Remaking news of the week: Equity profit-sharing

Today’s Remaking the news of the week post is on the old chestnut and increasingly thorny topic of equity profit-sharing.

Everyone agrees the traditional partnership structure of law firms has great strengths and challenging weakness. Collegiality, cohesion, custodianship, and entrepreneurial drive are one side of the coin. Flip it and inertia, lack of agility, risk aversion, and lack of a balance sheet loom large. 

A stack of news

On May 16, John Gapper one of the great writers in the Financial Times published Law firm partnerships are losing their lustre. Mr Gapper concluded ‘True legal partnerships that develop all of their employees are built more sturdily. They were designed to work – and to keep on working – across generations. But the pyramids are not being built anymore.‘ And with that, I would add, there goes profit-generating leverage.

The week before New Yorker and well-known blogger Bruce MacEwen wrote The Death of Lockstep?; Bruce’s post is a rich source of current views on the subject.   

And last Tuesday I updated an earlier post of mine: Why the economics of free agency should worry partners, including Ed Reeser’s power comments.

Why the image and caption?

The obvious, this episode is a digest of news. And stack is a double entendre referring to the old – smokestacks – and the new – tech stacks.

Last week

BigLaw firms in London incubating lawtech startups   

More on equity profit-sharing

Ed Reeser’s classic: ‘Equity profit shares can bring more tears than working with an onion‘