No Tithing No Title

Allison Williams: [00:00:11] Hi everybody, it’s Allison Williams here, your Law Firm Mentor. Law Firm Mentor is a business coaching service for solo and small law firm attorneys. We help you grow your revenues, crush chaos in business and make more money.

Allison Williams: [00:00:25] Hi everybody, it’s Allison Williams here, your Law Firm Mentor, and I want to welcome you back to another episode of The Crashing Chaos with Law Firm Mentor podcast. And today we’re going to be talking about something that I think is a lot of fun to talk about, which is advancing our firms through acquiring or developing a partner. And I know a lot of law firm owners start out solo and they say, you know, I want to be on my own. I want to chart a path. I want to own my own firm. I want to be the one in control. And then they get to a place where they have grown and developed in such a way that they want to either expand the business by adding a partner or they want to step up a partner. So I’m actually going to record a couple of episodes talking about partnership in particular, adding another practice area. That’s going to be our next episode. But for today, we’re actually going to talk about what it’s like and what are some of the considerations that you have to have in order to successfully add partners to your law firm.

Allison Williams: [00:01:29] Now, there is something to be said for developing someone from being an associate into being a partner, i.e., they join you. They add a certain level of value that comes with their legal skill. And then through working with your company, developing and espousing the core values of your company, your vision and your mission, and working with you in such a way that it’s clear that you’re aligned and that your goals are the same. You can ultimately create a symbiotic relationship where they can add a lot more value when they feel some buy-in that comes with being a partner or taking another route to growth, which is adding someone who already has an established practice outside of your firm and adding them to your firm with intentionality of giving them the title of partner. But as we know, today’s episode is titled No Tithing, No Title. And I use tithing in the sense of what a lot of us would think of is what happens in church. I am no shame to anyone and or anyone’s religion, but I’m a recovering Catholic. So when I talk about religion, I talk about it usually in the sense of it is not what fulfills me, but I don’t denigrate religion. And when I hear the term tithing, I think of it as and I’m using it in that sense, the obligatory 10 percent of your income that you are obligated to give if you are a member of the Christian faith and believe that your religion requires you to ultimately give, give of your income to support your church.

Allison Williams: [00:03:07] OK, now that’s just a general doctrine. We’re not going to talk about religion in this episode. So, like, don’t turn off if you are or are not a religious person. It’s not that. But I use tithing in the sense of, the sense of obligation that comes with giving. Right. There is a an expectation of there’s a responsibility that you have as a member of this organization, a member of this faith, that you must give a certain percentage of your income to the organization to support it. I’m talking about that same general concept when I talk about no tithing in this sense here in a law firm that before you give a title to someone, it should not be that they have an expectation or an entitlement feeling of what is supposed to happen at a certain stage of their career, but rather when they give a certain amount, they receive a certain amount. Right. There’s a level of reciprocity that comes in the title of partner. And I know too many lawyers in all different walks of life in large firms and mid-sized firms and small firms in solo shops that contemplate partnership is kind of the automatic rite of passage. Like you’ve been lawyering, for X number of years. You’re now entitled to be a partner. And that’s really a very faulty way of thinking about it, because when you think about it, traditionally partnership came with the association of economic responsibility once upon a time when you heard the term partner.

Allison Williams: [00:04:40] Now, this is years and years and years ago in in the law. Right. We have now a lot more iterations of partner. But once upon a time, partner meant that you had practiced for a certain number of years, you had a certain level of independence and you had some economic stake in the game. So you bought into a partnership and now you had an ownership interest and you received the benefit of that. But you also received the detriment of that, which is if the business goes down, the employees get paid before the partners do. And if there’s not enough, the partners don’t take. So depending on how you are contemplating adding a partner, you could be contemplating adding an equity partner, someone coming into your firm and being equally or at least to some degree in it or in it with you from a financial perspective. Or you could be thinking about it in terms of the person is going to have a job, they’ll be a non equity partner, but they will have the status and the independence of practice that they can do what they want practice wise. And ultimately, they don’t have to account to anyone for how they practice because they have a level of skill and knowledge at their experience level that would allow them to practice without adding risk to your business.

