US, UK firms and the modifying of lockstep: a response (Guest Post)

I wanted to respond to the Lawyer Watch note about profit enhancement in firms and its impact on ethical behaviour. Because I do not want to be seen to be betraying confidences this is anonymous, but I spent long periods as a partner in each of what one might call a top 10 London commercial firm and in a major US based international firm. The former had a lockstep structure, so each year a partner received a bigger profit share until the plateau was reached. And yes, we did lose people to more profitable firms. The latter had a ‘modified lockstep’ so that only a reasonably small group of partners were given the largest share of profits. This still meant that a partner involved in Labor Law was capable of earning quite large sums of money, but not as much as a partner who could bring in large clients involved in cutting-edge transactions or litigation, contributing considerable amounts to the overall profits. Partners moved elsewhere, but rarely for more money. My English friends asked me how I liked the US model compared to strict lockstep, and my response was that provided that partners had a high degree of confidence in the profit allocation process, which we did, I preferred the US style arrangement where effort and outcome were properly rewarded. I also felt that my firm (at least whilst I was there) treated partners who were having bad patches much better than the English lock step firms who appear to think that a partner of 52 is at the end of his or her useful life and needs to be pushed out.

Both firms were admirable corporate citizens, but my US firm was by any measure outstanding. In addition to normally exceeding the target of 2% of overall hours being devoted to pro bono work, the firm sponsored lawyers outside the firm with enough money to live whilst they provided legal advice and, often, litigation support, for all sorts of socially responsible not-for-profits as they tackled the many problems of US society. And there was one programme that I was particularly proud of; the firm sent a large number of lawyers with a wide ethnic mix into a college with an overwhelmingly non-white student base to help teach and support students, and to make the students realise that they could aspire to do whatever they wanted.

My US partners would have said, not that these activities held back profits, but that the profits made allowed the firm to do so much for the community.

And I would say something similar about ethical behaviour. The pursuit of profit does not need to be unethical. Any sensible partner in a legal firm knows that the good reputation of the firm is the biggest source of future success. Cutting ethical corners in one year can lead to loss of income in future years. It can, I think, be partly attributed to the extremely litigious nature of the US (by most standards) but I found my US colleagues far more aware of ethical requirements than what I see in London firms (not all of them of course). My US firm consistently turned work down, some of it potentially extremely lucrative, over ethical concerns.

When lawyers decide on their careers, they make choices. I have nothing but admiration for those who chose to work in law centres, or in charities or otherwise to devote themselves to helping those less well off. But I know that I would be bad at that, and it turned out that I was reasonable at commercial law. Once someone becomes a commercial lawyer it is reasonable that some degree of profit maximisation is involved, and there is no inexorable link between that and poor behaviour. ‘Doing good by doing well’ is not a fantasy, at least in the world of big law.

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About Richard Moorhead

Director of the Centre for Ethics and Law and Professor of Law and Professional Ethics at the Faculty of Laws, University College London with an interest in teaching and research on the legal ethics, the professions, legal aid, access to justice and the courts.
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