Junior to Partner in Under 5 Years

book.

PREFACE

Professional services is a rewarding career. People working in our industry are privileged to help clients. The work is generally interesting and is performed within the comfort of a professional firm environment. If we are good at what we do, we achieve career success and become partner. However, the road to partnership can be rocky and is rarely without incident.

A troubled beginning

I was sacked from my first professional services job. I will always remember sitting in the stark boardroom, gazing in disbelief at the three puppet executioners delivering the death sentence of their faceless masters. ‘Help me,’ I entreated. ‘We cannot help you,’ was the cold reply. They were of no use to me and it was over. I was not a bad guy and had always been a good worker. Yet here I was being shown the door. How had it all gone so terribly wrong?

To help you understand, let me go back to the beginning. Prior to entering professional services, I was a research and development engineer. At that company, we worked in teams developing products for automotive customers. We were all ambitious for the project to succeed. Personal ambition took a back seat for the nobler cause of getting the job done right. There was little room or need for egos. Honest appraisal and communication was preferred. The culture was terrific, but the job itself was somewhat repetitive, whereby new prototypes and products were generally incremental improvements on previous designs. I was eager to escape the monotony and try something different.

A friend of mine, who was an assistant at one of the largest and oldest patent attorney firms in Australia, told me that they were looking for a trainee with my engineering qualifications. It would mean more study and less pay in the short term, but the longer term career prospects and variety of work were appealing. I was fortunate to get the job, and I brought with me a wealth of knowledge acquired during my time in engineering.

However, as I was too slow to realise, engineering workshops are not at all like large and old professional service firms. I was an unwary, unstoppable force and charged without thinking into the immovable object that was the firm. Two very different worlds had collided and there was always going to be one result – a parting of the ways. The firm, through its vast experience in staff turnover, had simply been first to realise that there was no long-term future for our relationship, and they had been the first to act.

Although naturally angry and humiliated at being sacked, upon reflection I came to realise that the finger of blame had to be squarely pointed at me for various reasons which I will explain throughout this book. We should expect to be disqualified from a game when we do not play by the rules.

It is always unpleasant when any relationship ends badly. Both parties enter into a relationship with the best of intentions, and both share in the disappointment when it doesn’t work out. But life goes on.

I was at a career crossroads with shattered confidence, thinking to myself ‘should I continue in professional services? Or should I return to the stability of engineering where I was previously successful?’

Although I was left seriously questioning my ability and shaken by the experience, I committed to continue with professional services only on the proviso that I would meticulously analyse what had gone wrong the first time and take every step to ensure that I would not make the same mistakes again. Failure for a second time was not an option.

Within five years of qualifying, I rose from a junior to become a partner of one of the most profitable Australian firms in my professional services area. One year later and within seven years from being sacked from that first professional services job, I was made full equity partner. At the time, we were in the midst of the Global Financial Crisis (GFC), in a severely impacted profession, providing entirely optional services. It was difficult, and I may have been lucky, but you make your own luck in professional services.

So how do you go about making your own luck?

The challenge for professional service providers

Partnership can be lucrative with many rewards. The clear challenge for every junior in a professional services firm is to make partner.

The reality is that many professional service providers – ‘professionals’ – will never make partner. It is common to hear partners say, ‘junior professionals simply do not understand what is required to become partner.’ I also hear that the education system is failing our students, with many juniors now entering professional services having inadequate skills that will delay their progression to partnership.

Anecdotally, many partners in larger firms believe that fewer than one in ten new professional recruits will make partner. These odds are undoubtedly uninspiring for those entering the professions, but every professional must still aspire to partnership. Without partnership in mind, the professional will not be challenged and will stagnate, which is beneficial to neither the professional nor the firm.

Growth in many professional services firms is sluggish, which also impedes progression to partnership. There is increasing competition in the sector, with record numbers of practitioners qualifying. In some professions, previously high bars to registration have been lowered, or removed altogether, with universities effectively passing all students. Furthermore, Western societies are gradually becoming nations of service providers as many businesses, and especially manufacturers, are offshored. In many cases, the professional service providers of today earn less in real terms than their predecessors did 20 years ago. Accordingly, many current partners are working longer which further lengthens the wait for incumbents to make partner.