Allison Williams: [00:06:00] So however you’re thinking about partnership, there are three considerations that I’m going to talk about today that I want you to contemplate before you consider either making someone partner, promoting someone from within, or adding a partner from without your business into your structure with that title and that responsibility. OK, so the first thing to consider is that a partner is not a CEO. OK, now in a law firm, as with any business, the CEO has responsibility for three primary functions. They assemble the team, they manage the resources and they have the vision. Right. A partner typically is not going to function as a CEO. They may have some responsibilities in different areas. But ultimately, the CEO, who is in many law firms, for lack of a better phrase, the managing partner is the one that is going to be responsible for casting the vision of what the law firms are going to look like today. Tomorrow, five years from now, 10 years from now into the future is going to be responsible for assembling the team. So that could mean actual hiring and firing. But if nothing else, it certainly means deciding how the structure of the firm is going to evolve, including all the people that are going to be there. So are you going to have, you know, two or three partners and 10 associates? Are you going to have one associate for every one partner? Is it going to be an eat what you kill so everyone is a partner? What does that look like? Right.

Allison Williams: [00:07:35] And so the thinking about that comes typically at the CEO level. So that usually means that you want to make sure that any one that you’re having a conversation about partnership with understands what you mean by partner versus what may be thought by the other person, by partner. And this typically can be resolved by putting things into writing, but not necessarily so, because if you don’t have a true conception of all that goes into the higher level strategic thought, a partnership or of ownership, rather, if you’re not thinking of yourself as a CEO, then when you start to communicate with someone else about what is and is not included in this arrangement of partnership, it’s hard to exercise out of that. The parts of it that are really CEO function. And if somebody is buying into a business and they’re buying less than 50 percent of the business, inherently, there has to be a delegation of that authority of CEO or CEO status goes to the person with the majority shares. So you want to make sure that you’re having a clear understanding for yourself as well as for the other person before you go into any further discussion about should this person or should this person not become your partner? You also want to make sure that as you’re talking about partnership, that you are either conceptualizing equity or non equity in that description.

Allison Williams: [00:09:06] And for most small business owners, the challenge with adding a partner is the idea that something that I have already created is going to not just now change, but it has the ability to completely be gutted and completely reformed if someone else comes in and has an equal say and what the business will evolve into. And that’s part of the reason why most people don’t, when they are a solo lawyer becoming a partnership or adding a partner, they don’t typically add a person and say, all right, everything that was once mine is now ours. Right. Think about it like a marriage, right? If if two people meet each other and one person has lived in a house for five years that they bought on their own before they met their beloved. And then two years into the dating relationship, the parties become engaged, and a year later, they’re married. Well, by the time they get married, one spouse would have lived in the house and owned it and had the full right title ownership and run of the space for eight years. And to add another person into that space may or may not give a true feeling that this is ours. It is much more common that spouses together will say until we can afford to do something different, perhaps we’re going to live in your house, but we’re ultimately creating our life together.

Allison Williams: [00:10:30] I, the person who did not own the home, want an equal say. So now we’re going to get our space together. Right? But even then, space is only one small component of it. You’re talking about in a law firm, the systems, the policies, the procedures, the vision, the mission, all of that critical data that forms the how to of our daily lives. It is really challenging to shift that and suddenly become a team of two as if we are equal in this. It is also very unusual to find two people who are at the same level in terms of what they bring to a business economically. And if you’re starting out and building together, we both start out at zero. We build ourselves into a million dollar company, then we each are responsible for that million dollars. Even if one person generated more dollars, we were in it together for all of the decision making, all of the struggle of hiring our first employee, firing our first employee, adding a marketing team, deciding how to handle our intake system, adding new people into the infrastructure of doing the work, outsourcing some of the work. Right? All of that, all of that minutiae. And I’m calling it minutiae but it really is, some of these are very major decisions, right? All of that was co-created. When one person creates and you tack on another person who’s coming to something that’s already been built, even if they bring equal dollars, those equal dollars are not at risk.

