Navigating Generational Friction in Law Firms 

With Kit Murphy

In May of 2023, I (Mike) tried to raise awareness of the challenges of navigating generational changes by focusing on the impact on partner compensation systems – Does Your Partner Compensation System Harbor a Generational Timebomb? Since that time, we have seen several firms go through highly disruptive and challenging partner comp seasons due to differing generational perspectives on the distribution of profits…even though each had more than enough money to go around. We continue to see these generational pressures grow and seep into many other areas of the business of law – all with related strains, misunderstandings, hurt feelings, and sometimes real damage to partnership culture, exacerbated by related departures.  If these pressure points are allowed to grow in magnitude and volume without sufficient forethought and planning, dangerous yet avoidable flare-ups will occur in the future.  To help navigate through these rapidly developing friction-points, we offer some examples to identify real-life scenarios to help you reach safe decisions.

Notes

• We are neither organizational psychologists nor generational experts by training.  We are, however, keen observers of the industry who are trained to identify, understand, and help resolve conflict within the business operations of law firms.  Our experiences here are the basis for this piece.
• We also note that, within the following piece, we use generational classifications as a means for representing how everyone in any given group thinks and acts.  Of course, this isn’t the case for everyone in each cohort, but we think it is a fair framework for a broader discussion.
• I am a Boomer and Kit is most likely a Gen X’er, although I won’t ask her what her age is.  Some readers may interpret the following piece as a defense of the younger generations because we are not defending our generations.  To be clear, the only institutions we are trying to defend are each of your law firms.

Exacerbating generational friction is an inability or unwillingness to communicate based on a lack of understanding of, or respect for, the other party’s hard-wired, age-linked perspectives.  Too often we hear some variation of the statement, “I just don’t understand what these younger lawyers want or expect” from Boomers or early Gen-Xers.  We link this perspective, in strong part, to the fact that many first-generation and/or Boomer-heavy partnerships have succeeded quite nicely and grown via a culture and governance systems (including compensation) based upon three foundational statements –

• “Be patient.”
• “Pay your dues.”
• “Trust us.”

Furthermore, and in defense of these statements by the Partners using them, we often hear, “The results have been great thus far, so why would we change anything now?”  (So, too, said Kodak, Blockbuster, Borders, Blackberry, etc.).  Meanwhile, the Boomers’ reliance on, and confidence in, patience and trust have been replaced within the younger generations by immediacy and skepticism…two characteristics that are at complete odds with these three foundational tenets.  The resulting feelings by the Boomers that “these young people don’t trust us” is as painfully received as the feelings by the younger generations that “they won’t listen to us…we don’t have a voice”.  Trust is eroding all around.

We observe the very nature and foundation of trust shifting at a deliberate pace.  Based on conversations with younger lawyers, we see trust and confidence evolving through three stages – 

• Absolute trust/blind faith (that the Boomers thrived under) – Many have moved on from this position to the next.
• Trust, but verify – This is where many are right now, as evidenced by requests for transparency, structure, data, and documented rules to ensure that all parties are being treated fairly and equally.  For the Boomers, these requests can be a painful questioning of their emotional status quo.  For the younger generations, these feel like very reasonable, simple, and innocent asks.
• Verify to trust – This is where we are likely headed, where the elements listed in the prior point will be predicates to forming any semblance of trust.  Structural elements and systems must be in place as the foundation upon which trust can be built.

Remnants of the old “trust us” model are now being scrutinized far beyond the Partner Compensation System.  Additional areas of potential impact, where a “we’ve always done it this way” approach may lead to serious generational friction with ramifications, include –