We all start with being thrown uninitiated into the firm environment. We often must fumble our way to the top, learning by osmosis and from our inevitable mistakes. These mistakes need not define us. How we bounce back from adversity is what will determine our worth as a professional. Even the stupidest career blunders can be overcome.

In this book, I have used my experience to develop a simple set of principles for professionals who want to make partner – fast! I have never been the smartest or the hardest working professional, but I am proof that these principles actually do work.

In spite of the challenges, I believe that every professional armed with these principles has the ability to quickly become partner through the results that will follow. Learn from my mistakes and those of my peers. You are likely not on the verge of being sacked so you already have a head start on me.

Author’s professional services career milestones

2002 Entered professional services as an unqualified junior

2005 Sacked from first professional services firm. Employed by another firm with no clients in a new city

2006 Became a qualified practitioner

2008 Started earning an annual salary of six figures

2011 Made salaried partner

2012 Built own practice from scratch at the first attempt and made full equity partner

2015 Built second practice after giving majority of first practice to junior

2015 Started earning an annual salary of seven figures

2016 Sold highly successful practice.

CHAPTER 1

PLAN FOR PARTNERSHIP

Juniors entering professional services cannot be expected to have a plan to make partner. Even those professionals who have worked at a firm for some time can still have no clear understanding of the career path that lies ahead. Instead, professionals invariably bumble their way through their careers, passively picking up techniques from their colleagues through observation and hoping that they will be made partner in time.

Passively acquiring the skills to become partner is highly reliant on the student’s powers of perception and on the ability of the professionals around them to teach. A smart junior will always succeed in the long run, but the wait for partnership may be unnecessarily lengthy. A clear plan for partnership, adopting the correct techniques, is preferred and mitigates the potential for delay or failure.

Do you have a clear plan for partnership? Or are you prepared to wait and see what happens? It is never too late to get on the right path, regardless of your current position in the firm. Concentrating on decisively doing the right things, here and now without any need for over-analysis, will ensure that you get there.

THE WAITING GAME

It can be a long wait to make partner in many professional services firms. Partners come in many forms including junior partners, senior partners, associate partners, salaried partners, and more recently, principals and directors. The only type of partner who really matters is a partner who holds equity or shares. Professionals awaiting equity can get lucky by being in the right place at the right time. But the vast majority are simply standing in line waiting for their opportunity to acquire an ownership stake in the firm or to get some ‘skin in the game.’

Flawed conventional firm thinking

In the first chapter of Managing the professional service firm¹, Maister defines an archetypal structure for traditional firms. According to Maister, the three generalised professional levels in a firm are juniors, seniors and partners. As shown in Figure 1.1, the juniors are the ‘grinders’ of the firm who grind out the work. The seniors are characterised as ‘minders’ because they are responsible for minding the juniors and associated projects. Lastly, the partners are characterised as the ‘finders’ of the business with the core responsibility of finding new work to feed the grinders.

Figure 1.1 Structure of a traditional professional services firm

The number of professionals at each level generally decreases with seniority. In other words, there are fewer partners than other professionals as typified by a pyramid structure. Furthermore, the profitability of the firm resides in the firm’s ‘leverage,’ or ratio of partners to other salaried professionals. The profitability increases with a decreasing ratio of partners to the other professionals.

Somewhat ironically, the profitability of the firm is not connected to the firm’s growth. Growth of the firm does not affect the overall firm’s leverage because additional partners and professionals are brought in to handle new work. The partners, or finders of the firm, reap no direct profit benefit from growing the firm. Therefore, in reality, the partners are not financially incentivised to actually find new work. Furthermore, the influence of existing partners actually diminishes with the admission of new partners.

However, the growth of the firm is essential for the progression of professionals to partnership. The partners are therefore to some extent incentivised to find work to prevent the loss of good professionals. But is the threat of losing good professionals really a strong motivator, particularly in a tough economic climate where professionals effectively have nowhere else to go?

The reality of partner motivation

Money is the main motivator for most humans and especially most partners. The Richest Man in Babylon² accurately states that ‘since time immemorial, money has been the medium by which earthly success is measured.’ As a general rule, financial incentives are more certain to motivate than any other incentives. Admitting new partners, representing an increase in salary or a dilution of equity, will initially erode profit and is often viewed as a financial disincentive by existing partners.

