Law Firm “refugees”

The growing number of spin offs set up by top professionals who decide to leave a large law firm to create their own boutique practice is a wake-up call for the legal profession.

There is a very funny scene in Annie Hall where Alvy is with Annie on a balcony, enjoying a glass of wine. They are having an apparently trivial conversation about photography, but the director makes us privy to what they are really thinking in the form of subtitles, thereby conveying their mental conversation, which is simpler and more authentic.

I think we should invent a similar system to clear up many some of the situations of uncertainty, insecurity, and misunderstanding that occur in companies, and which, among other negative effects, make good professionals leave the firm.  I am talking about two realities that are happening increasingly often, the spin offs of young partners or senior lawyers who take all their technical expertise and commercial contacts with them, or when older partners leave, with at least a decade of intense working life ahead of them. This article is going to focus on the first of these two groups.

The splits or exits of lawyers who break away from the law firm where they “grew up” to work for a new one are a reality and cannot be avoided in our law markets. In Spain, in only five years, at least 12 partners who headed their department have launched their own firms (11 of them boutique firms). In Chile, two of the Top 20 law firms were founded in the last 8 years by former partners of larger firms.

We are going to focus on the reasons for the more painful exits, that is to say those led by a partner who was managing a specialized area. In line with the McClelland’s theory on entrepreneurship, we could think that they were driven by the need to initiate their own project and head it successfully in an independent setting.  Nevertheless, if we look deeper into politically correct statements, we can see that they are bold moves that form part of a search of shelter in a new territory because the old one is no longer safe or pleasant. These modern refugees, as Russell Knight calls them, must have their reasons, which could be any of the following:

• They want to escape from internal red tape which they feel forces them onto the same career path as their associates, limiting possibilities of contacts with clients or cramping their independence and flexibility when it comes to accepting cases or clients, or managing their time.
• They want to get away from conflicts of interest that prevent them from rendering their services to the type of client that is interesting for a lawyer but not necessary from a structural point of view, in the case of litigation they make it difficult to take legal actions against certain economic agents.
• They don’t want structural pressures, such as being required to carry out commercial activities, reaching certain levels of billing, or having to do internal administration.
• They do not feel that their work is recognized and think that their qualifications and experience are not compensated in terms of position, responsibilities, rights and/or remuneration.

From a structural point of view, how can you manage these exits in a positive way? Without forgetting the fact that there are exits that can do serious harm – in terms of reputation, clients and internal motivation – there are certain attitudes that we can adopt to limit the damage:

1. Put your pride to one side. Sometimes egos can be very expensive things to have and can also be a corporate cost. This is the case when the quality of a law firm is seriously compromised by the exit of a great professional team.
2. Identify possible areas of collaboration with the new project. It will be easier if we are talking about boutique firms. It can be an option for subjects that require specializations, in which there are conflicts of interest or they are especially sensitive and could be handled better if outsourced to parties that are known to be safe.
3. Examine actions to take with ongoing cases. Clients have the last word and it is only logical that they want to end their cases with the same lawyer they started with. This does not necessarily mean losing the client. Tackling the situation in a mature fashion will send positive signals to clients who will identify with decisions that are taken to benefit them.
4. Agree on how the exit is announced to clients, internal teams and the media. Again, how this is handled will be a sign of sensibility, and should not be tainted by criticism and gossip.
5. Talk immediately with the rest of the department team. You have invested time and resources in their training and it would be desirable to keep them in the firm.
6. If they are professionals that represent the philosophy of the firm, try to keep in contact with them. This could be achieved through an alumni program or by linking them to corporate social responsibility actions.
7. Monitor reasons for leaving. Ask honest questions and convey the conclusions to the management team, given that they can point to a weakening of the firm’s culture or internal communication. Or it could be due, quite simply, to a lack of communication, meaning that some of the concerns could probably have been resolved without their leaving the firm.

They are not easy situations to deal with. They feel like betrayals but really they are a choice of professional lifestyles. Perhaps the availability of subtitles indicating what is really going on in their minds would make these situations easier to handle.

Marisa Méndez. Professor. IE Business School