop you. If you’re conservative you might want to pay it off, while others might focus on their mortgage or put money in their RRSPs.

Q: What are the risks of this type of loan?

A: In the rare case that the law firm goes bankrupt, you’ll never see that money again.

Q: Recently, the laws changed to allow partners to register as corporations. Good idea?

A: There are costs involved to incorporate and some firms allow you to, while others don’t. Incorporating can be a way for a lawyer to pay less tax. It’s best to seek advice from an accountant or a tax lawyer at your firm to see if it’s a good fit.


This story previously appeared in The Precedent Partnership Guide, published in our Spring 2013 issue.

Our top 5 stories of the year

With the Precedent team taking a break for the holidays, there’s no better time to catch up on our coverage of the year’s legal issues.

Here are five of the top stories from our website over the last 12 months. 

 

An inside look at how to make partner
Last winter, we asked industry insiders to reveal the secrets behind partnership. Here’s what they had to say.

 

 

Hireback Watch 2013
Toronto firms hired back fewer articling students as first-year associates compared to last year. Check out our firm-by-firm breakdown. 

 

 

Canada’s first bulletproof business suit
This fall, a Toronto retailer proved that cutting-edge technology can still look great on the catwalk. But are the clothes even legal?

 

 

The year’s most creative job search
A recent law school grad took out a classified ad to find an articling position. What were the results?

 

 

 

Ontario reveals two new options for law grads get licensed
Students can now become full-fledged lawyers — without articling — by taking the Law Practice Program (LPP).

 


Photo of Ryerson Univeristy: William Mewes