Best Practice: Law firm equity partnership/admission requirements
Asked and Answered
By John W. Olmstead, MBA, Ph.D, CMC
Q. We have a 16-attorney business law firm in Cleveland, Ohio – six equity partners and 10 associates. The equity partners have been discussing putting in place an associate attorney career advancement program and outlining equity partner admission requirements. Can you share your thoughts on what we should be considering and how we should get started?
A. You might want to consider developing a competency model. Rather than using a timeline – how long an associate has been with the firm – base career advancement to senior associate, non-equity partner, and equity partner upon achievement of competencies at various levels. These include:
- Core competencies and success factors – the traits required to be successful at your firm.
- Performance factors or criteria – the specific skills, traits, and behaviors that together describe the full behavioral dimensions of the core competency.
- Behavioral elements – the phrases that offer descriptions of distinct, observable behaviors that would be exhibited by lawyers who have mastered a performance factor.
- Levels or stages. For example, Level 1, Level 2, and Level 3. Level 3 might be the level required to be considered to be eligible for equity partner. Examples of core competencies might be legal excellence, client orientation, leadership, career commitment, etc. In addition to competencies typically required to be a Level 3 attorney, equity membership has additional requirements and obligations. For example:
1. Equity owners will be sharing in the risk and reward of ownership and will invest their time and capital in the firm. They will have a firm-first orientation and they will share the vision and core values of other equity owners in the firm.
2. Equity owners must add value to the firm. They must not just be good worker bees – they must pay for themselves, cover their cost and their share of the firm overhead, and generate enough work to keep other attorneys busy.
3. Equity owners must be client finders, minders, and grinders.
4. Equity owners must act like owners of small businesses.
5. Equity owners must contribute to management and marketing of the firm.
6. Equity owners must mentor younger attorneys.
7. Equity owners must follow firm policies, system, and procedures – no lone rangers.
8. Equity owners should contribute capital and sign for the office lease, firm credit line, and share in other financial obligations of the firm.
9. Finally, future equity owners must be good marriage partners considering the other equity partners in the firm.
John W. Olmstead, MBA, Ph.D, CMC, (www.olmsteadassoc.com) is a past chair and member of the ISBA Standing Committee on Law Office Management and Economics and author of The Lawyers Guide to Succession Planning published by the ABA. For more information on law office management please direct questions to the ISBA listserver, which John and other committee members review, or view archived copies of The Bottom Line Newsletters. Contact John at email@example.com.