You Just Made Partner at Your Law Firm - But What Happens Now?
Congratulations on making partner! It’s a great feeling when all that hard work pays off and you can celebrate your new title and position. But you may also be trying to figure out what you need to know and do to actually succeed as a partner now that you are one.
Most law firms don’t hand out a manual outlining what you should be doing as a partner, and how you can take the right steps to thrive in that role. With that in mind, here are a few key things to focus on as a new partner:
Get better at managing your business for the firm
Before you became a partner, you probably focused mostly on how many hours you billed and getting good evaluations every year. But now you’re managing a business line for your firm, and you need to think about not only how many hours you work, but also where you are going to get new business, whether that work will be profitable, and how you will get clients to pay for those services in a timely manner. If, like many lawyers, you don’t have a business background, now is the time to get smart about what your firm considers when it evaluates whether your business is succeeding, and accordingly how much it decides to compensate you for your work.
For example, it may be that you need to rethink how your practice is leveraged, what the realization rate is for the matters you lead and the clients you service, or how to negotiate with clients about timing of payments so you aren’t constantly facing calls from your firm’s billing department about your aging receivables. Consider also setting up a meeting with a member of the firm’s partnership compensation committee or the firm CFO to get smart about the financial measurements they look at each year when decisions are made about how much partners are paid and bonused.
Figure out your new personal financial situation
Your personal financial picture changes when you become a law firm partner. Despite your likely increased income, you will almost certainly be paying more in taxes and, especially in the US given the complications of federal, state and local taxation, you will want to engage a tax advisor who can help you plan your tax payment schedule and estimates. Every firm’s financial structure and tax implications for partners are different, so it can be helpful to work with a tax advisor who already advises other partners at your firm and is familiar with the specifics of how the firm and the partners report taxable income and expenses.
You will also likely need to plan for how you will manage without a guaranteed salary every month. Most equity partners receive the largess of their partnership distribution at the end of their firm’s fiscal year, which may make it harder to budget for expenses earlier in the year when draws are smaller. You also may be required to contribute capital to the firm, usually by getting a loan to finance it. In short, before you buy the expensive car or take a luxury vacation, make sure you understand what being a partner means for your personal income and cash flow.
Keep building relationships within the firm
When you were working to be elected as a partner, you likely took the time to meet and ask for advice from partners and firm leaders who were important to help support your candidacy. Now that you’ve joined the partnership ranks, it’s critical to maintain those connections and develop new ones. Of course, you want your partners, as well as other attorneys and professionals in the firm, to think of you as a resource for them and the firm’s clients. But you also want your colleagues to know you see the value they bring to the firm, that you recognize their work, and that you are interested in their input and suggestions. Showing respect and acknowledging the importance of everyone’s contributions builds a better and stronger working environment. If you start out acting like the partner people want to work with to help them succeed, you will find people who want to work with you and help you succeed as well.
Be aware of changes to your clients’ needs
Putting the partner title after your name does not guarantee that work will keep flowing in, to you or to the firm. Industry changes, economic downturns, and other unexpected events (Covid, anyone?) can drastically alter the demand for different types of legal services, the price sensitivity for those services, and the manner and method in which clients expect them to be delivered. The in-house counsel who has always hired you for key issues in your specialized practice area may now be required to seek proposals from multiple firms on her company’s legal panel. Or you may be asked to take on a litigation matter for your biggest client, but at a significantly discounted rate. Staying in touch with your clients, and really listening to what they are experiencing – their internal pressures, the anticipated changes in their organizations, and the market developments that are altering what work they do and how – can help you support them and be aware of how you might need to change your practice to meet their expectations. In addition, be willing to recognize and pivot to take advantage of growing areas when demand for your existing practice is slowing.
Please reach out to me if you are new to law firm partnership, or experiencing new challenges as a law firm partner – coaching can be an effective tool to help get you started and meet new goals.