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Problems in the partnership

1 September 99

The problems that can undermine partnerships and ways the managing partner can sort things out quietly and efficiently

by Brian Allingham

He who takes a partner takes a master

(French proverb)

All partnerships have problems. It’s just that some have more problems than others. Even the partnerships that don’t have problems may be loitering in the Comfort Zone, which can be a very dangerous place to be.

I must make it clear that this article is not about problems with the legal practice, the mundane things such as a failure to attract new clients (or to retain old ones), a lack of profitability, trouble in retaining staff and so on – the normal management problems. We all suffer from these diseases at some time or another. This article is about the problems which arise between partners or groups of partners in their relationships with each other.

The big difference with these partnership problems is that they tend not to be recognised at all, or to be mis-diagnosed or swept under the senior partner’s carpet, to moulder and fester, until the poison seeps through the whole office. “What’s that funny smell?” a visitor to the office will ask one day, only to realise that the smell is now so familiar that no-one notices it any more.

The problems can take many forms, such as a failure to agree on a proper partnership agreement, an apparently under-performing partner (who, nevertheless, draws the same share of profits as the other partners), or a partner who refuses to get involved in partnership matters. This “sleeping partner” is perhaps the most common of the problem partners. He is regularly late for partnership meetings, or has a perfectly valid reason for not attending at all, but is happy to complain about the effects of the decisions taken in his absence.

And quiet sleep and a sweet dream when the long trick’s over

(Masefield)

It is easy to repeat (as I often do, in workshops and in visits to law firms) that one of a partner’s roles is to take part in the management of the firm. True though that may be, it will not influence the partner who simply has no taste for management, and believes that it’s all a waste of time anyway, which is simply interfering with his perfectly reasonable wish to get on with the job. This is where the managing partner comes into play (and most firms have one or more clearly identifiable managing partners, even if they are not named as such on the headed paper). The role of the managing partner is to explain to the sleeping partner what he is missing by failing to attend partnership meetings; and here I am not referring to the high class biscuits, the filtered coffee, or the après-meeting sherry. A partner will be less likely to attend the meeting if he does not know what is going to take place. Every meeting should have an agenda, circulated beforehand, with subjects which will appeal to all concerned (so far as possible) and warnings of important decisions which are going to be made.

And if there is a regular non-attender, the managing partner should have a quiet work before the agenda is drawn up to find out what he would like to see on the agenda, followed by another quiet word the day before the meeting to make sure that his diary is clear for the meeting. Quiet (and, preferably, oblique) words beforehand will always be more effective than direct (and, frequently, loud) reproaches afterwards.

However, the sleeping partner is not nearly as much of a threat to the happiness of the partnership family as the under-performing partner. This creature, after all, is a danger to the take-home swag of all the other partners. It is clear (to everyone else, if not always to himself) that he is lazing along, putting through the minimum of work for the smallest of efforts, while insisting on the same scoop out of the pot at the end of the year as everyone else.

(Drink) provokes the desire, but it takes away the performance

(Shakespeare)

But, hold on a minute. Is the under-performance really so clear-cut? Very few firms appear to have really good figures which make clear what each partner (and his assistants, or in smaller firms, his share of an assistant) creates in the way of fees. Many firms do have the 1980s computer print-outs, with columns of figures, relating fees to the references which appear on the fee-notes, but these figures are always subject to dispute. “I did more than half the work on the Dingalong case, but I get no credit in the print-out for any part of the enormous fee” is a common refrain, with variations. “My assistant, Jenny, would have twice the level of fees against her name if you didn’t keep pinching her services to help you out with the executry work you keep getting behind with” is another, less grammatical, one.

The print-outs look very fine indeed, but, even when anyone reads them, they rarely produce clear-cut evidence that one particular partner is performing less well than the others. And, even where the evidence does appear to be better than “not proven”, and the jury takes more than half-an-hour to reach its decision, are there not then mitigating factors to be taken into account, M’Lud? Who, for example, was it who spent so much time working on the advertising campaign? And who has been involved for the last two years in organising the office move, the new computers, the disastrous filing system? Who has been training the trainees?