In an increasingly competitive market, with less opportunity, good professionals will not go through the travail of leaving their firm when they are likely to be faced with exactly the same situation or worse at the next firm. Professionals are often better off sticking it out at their current firm.

The reality is that existing partners may not be driven to find new work. Instead, these partners can be content to maintain the leverage and profit of the firm because salaried professionals are reluctant to leave. These salaried professionals often wait for the un-incentivised partners holding equity to find new work and grow the firm so that they, in turn, can make partner.

In many areas, professional services is not a growth industry, and the firms are not growing to any appreciable extent. Accordingly, professionals often have to await the departure of an existing partner to make room at the top. Many firms extend the wait to partnership by introducing intervening professional levels, or implementing ‘lock step’ and other delaying mechanisms, whereby equity is allocated gradually in a piecemeal manner. Even in the best of times, many professionals who are diligently fulfilling their dedicated ‘grinding’ or ‘minding’ role in the traditional firm structure can effectively wait indefinitely and may never make partner.

Clearly, there is a need for a better plan for making partner, which is not reliant upon factors outside the professional’s control – such as the growth of the industry, or the questionable motivation of the existing partners to find new work and grow the firm.

SKIPPING THE WAIT

Many professionals are highly motivated achievers, not at all well attuned to embracing concepts such as ‘serving your time’ or ‘waiting it out.’ Indeed, any resignation to these demotivating concepts can challenge the very survival of a professional in professional services. The professional may instead seek out greener pastures in another job.

We live in the age of disruption to conventional thinking. For example, the introduction of the digital camera severely disrupted the film processing industry, putting Kodak out of business. Similarly, Google and other online search engines have rendered Yellow Pages virtually obsolete. Disruption is also affecting many professional services areas in a negative way.

Darwinian theory dictates that it is not the strongest species that survives, nor the most intelligent, but the species most responsive to change. In the modern competitive arena of professional services, which is undergoing unprecedented turmoil, professionals must embrace a change to the conventional waiting mindset, which will also help to secure partnership and professional survival.

The key to partnership

The key to making partner is to build your own practice for yourself. It is as simple and as difficult as that! There is also no professional achievement more rewarding than building a practice empire from nothing. While building a practice sounds straightforward in theory, many juniors have difficulty in determining, or simply have no understanding of, how to grow a practice to become partner.

In simple terms, a practice is the collection of clients, and ultimately the files (or docket), that a professional has under their care. As a general rule, the bigger the practice, the more valuable the professional is to the firm. Once a practice is large and profitable, the firm will secure the indispensable professional with partnership to sustain the firm going forward. The firm will do so in preference to losing the professional, in which case the built practice could lose profitability or disintegrate altogether.

Conventional businesses differ from professional services firms. In conventional businesses, there are often limited spaces for promotion, particularly at the top. For example, there is typically only one chief executive officer (CEO). It may be a long wait until the existing CEO retires. Even upon retirement, there may be a glass ceiling for some employees seeking that position based upon discriminatory factors such as class, race, sex, privilege or wealth. The appointment of a new CEO may be nepotistic or political. The odds can be greatly stacked against employees of conventional businesses making it to the top.

In contrast, a professional services firm is the ultimate meritocracy, where the progress of professionals is based on their ability and talent rather than other discriminatory factors. In a professional services firm, there are actually no constraints on admitting new partners. Partners can be readily admitted at any time, provided that there is a case for doing so. Most firm partnerships are diverse, without a need to employ affirmative action in admitting quotas of minority groups because partnership naturally follows results.

A practice is like a small business within the greater firm. Admitting the successful professional as partner represents a win-win scenario, whereby the firm wins by securing its future in acquiring a proven professional, and the professional wins by buying into his or her own destiny. On the other hand, denying the successful professional partnership represents a lose-lose scenario, whereby the firm loses one of its star performers and potentially some of its clients, and the professional must once more begin building a new practice from scratch.

Once a solid and sustainable practice is built, no equitable firm can deny partnership to the successful professional, even in the face of any perceived intangible or