Allison Williams: [00:12:02] Right. So that person oftentimes has a sense of entitlement that comes with dollars that may not necessarily align with the owner’s sense of value that that person brings because the owner is the one that went through the blood, sweat and tears of building it. All that the partner coming over did was tack their dollars on to an already existing structure. It’s just not the same. So it’s really important that people contemplating partnership, think about that and have some very candid conversations about how we see the value of the person coming into the partnership, not necessarily just, do I, am I willing to give you this title in exchange for something, whether it’s economic or other, which we’re going to talk about next.

Allison Williams: [00:12:56] OK, so the second thing to consider when we’re talking about partnership criteria is what do you value and does every partner have to have the same composition of value, and the entirety of it, in order to make partner. So what I mean by that is that there are a lot of decisions that typically will influence an owner to say, hey, I think it’s time for so-and-so to become a partner. That can be things like how much money do they generate on an annual basis? Like in other words, are they productive in the company? It can be how much money do they personally originate? In other words, are they bringing clients to the company? And if so, what is the economic value of their base of clients? It could be their management ability. Do they have the ability to assign work, oversee that work, ensure that it’s of high quality, ensure that people are turning things in on time, making sure that people are advancing in their skill set, their level of understanding of the law, their ability to work independently. It can be the reputation. Does the firm benefit from having this person and whatever the marketplace thinks about this person, including the legal marketplace, but also the public. Does the firm benefit from adding that reputation to the firm? So when you think about these different areas to consider, one of the things that becomes really challenging is when there is a different sense of value for each of these different components that one might have to have in order to be a partner in a law firm.

Allison Williams: [00:14:42] So if John Doe owns a law firm and he is considering elevating his associate Susie Smith, and Susie generates five hundred thousand dollars a year based on work that she does for the firm, and one hundred thousand of that comes from clients that she personally originates, then the firm may say she’s worth one hundred thousand dollars because if she quits tomorrow, we’re going to lose the hundred thousand dollars of business that would likely go with her. But we still have four hundred thousand dollars that we could still generate and hand over to the next person. Versus Susy’s perspective might be I work and as a result of my work, this firm had available to it five hundred thousand dollars. And while, yes, the firm generated that five hundred thousand dollars, meaning that firm, the firm caused that amount of money to be available to produce in the legal work that was created. But for my willingness to do it and to do it at a high level and to do it in keeping client satisfied, it would not have been produced. So therefore, I’m worth five hundred thousand dollars. And so you have to have these conversations about how you are viewing things in your business in order that both parties go in, typically with a sense of this is where the firm sees my value and this is where I see my value. And I’m using money as the primary example, not because that’s the primary consideration or even the most important one, depending on your practice, but because that’s typically the area where people will feel most aggrieved in the negotiation process and or the consideration process. So if I tell a person their management ability is not what I would like it to be, I rate that as a seven out of 10.

Allison Williams: [00:16:37] That stings less than if I tell a person their economic value is of very little value to me because your hundred thousand dollars, if it walks out, I still have another person that I could give four hundred thousand dollars worth of work to that I could easily expand into five hundred thousand dollars by virtue of them just working cases differently, having more availability. Thus I could take more cases in that I can actually give to them. So your hundred thousand dollars isn’t worth a whole heck of a lot. And that’s hard for people to hear, especially for lawyers that work hard to generate their cases. Meaning there are some, there are some lawyers that are natural networkers, natural public speakers. They generate clients very easily because they’re always out and about and on the hunt. And then there are other lawyers who are exceptional lawyers. Right? You give them a file and they get amazing results for the client, but they’re just never going to set the world on fire with their sparkling personality. They’re never going to be that person that goes out and meets a person at the grocery store or the dry cleaner store or at the auto repair shop and happens to mention what they do for a living, gives out their card and that person happens to need something right then and there. Right.

