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The Partner Progression Model

Carla McCabe
Jan 8, 2020

(for Internal Next Generation Succession)

When it comes time for a business owner to retire and transition the business, several options exist. Oftentimes, an internal transition is the preferred way to pass the reigns to the next generation. This method allows an owner to gradually transition the business to a person (or persons) of their choosing, whereby the owner gets to “groom” their successor(s). This strategy usually has the added benefit of making the process less emotional for the owner.


But how exactly do you go about internally promoting someone through the ranks while preparing them for firm ownership? As with any strategy, we encourage a PLAN for all those involved. That means clearly defining what is expected for all individuals – from what someone needs to accomplish to be considered for ownership, to an expected exit date for the existing owner(s), and a timeline by which to measure each milestone.

It can be helpful to consider how a law firm might approach a path to partnership when designing your own partner progression plan. It’s important to remember that most of the employees within a firm will not reach a point where they will be equity owners. Instead, it’s an elite status for those that are truly qualified to be owners and leaders of the firm (additional synthetic or similar programs can exist for other employees that the firm wants to reward in some manner).

The following chart illustrates an example of potential requirements for a path to equity ownership.

Level Experience Production Years with Firm Ownership
Associate Less than 5 years Less than $150,000 0 to 2 years No
Senior Associate At least 5 years At least $150,000 0 to 2 years No
Partner 10 Years $250,000+ 2 to 5 years Yes
Senior Partner 15+ Years 500,000+ 5+ years Yes

 

The beauty of this plan is that you can customize it to be exactly what you want! The progression requirements will vary from firm to firm, based upon culture and objectives, and can take into consideration many different items other than production.

Qualities of a Partner

As mentioned, only select employees should be considered for ownership. Determining who those individuals should be can be challenging though. People generally fall into one of two mindsets: those that possess an employee mentality and those that possess an owner mentality. The following list will help you determine if someone displays the qualities of a potential owner or partner:

  • A willingness to devote a significant amount of time to the betterment of the firm
  • Willingness to participate in or lead an operating committee
  • In-depth knowledge of the firm and the industry
  • Demonstrated success within their individual practice/book
  • Value-added skill set with the ability to demonstrate thought leadership and technical competence
  • Strong communication and interpersonal skills
  • Willingness to mentor and train
  • Strong cultural fit
  • Clean compliance record

Partner Advancement

Once you have created the progression requirements, it might be helpful to engage a formal board to oversee the program. This is especially important for large, well-established firms. A Board of Advisors (“BOA”), in tandem with a Partner Committee, can monitor and manage the plan.

The BOA will determine how a Senior Associate and Partner can advance to the next level. A popular idea is yearly nominations for new Partner and Senior Partner acceptance. The Partner Committee will evaluate each nominee and present them first to the Senior Partners for a vote. For those new Partner and Senior Partner nominees who receive majority approval by the Senior Partners, they will then be presented to the BOA for final vote.

Expectations of a Senior Partner

Since being a Senior Partner is a privilege and not a right of tenure, a firm must ensure that the Senior Partners are at all times conducting themselves with the best interest of the firm in mind. It is suggested that the BOA create a set of guidelines should a Senior Partner not be performing his or her duties to the expected level. Also, an operating standard needs to be agreed upon should a Senior Partner be terminated from the firm for cause.

Conclusion

When properly designed and executed, a Partner Progression model can effectively and deliberately set the course for your firm to seamlessly transition to the next generation of ownership.

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