This is not to suggest that the under-performer, like the Yeti, does not exist. He does indeed, and there are footprints in the profit and loss account to prove it. But no-one under-performs deliberately, I believe (relying on my kindly view of human nature). It is necessary to look behind the poor performance to find out what the real problem may be. Is there matrimonial disharmony in the background? Is the partner struggling to make profitable a service which cannot be turned away from the black hole into which it is plunging? Poor performance, like spots or a shaking hand, is usually a symptom of something else.

Once again the managing partner should be enquiring discreetly into the nature of the real problem. There is no known cure for serious marriage problems, but perhaps a holiday is needed to give the couple time to sort out the problem. There are cures for unprofitable services, but these require time, effort and, perhaps, investment of capital. The question may be whether the service should be discontinued and the partner employed, note profitably, elsewhere. The worst thing you can do, of course, is to allow the problem to continue and, inevitably, worsen to the point where it becomes a crisis. Early intervention is better than having to mop up the mess afterwards.

If under-performance is often a symptom of some background difficulty, so is the inability of many firms to prepare a proper partnership agreement. The excuses for the lack of this are numerous and various. “We don’t really need one – we all know what the position is” being perhaps the most common. Oh really? What lawyer would encourage two of his clients to set up a joint business venture (or even buy a house together, if unmarried) without an agreement setting out the bare minimum requirements of the mutual contract? We all know that a partnership agreement is essential. So, once again, if there is not agreement, it is important to find out why this is so.

…..he’s a problem must puzzle the devil

(Burns)

Perhaps the real reason is that one influential partner (often the senior partner, who may even have accepted the responsibility for drafting the thing) does not want to commit himself to an agreement which may, at a later date, not quite suit his purposes. As older ladies (and, no doubt, older men, but less so in my experience) are so often unwilling to discuss wills, because this raises the unwelcome subject of death, so older partners may be unwilling even to consider a subject which necessarily involves the discussion of the question of retirement. Senior partners may be afraid that their junior partners are going to be less than generous to them on their departure; junior partners may be afraid that the senior partner may refuse to leave the firm, unless his pockets are suitably weighted with gold first.

Both may well be wrong, but both may be afraid to find out the truth of the matter. I prefer (going against popular belief and considerable evidence) to believe that most lawyers are fair-minded people who want no more than their fair due from their partners. If I am correct, the greatest source of fear in the approach to the partnership agreement is probably fear itself. Be brave – tackle the monster in its cave and find out what the real problem is. Because the problem exists, whether or not you are prepared to discuss it; and ignoring it won’t make it go away.

 Communication breakdown; it’s always the same

(Led Zeppelin)

In all of these cases the source of the poison is really the failure of partners to communicate properly with each other. And perhaps this is the most common of partnership problems. I remember a firm where the partners met for proper meetings once a year, whether they needed it or not. How much better off was the firm where the partners met, informally, on a daily basis for tea and biscuits. The pace of life has increased beyond the scope of daily get-togethers for most of us, and, anyway, many partners are separated from their workmates by several lang Scottish Miles, making regular meetings difficult to arrange.

However, there is no half-decent excuse for not having regular partnership meetings, with proper agendas and full-ish minutes, with, between times, regular communication by e-mail, fax, telephone or whatever hoojimmy has been invented this week to complicate the process of communication.

Failing to communicate can lead to the loss of a partner you will regret losing, the increase of resentment at the unprofitability of a service (without any constructive attempt to solve the problem), or even, in a worst case scenario, the dissolution of the partnership. It will certainly lead to the unhealthy stench under the carpet getting worse, until no-one, including your clients, can bear it any longer. And, when that happens, it may be too late to call in the plumber.


Brian Allingham is the Managing Partner of Allingham & Co, Edinburgh, and a consultant to law firms throughout Scotland. His book on Managing the Professional Partnership will be published by T & T Clark later this year.