Partners... no more

This article looks at a headache for people tackling the management of private practice firms – that of wrestling with the problems caused when partners leave and move to another firm. This is a relatively recent development, as historically professionals who moved between firms were regarded as “suspect” – in other words, in some way unreliable or unstable. Especially when people became partners, they were expected to stay with that firm for the remainder of their professional life. Nowadays, it has become commonplace to read about senior people and indeed whole teams moving between firms. The knock-on effect of this can be considerable, including difficult internal relationships and client confusion.

Rather than rail against those who have caused the problem or blame other people for not preventing it, in my view it is important to tackle the situation constructively. This implies dealing with it quickly, remaining as objective as possible and focusing on the opportunities created rather than the problems caused.

Working at relationships

A partner may choose to move to another firm, without any prior direct discussion with his or her existing partners. I say “direct discussion” as there may have been a number of oblique incidences where he or she will have displayed unhappiness or frustration. As a result, this situation often comes as a surprise to management and other partners, with the result that people react emotionally, and may feel betrayed or let down.

It is important not to underestimate the effect this situation will have on the firm in general and morale in particular. Whilst there will be a lot of practical matters to be dealt with, the effect on working relationships must be considered. Staff will require a great deal of reassurance that the firm is not in financial trouble. Younger professionals may feel they have divided loyalties between those who are leaving and those remaining. As a result, partners must maintain a unified front and not undermine management in particular.

In addition to the emotional side, there will be a number of practical problems which have to be dealt with. These include:

• financial implications, including capital and work in progress values;
• workload management, including handing over of files, specialist knowledge and expertise;
• dealing with reallocation of responsibilities, both non-client and client; and
• letting clients know what is happening and allowing them to choose who to continue to instruct.

All of these have to be tackled in as positive a way as possible. Responding in this way will help to reassure other people within the firm that managers are in control of the situation, thus helping to bolster morale in general.

One point here is worthy of special mention. I appreciate that when a partner leaves there is likely to be a great deal of management time taken up with dealing with the details of accounts, work in progress values, agreeing client lists and the like. However, I continue to hear stories of a partner or team of people working six months’ notice. Regardless of how professionally people behave, such a situation inevitably puts a strain on working relations and can damage the firm financially. In my experience, three months is more than enough time to sort out handover details and maintains a positive momentum.

Can we prevent it?

So far we have considered the impact of dealing with the problems caused when partners (and their teams) leave. However, in my experience, it is possible on many occasions to prevent people leaving.

Usually they will have been showing signs of discontent or unrest for some time with a number of incidents flagging this up. To stop the rot, managers must pay attention to these “distress flares”, take the individuals aside and get to the bottom of what is really wrong. It may be a worry or frustration over current changes or dissatisfaction over other people’s attitudes. A sympathetic ear will help to alleviate some of these concerns, coupled with a determined effort to deal with their problems. People will then feel that managers have listened to them – and done something.

In some cases, individuals have decided to leave and no amount of persuasion will alter that. However, if managers find out in advance that this is their intention, it is much easier to prevent the shock and the bad feeling generated by being told about it after the event.

Grasp the nettle

First of all, the firm has to grasp the nettle and deal with what needs to be done. If at all possible, the situation must be dealt with as objectively as possible. Hopefully, a written partnership agreement sets out what needs to be done and by when. This should be adhered to – not picked over and debated as often happens when people feel resentful.

In the absence of a clear partnership agreement, in my experience, the situation can become messy and subjective. Discussions tend to become personal and are often vindictive. None of this is easy to manage as relationships deteriorate. In such a situation, it is essential to bring in an objective outsider. An accountant told me of one law firm he was acting for where the partners were refusing to sort out a financial settlement out of sheer spite. He offered to take a large fee to act as judicial factor, pointing out to them that this would be more than the retiring partner was asking for!

It is essential therefore to sort out the leaving package (financial, timing, work handover) pragmatically to minimise the time and energy involved and disruption caused. This package must include communication both internally to staff, and externally to clients and the marketplace. It is also important if at all possible to allow both sides to part on good terms. People tend to have long memories and if one side feels disadvantaged, this will re-emerge later on or in indirect ways.

Be positive, keep control

Continually communicating a positive message is essential. First of all, both staff and clients require reassurance that managers are in control of the situation, and clients in particular will be concerned about what is happening to the firm in general and their work in particular.

It is important not to underestimate the destabilising effect any change has on clients. Clients hate to be taken for granted and require active management to address their concerns. At the very time they want direct contact with their professional, they are often told “all of the partners are in a meeting”. As a result, they will perceive any alteration in service or personnel as a concern. Key clients in particular must be met with personally to discuss how their work will be handled in the future, often requiring the assurance that a senior partner rather than anyone more junior will be in overall charge.

Internal management will also become more difficult. As a result of the uncertainty caused by senior people leaving, the “doubting Thomases” in the firm will dig in their heels and start asking difficult questions, such as:

• How do you expect me to delegate when people keep leaving?
• How can you ask me to share my expertise and my clients?
• Why didn’t you see this coming?
• What will our clients think?

It is important therefore to be able to take control of the situation in a constructive way to deal with such negativity. One way to do this is to look at what opportunities such a change may bring.

Problems, or opportunities?

Given the amount of problems generated by senior people leaving, it is sometimes difficult to see that anything positive can be achieved. However, any change presents an opportunity to look at how the firm is structured and how work is managed. It is essential to do this before any decision is taken about replacing the partner or team. A number of questions need to be asked, for example:

• Do we need to review the financial structure of the firm? Should we look at the LLP option?
• Do we need to review our long term strategy? Is this a chance to introduce new services?
• Do we need to review our operational and/or department structure? Have we existing people who can take over more senior roles?
• Should we bring more technology into the way that type of work is done, to make it more profitable and/or less labour intensive?

Taking a pragmatic view, it may provide a real chance to change the way people work together and manage their workloads.
Managing the departure of partners and sometimes their teams is currently part of everyday management of our firms and should be seen as such. It is possible to maintain morale if people succeed in dealing with it as objectively as possible. Once subjectivity flares up it is difficult to defuse the situation without outside help.
As a result, it should be tackled openly and constructively, rather than regarded as some kind of betrayal or failure. It is important to deal with it quickly and pragmatically and maximise the opportunities it offers.