Profit is sweet, even if it comes from deception. — Sophocles
This is the second in a three part series on the topic of Profits Per Partner, see Part 1 here.
The evolution of the US legal profession was measured and steady for more than 200 years — from 1776 to 1985. Firms grew around collegiality, a sense of partnership, the highest ethical standards, and quality work for clients.
Things were simpler then. The profession was a respected one in which hard working lawyers could make a good living helping businesses and individuals.
And then came 1985. Few could have anticipated the impact a simple magazine ranking would have on the profession.
It all started a few years earlier, when Steve Brill, a Yale law graduate founded the magazine The American Lawyer in 1979. Meeting a growing need in the marketplace, the magazine focused significant attention on the business side of the profession, with Brill frequently publishing articles on the levels of income of certain high earners. This new combination of business reporting and the growing income levels across the industry generated significant interest.
Brill took, what for him was, a brilliant next step – and the seminal list of America’s largest law firms was created. The list highlighted number of lawyers, estimates of revenue, profit, and yes — the now famous Profits Per Partner . The AMLAW 50 was born and would later become the AMLAW 100 and then AMLAW 200.
The profession has never been the same.
For the first time in the history of the American legal profession, law firms were ranked — by size, revenue and profits per partner. And law firm leaders had a national scoreboard.
The game was on. And with it came a competitive new focus on anything and everything that impacted a firm’s performance in a way that elevated position on the list.
Relative to history the change occurred almost overnight. To a significant degree — and especially when it came to a growing pursuit of lateral partners — a firm’s measure of success became its AMLAW ranking, and that seductive PPP number.
In the early days I don’t recall there ever being a discussion of the relevance of the PPP metric in assessing performance and how a law firm was progressing. I don’t recall any dialogue around the potential downsides associated with making fundamental decisions based on implications on AMLAW rank.
What I believe to be some of the downsides — the ultimate effect on people, clients and the profession — are the subject of the next post…Part 3 in this series, coming next week.
Is the PPP metric at the pinnacle of your firm’s success criteria? If so has it lead to a better, happier more competent law firm?