• Firm Leadership Selection & Client Relationship Transitions – Is there an inviolate generational pecking-order or can generations be skipped to get a younger Partner in place, if appropriate?
• Billing rates – Must rates (which influence compensation) be generally aligned with age, again for pecking-order/ego reasons?  Can a younger Partner be at the top of the rate sheet?
• Lateral Recruiting – Is “bring your practice and clients over and trust us” a key part of your pitch to younger laterals with portable business?  Your competitors hope so.
• Mentoring & Retention – Is your key advancement message focused on “work harder and do what we ask”?  Do you share matter and client information on a need-to-know basis and expect everyone to stay in their lanes, or can younger team members see the whole picture?
• Definition of “Career Success” – Do you tell all young lawyers, with pride, that you view each of them as a future Equity Partner?  Is there only one way to “succeed” at your firm even though an increasing number of young lawyers don’t seek this ultimate outcome?
• New Business Generation Credit – Do you have to be an equity partner to bring in business and get credit?  While an Equity Partner needs to be involved to protect the firm’s interests and risks, does this Partner keep the younger lawyer involved and then give credit back when this lawyer is admitted to the Equity Partnership…or is the client lost to the young lawyer?
• Strategic Planning – Is your Strategic Planning Committee populated largely by big-book Partners who are set in their ways and are highly inclined to act parochially to defend what they have? 
• Innovation – Do “new” ideas come from an echo-chamber of firm elders?  Is there a real conduit across generations to drive innovative thinking?
• Needed Long Term Investments – Are investments needed for the long-term health of the firm (e.g., AI) ignored or minimized by senior decision-makers who are near retirement and are more focused on short-term profitability?
• Data Access and Transparency – These two elements often go hand-in-hand.  Is data collected in a trusted, objective manner based on rules, or can strange changes (e.g., claims of origination credit or write-offs) occur without explanation or even notification?
• Associate Productivity – Is your firm wedded to the old annual hours-based bonus program for Associates (who are largely dependent upon Partners for work), under which a slow first quarter renders a bonus at the end of the year impossible, or can you implement a different approach (such as quarterly bonus program, as an example) to boost productivity?
• Reputation Management – The pace of social media is lightning fast and news of old-school approaches can move rapidly across peer groups.  Even if repaired, the pace of the secondary “good” news lags far behind the more interesting, click-worthy initial negative news.

By creating this list, it is not our intention to present each scenario in an either/or, winner/loser, right/wrong, one-dimensional light.  It is, however, our intention to demonstrate the importance of threading the (planning) needle for each scenario in a manner that promotes involvement, transparency, receptiveness and fairness to all as younger generations increasingly populate decision-making seats.  Absent a smooth transition, we will see many decision-making philosophies pivot intentionally and dramatically away from the 3 core statements, above, and into a new and different direction.  Such shifts rarely go well so let’s take a step back and create deliberate evolutionary processes, rather than risking major disruptive events in the future that will shatter the trust from significant cohorts within any firm. 

To assist, we encourage you to adopt some variation of the following workplan –

1. Create Generational Knowledge  – Proactively educate everyone on generational differences and how to communicate effectively across generational lines.  This will elicit eye-rolls and groans from some but it is really important for each cohort to understand how their well-intended messages and gestures can be interpreted in a contrary manner.   If you have already done this, evaluate the effectiveness and do it again if needed.  Involve all groups in the discussions.
2. Identify Potential Friction-Creating Events – Using our list, above, your partnership agreement, a list of the ten most Senior Partners, and interviews with balanced (in perspective) representatives from each generation, identify the elections, client transitions, policies, cultural aspects, pending decisions and investments over the next 5 years that will truly guide the direction of the firm.  Whittle this down to a prioritized Top 10 list. 
3. Plan, Plan and Plan Some More – For each decision, determine key points such as –
   1. Who, specifically, will be making the decision at the needed/scheduled time?Will that person or body be viewed as objective and acting in the best interests of the firm…without pecking-orders, homages, and influences from days gone by?What is the most likely outcome, based on what you know right now?
   1. How will that outcome be seen and received?
      1. Important note – This is about making the right decision via the best process.  This is NOT about making the most popular or safest decision.  The process and the related optics are often as important as the decision itself.
4. Evaluate – For each of the questions posed in #3, above, how can the process be improved?  Do any changes result in different outcomes?  If so, which is best for the firm long-term and long after the Boomers are out?

This is neither fun nor easy.  This is what long-term focused leadership is all about.  It’s a key part of the job that is rarely spelled out on a job description.  Either ease into this process now to vastly improve your odds of safe outcomes or increasingly dare your younger talent to leave.

The choice is obvious.  Please get to work while you can.