Allison Williams: [00:17:57] There are some people that have an intuitive knack for that. And there are some people that work on, truly, truly work on generating business because they’re concerned with it. And the people who are not concerned with it, it is very challenging by the time that they have been practicing for a decade to suddenly get them interested in it in a way that is going to have them set the world on fire if they’re trying to be someone’s employee, that happens to have the title of partner. So it is rare that you’re going to find the million dollar producer quote partner who does not either already have an ownership status somewhere or who doesn’t come in with a high expectation for what they bring, because they bring high dollars. Most of the conversations that you’re going to have in the solo and small firm space are going to be with people who are generating something or at least recognize the value of generating something. But it may not necessarily be as substantial as they would like. The other thing to consider here is that when you were talking about what what is required for a partner, there are some firms where every partner has to contribute a certain amount and that amount can be a certain amount of dollars, a certain amount of hours managing associates, a certain amount of time spent researching different activity. Right.

Allison Williams: [00:19:18] And then there are other firms where we are, we are aligning ourselves together because the reputation is so strong among every person who is a partner that really the value becomes that we’re now telling the world, all of these three powerhouses, for lack of a better phrase, are here together. And one powerhouse may be great on his feet. Another powerhouse may be great drafting documents, and the third powerhouse may be the great client development person. However we slice up the cake, ultimately we recognize that all of us don’t have everything. We are a conglomeration of strengths and weaknesses. And as long as you are bringing a primary strength in an area that we value, it’s more than fine for you to be a partner in the firm. OK, if that is your model and by the way, that tends to be the most applicable model in most law firms because most law firms recognize that it is nearly impossible that you’re going to copy and paste your acumen and hand it over to the next person and expect the same result. Right. You may be great at developing clients. You may be mediocre at trying cases. There is someone out there who’s willing to be your partner who is mediocre at generating cases, but as brilliant at trying cases. So that partnership may have some synergy that you want to capitalize on. And if you are deciding what makes someone eligible for partnership, it’s really important that you don’t write your partnership requirements in a way that necessitates everyone having everything, or else no one would be eligible to be your partner.

Allison Williams: [00:21:06] Right. Which, by the way, could be a subconscious cue for for you to do some work on yourself, which has nothing to do with partnerships. But of course, any time we’re contemplating people, we’re going to encounter our patterns with people. So you could very easily see where there could be some work that needs to be done there. But here is where the biggie comes in. No tithing, no title. They have to bring some value. And what I see far too many lawyers do is they decide to go into partnership with someone because they are scared, because they don’t want to do it by themselves, because they like to collaborate. They have such a lack of confidence in their own decision making authority that they need to have somebody available to ask. And there’s a lot of growth that needs to happen in that person, whether he or she ultimately joins a partnership or not or forms a partnership by virtue of adding a person or growing up an associate in partnership. The growth still needs to happen. But either way, there is a real significant value system that we have to understand here. That partnership implies value. OK, third thing I want you guys to think about, when you’re thinking about adding a partner or elevating someone to partner, is that I want you to reduce it to writing whatever it is that is the agreement between the two.

Allison Williams: [00:22:30] However, you need to ensure that you have subjective flexibility written into your partnership criteria. OK, so this usually happens before you actually make an offer of partnership to someone because you’ve given them what is expected of them when they sign on to be your partner. But there is definitely a need for you to have the final say as the owner of the business as to whether or not someone should feel that it is time for them and ultimately comes to you and says, I want to be a partner. You want to not just check off the boxes and say, yeah, they got X, they got Y, they got Z. Poof. They’re partner. You want to have that final catch all category of yes. This aligns with what I want to accomplish for my law firm. Now, you might say, why does that really matter? I mean, ultimately, don’t I have the final say because it’s my law firm? And the answer is yes. But what you don’t want to do is you don’t want to have mid-level attorneys that have a conception of if I want to make partner, these are the things I have to do and then give them those criteria. And when they meet those criteria, you observe your subjective right to say no, even though the objective criteria, they are satisfying it.

