A Modern Business Model

Re-thinking the relationship between partners and associates

A Modern Business Model

What constitutes a modern law firm is always changing. Instead of giving you a definition, I will outline what my firm has done to modernize our structure.

A classic firm structure is a top-down management model. The best visual description would be a pyramid with the senior partners on top. Senior partners make the business and management decisions of the firm. Associates at the firm work for/with the senior partners and have strict billable hour targets. The classic structure has trad­itional overhead demands primar­ily related to brick and mortar office space. Partners then set the billable targets to ensure that the associ­ates can essentially pay for the over­head of the firm and make profit for the partners.

Many classically structured law firms will have a partnership track. This structure often puts the inter­ests of the associates at odds with those of the senior partners. Young associates are trying to maintain a work-life balance with a young family while the partners need to ensure viability of the business and ensure profitability.

The top-down structure is designed to benefit owners, as the owners bear nearly all the financial risk of the busi­ness. For associates, success within this model means becoming a partner.

Law firms have generally resisted change but unfortunately whether a law firm wants to change or not, change is here. Associates want more control. They want control over the type of work they do and control over their work-life balance. They want to be compensated for the value they bring now, not for the proverbial “carrot on a stick,” i.e., the possibil­ity of partnership.

The pandemic was a catalyst for many firms to finally embrace technology that had been around for years. While embracing tech­nology is a step in the right direction, in my view, a truly “modern law firm” needs to re-think the relationship between partners and associates in the firm.

But how does one reconcile the opposing interests of partners who want to ensure a strong bottom line and healthy profits against associates who wish to have more control over their working conditions, career dir­ection, and work-life balance?

My firm has created the 80-20 asso­ciate counsel program. It flips the classic pyramid upside down. Under the program, associate counsel are entitled to practice in any area they wish and retain 80% of their billings. This is in stark contrast to the typical compensation model for associates, which is usually closer to a 50/50 split, billings to earnings. Associates are expected to work remotely. They have no billable targets and have total control over their own hours. Associates can make use of the firm’s trust account and have assistance from our accountant and reception, but other administrative assistance becomes their responsibility. The firm covers Law Society fees and insur­ance and the use of our cloud-based file management software (Clio).

Our de-centralized model is more akin to the relationship of a real estate agent to a real estate broker­age firm than that of a traditional law firm structure. It can act as a bridge to solo practice for those worried about taking the leap. Associates enjoy total control over their career and have most of the benefits of solo prac­tice while retaining the security of being part of a larger firm.

No more fear of failing to meet a billable target. No more struggling between family obligations while meeting your employer’s demands.

As we all know, the practice of law is a demanding profession. Our view of a modern law firm is one that allows people to be compensated more fully for their efforts but also allow them to choose the way they meet their career and financial goals. Remote work is the way of the future, but the benefits and collegiality of being a part of a firm can still be retained with our modern business model.