How to Change Everything

More from the redoubtable FT about what may transpire from marketplace forces released after (the widely expected) adoption of the Clementi Commission recommendations in the UK.  (If you don't know what the Clementi Commission is, as one of my law professors would have scolded with juicy delight, "you haven't been paying attention," but I choose to view life through a mellower lens, so take a look here.)

We start from the premise that the prospect of injecting public capital into a law firm—or even admitting non-lawyers to the ranks of equity ownership in a private firm—is anathema to a large swath of the profession.  Indeed, as Sir David himself puts it, "Certain lawyers dislike being described as part of an industry. They see a conflict between lawyers as professionals and lawyers as business people." 

Rare is the expressive pith with which this captures much of what this blog aspires to be about.  Are the "profession" and the "business" strange bedfellows? I would answer with more than a resounding, "No;" I would answer that the virtues of each enhance the strengths of the other.

But let's clarify what engages our attention here:  Not that the UK equivalent of the American Automobile Association, or the supermarket chain Tesco, are making noises about starting up their own branded law firms to serve the consumer masses.  Rather, we're interested in the implications for the Magic Circle and blue-chip firms.

Far and away the most important, I believe, will be the pressure—indeed, the inevitability—of allowing and inviting professional managers in firms to become equity participants.  The implication is clear: Participating pari passu in ownership with a firm's senior lawyers "puts you in a different place mentally," as one such aspiring manager nicely puts it.

That running a major law firm today is largely like running any other big company can no longer be denied.  And senior management's expectations about the availability of the full arsenal of compensation tools, including equity, should be no different.  When this happens, it will have profound cascading effects analogous to the opening up of the market for lateral partners in the 1980's—which, it is not too much to say, changed everything.