Allison Williams: [00:23:48] And I’ve I’ve heard of more than one law firm that’s done this. And it creates a level of distrust and a level of dissension in the ranks with the partnership, right? So what ends up happening is the associate who’s vying to make partner makes partner, but they always have their eyes and ears open. Right. They never quite feel like they are truly a partner. Or if they are truly a partner, they never quite feel like they’re secure. Because they were kind of told the old bait and switch. We want you to be dazzling in court, generate two hundred and fifty thousand dollars and be able to handle complex litigation from beginning to end. Right. And they do all of those things and then say, hey, it’s time for me to be partner. And then someone says, oh, yeah, well, not right now. And when the person comes back and says, well, I’ve met all of the written criteria, I don’t understand. You add in another criteria and you may or may not communicate it honestly to them. It might be just I don’t want a partner right now or it could be something more involved. Like, you know, you have a rough around the edges way of dealing with our staff. And while we never wrote down, we want our staff treated a certain way by partners. We always thought it was presumed we want you to grow in this area before we elevate you.

Allison Williams: [00:25:13] If the person ends up leaving, they leave with a chip on their shoulder and an education to the marketplace that you don’t honor your word. Now, I’m never a big fan of creating a law firm based on what people can say about you when they leave. Right. But there is something to be said for being able to look a person in the eye and give them a candid assessment of where they are on their way to their professional goals. It’s fair to them and it’s fair to you because you want your partner when that person becomes your partner, to be brought in not just on working for you, but on what you’re creating. So if you’re creating a fabulous culture, if you’re creating a strong collective of professionals, if you’re creating exceptional legal work, if you’re creating power and status in the community, if you’re creating a community resource where people give back in proportion to their incomes, you want the team members who are alongside you, especially at the level of partner, to be brought in on that vision. And if people feel slighted in the process of becoming a partner because you have spoken something that is fungible and the criteria changes after someone meets the criteria, that is never a good way to form a strong relationship. And if that does happen, it’s not that it’s insurmountable. You can certainly talk your way through it. But communication is necessary for all work dynamics, but in particular, close lineage work dynamics, when people are close in the hierarchy together. You definitely want to work that out, and you can. But you don’t want to create that that bridge to burn that you’re going to have to salvage in the first place.

Allison Williams: [00:26:58] All right, everyone, today we have talked about no tithing, no title. And that, in essence, means that before we elevate a partner or choose someone from the outside of our law firms to come join us in partnership, then we’re going to consider essentially three primary concerns. First, that we are the CEO. And if we’re going to add a partner, what functions, if any, of the CEO role will that person be occupying? Second, that what does the value need to be in order for person to become a partner? In other words, do they need to have a book of business? Do they need to have management ability, their reputation? What what are the skills that a person needs to bring that that they may or may not have as an associate that are going to be required as mission critical for them to ascend in the business or to come in at a higher status in the business. And then finally then that, Before we consider reducing to writing the criteria that we have for partnership.

Allison Williams: [00:28:00] We want to make sure that we build in a subjective component so that no one ends up feeling that they are absolutely entitled to be a partner when they meet certain criteria, and that when we check the box of those criteria that they are presumed to be entitled to be made partner because we know that oftentimes our desires change or circumstances change and we don’t want anyone to be left with that negative feeling. All right, everyone, I am Allison Williams. Thank you for listening in to another episode of The Crushing Chaos with Law Firm Mentor podcast. See you at the next show.

Allison Williams: [00:28:47] Thank you for tuning in to the Crushing Chaos with Law Firm Mentor podcast. To learn more about today’s guests and take advantage of the resources mentioned, check out our show notes. And if you own a solo or small law firm and are looking for guidance, advice or simply support on your journey to create a law firm that runs without you, join us in the Law Firm Mentor Movement free Facebook group. There, you can access our free trainings on improving collections in law firms, meeting billable hours, and join the movement of thousands of law firm owners across the country who want to crush chaos in their law firm and make more money. I’m Allison Williams, your Law Firm Mentor. Have a great day.