After 25 years symbiotically-bonded to the legal profession, I’m afraid I groan inwardly when I hear talk of the latest revelations of law firm PEP (Profits Per Equity Partner – as if that TLA really needs spelling out these days to anyone in law).
We are, of course, approaching the annual Festival of Pants-Down, where everyone in the legal profession finds out what everyone else is claiming what they’re earning, via not just one but three legal market publications here in the UK.
A quarter of a century spent listening to lawyers obsess – or pretend not to be obsessing – about what everyone else is supposed to be earning in a given year is enough to send anyone demented, and I’m afraid I may finally have cracked.
If you are thick enough to calibrate your sense of self-worth around your perception of what the Jones’s are up to over the garden fence, then you really need to take a look in the mirror and ask yourself what your life is all about.
And much as many lawyers might protest they don’t really care, or don’t really look at the stated figures, or whatever, we all know that’s a fetid pile of dingo’s kidneys, as the dear-departed Douglas Adams might have said.
But then BigLaw lawyers and the cash they earn from their – frankly – crazy work schedules have long-since detached from the reality of most of us mere mortals.
I recall a conversation with a friend – happy with his life but on average earnings – about a dinner he’d had one evening with husband and wife law firm partners whose monthly disposable income – disposable mind you, disposable, let’s keep that word front-of-mind for a minute – was £90,000. Yes, £90,000 a month. After tax and all the bills they had to pay. Over twenty grand a week to play with.
And yet, they spent the whole evening at one of London’s finest restaurants arguing, bickering, bitching, back-biting and whining to my friend and his wife after one of them had gotten bored on Friday afternoon and decided to do a bit of online shopping. I say “a bit”, but how exactly one spends £40,000 in an afternoon online is a little above my social pay-grade.
This kind of behaviour, and crass discussion in front of those less ‘blessed’, is why Trump is in the White House and the UK is about to commit social and economic suicide, but I digress.
Lawyers’ obsession with PEP dates back to the time august legal monthly Legal Business – following in the footsteps of its then-dance partner The American Lawyer – decided to start publishing the results of exhaustive anonymous research among law firm partners about how much they earned, mystifying pretty much everyone, especially the accountants, who have never had to face the same scrutiny.
And boy did it work wonders. Lawyers were fascinated. Beyond fascinated.
Weekly publications The Lawyer and then Legal Week duly followed suit, each bringing new metrics, new angles, new nuances to the party. And hasn’t it been fun? It certainly was to research, and the effect it had on the legal market has been game-changing. PEP – in particular – has become the thing to aim for, the benchmark, the Blue Riband, raising it annually the sine qua non of managing partner survival. Nudging it above the £300k/£400k/£500k mark became the legal market equivalent of pricing things at £29.99, and in the upper echelons, £1.5m has become the new Olympus.
Of course, we all know PEP is a lie. The average (“public”) figure is manipulated, often bears little relationship to partner drawings and can be wilfully misleading as to the financial health of the organisation. In fairness to the press, they have, variously, tried to address this with the addition of the new metrics and exhortations to look beyond the headlines (eg the Lawyer and Earnings Per Partner), but the PEP genie (efreet, more like) is out of the bottle, and it ain’t going back in.
As useful as it has been to law firm chief execs, managing partners and finance directors to be able to set targets relative to their perceived competition, and to learn what other firms are doing, I have concerns about the effects of this annual circus on the psychology of lawyers and therefore on the psychology – and personality – of the profession itself.
And it is an important issue, beyond the profession. Lawyers, lest we not forget, rule the world. The US – by any measure still the only world superpower – is governed by a Congress dominated by lawyers, and recent presidents (Obama, Clinton) have been lawyers. Here in the UK, the two most successful prime ministers in modern times (Thatcher, Blair) have been lawyers.
For me, the real global struggle has never been Right vs Left, Capitalism vs Communism, but Law vs Unlaw (Chaos, if you will, though being a lifelong Dungeons & Dragons devotee, that has other connotations…)
Law must win that struggle, and it’s therefore vitally important who lawyers are and what they think of themselves.
If the essential measure of self-worth for the people who are really running the world is the amount of money they are making compared to their peers, then we may be in trouble.
