The Partnership Pyramid: Is Your Geometric Shape in Shape?

Having worked for both law and accounting firms, I know one thing for sure – accountants have a better life. Though they must navigate a partnership structure, their firms operate more like businesses and eventual elevation to partner usually means less paper work and more fun. This is largely due to the broad based pyramid structure accounting firms have leveraged.

A Sound Pyramid

A pyramid stands strong because the base is wide and holds up the top layers of the structure. The accounting firm partner to non-partner fee earner can be as high as 1 to 15. Law firm ratios vary widely but are often much less broad. This results in a completely different approach to client service and, ultimately, creates lifestyle challenges for law partners who are needing to bill as much today as their first few years with the firm.

Various compensation models can be found in both types of these professional services firms but accounting firms are more likely to operate in a lockstep, team sharing model. Law firms often focus on client origination and fees collected. The team sharing model opens firms up to more business development support, innovation in service delivery methods, and, most importantly, the wide-based pyramid.

The Top Heavy Triangle

In the last thirty years, the law firm pyramid has become an upside down triangle. Law firms let associate salaries get out of control and are now paying the price. (Clients are also paying the price and are looking for alternatives!) Because their young workforce is so expensive, the non-partner or income partner ranks have not grown to keep pace with incoming work. Law firms remain top heavy and senior law partners are often still in the weeds to ensure projects are completed successfully. Accounting firm partners rely heavily on much less expensive staff and devote their time to rainmaking, client satisfaction, and management.

Re-engineer Your Pyramid

It may be time to look at the budget and move money spent on real estate, public relations, or fee write-offs and move those funds to management experts who can create models for hiring, succession, and client service teams that only leverage senior partners in an advisory capacity. A fundamental blind spot for law firms may be that lawyers only look to lawyers for solutions and routinely fail to include non-lawyer experts in meaningful discussions that could uncover challenges, honestly examine the status quo, and build a better, stronger pyramid. Accounting firms have developed a more open culture. Global accounting and advisory firms are often refreshing infrastructure and, as business people, they are able to value roles and responsibilities and educational backgrounds that are dissimilar to their own.