And, let us not forget, what lawyers make is vastly inferior to the amount the truly rich are coining, compounding still further the lawyer’s sense of angst about burning their entire life away in order to “compete internationally” or whatever they have to tell themselves to justify some of the most aberrant working patterns on the planet (go on, deny it if you will…), and reinforcing the subservient mindset which apparently compels the delivery of such acrobatic levels of service in the first place.
It’s not necessary. Not. Necessary. Or, as one partner friend once related: “when one of my clients told me my team would need to work on Christmas Day in order to get the deal started as soon as possible, I told him to f*** off.”
But let’s not get bogged down comparing lawyers with other businesspeople when we have enough on our hands comparing lawyers with lawyers.
In hermetically-sealed markets, the wars for talent are always civil wars. Brother on Brother. Blues vs Grays. You dig me yet?
I love this Henry Ford quotation: “If money is your hope for independence you will never have it. The only real security that a man will have in this world is a reserve of knowledge, experience, and ability.”
The reason I love it is because it illustrates exactly the problem with the idolatry of PEP, and exactly the problem with the current direction of travel of the legal profession.
When I was a recruiter I acted for plenty of partners earning north of Generous Lottery Win every year who were miserable as hell because they had allowed themselves to become enslaved to PEP and, when their gravy train hit the buffers, found that they did not possess enough knowledge, experience or ability to continue earning the amount of money their lifestyle now demanded. #firstworldproblems #heartbleeds etc
The Magic Circle firms now engaged in a desperate battle to win a war they can’t win (see my blogs, passim) are busy bending, shaping, manipulating their financial structures in order to produce a PEP figure they have determined is a market necessity, fundamental to their ability to recruit and retain the best talent and…to do what, exactly? Are they happier as a result? Do they even think in those terms?
Happy firms – few and far between – are those firms who understand that earning healthy profit should be a function of Ford’s security triumvirate; happy lawyers are those who understand that earnings may ebb and flow from year to year, but that enriching the fundamentals – both for themselves and for the firm – is the most important thing in the long run.
As I look back over 25 years glued to the UK legal profession, I have seen PEP rise to dizzying heights, yet the happiness, contentment, fulfilment and sense of personal enrichment of lawyers, certainly in my circle, has not grown in tandem; in many cases, the reverse has occurred.
Over that time, some nice firms have fallen by the wayside, usually sliding into a gentle but ultimately non-enriching merger, and the nice partners have gone on being nice, usually disappearing from view quite quickly, caught in the manic undertow of the annual PEP frenzy.
The really nasty firms, firms whose partners would break down crying in meetings with me, who would ring me with tales of despicable behaviour on the part of other partners, tales of callous, mean-spirited, vile, arrogant and spiteful individuals, have gone out of business ignominiously, for the most part, collapsing like slabs of rotting meat sloughing off the side of a dead horse. Good riddance, though I wonder whether their inherent toxicity has travelled to those firms ‘fortunate’ enough to pick from these carcasses.
The PEP obsession did not create nasty firms, but whereas most of the truly unreconstructed firms have been swept aside by the progressive leavening of society as a whole, PEP has revealed the inheritors of the nasty mantle, who are nasty in a colder, harder yet still fundamentally antisocial way.
The PEP totem is planted in the ground of daily billing targets, illuminated by the light of screensavers which warn fee-earners not to leave the office until they have recorded ‘enough’ hours. It surrounds itself with the pastel shields of diversity committees and health advisors, rebadges HR as ‘talent management’ and hires workspace-design consultants and installs pink noise generators, but the truth seeps out here and there: sixteen weeks without a day off (including weekends); equity partners sacked on the first day of sabbatical; women logging on to the firm system the day after giving birth to deal with an “urgent” client matter; every deal commencement meeting in one Projects department fixed for Saturday morning, despite protestations from two mothers in the team; endless expensive holidays cancelled at the last minute, anniversaries, birthdays and weddings missed, sacrificed on the altar of ‘client service’. And on. And on. And on.
Yeah, you can punt the “oh well, it’s their choice” argument at me, and you’d be right. But that doesn’t answer the main point; whether the world’s ruling clique is at the behest of a self-created, self-perpetuating, self-flagellating monster, and what might be the consequences for individuals and, indeed, society in general, of such a pernicious obsession.
I’ve spent 25 years watching it, listening, thinking and I still don’t have any answers, only questions.
Never having toked from the PEP-crackpipe myself, I can’t say for sure whether any of this is right, but reflecting on it after 25 years of observation, for sure it’s not made me any happier either.