Legal practitioners learn from PWC ‘s partnership model at SLP conference

Legal practitioners in Nigeria have been urged to adopt a culture of accountability that would promote effective partnerships and drive economic growth in the industry.

Speaking at the 2014 Section on Legal Practice Conference, which took place at the Le Meridien Hotel, Ibom Resort in Akwa Ibom State, the Country Senior Partner, PriceWaterCooperhouse (PWC), Uyi Akpata addressed the issue of ‘Emerging Partnership Models and the Lessons for the Legal Profession in Nigeria’.

According to him, the legal profession in Nigeria could benefit as much as accountants have done in forging robust partnerships, which will assist them in the expansion of their businesses; whilst tapping into new markets and creating jobs for new lawyers.

Akpata, whose discourse covered Partnership Models, Basic principles of Partnership, Partnership Options, Global Trends in Legal Practice, Partnership Performance management system etc.; focused on the need for change in Nigeria’s legal sector. He observed that a number of new models of partnerships are emerging in response to global trends and events, which offers great opportunities for professionals who wish to go into partnership

He said, “Regardless of the Partnerships model, it is important that all parties see the relationship as a business relationship which can only be successfully nurtured with trust, openness and shared commitment.”

He argued that a handful of legal practitioners in Nigeria see partnership merely on the basis of a contractual relationship between two or more persons carrying on a joint business venture with a view to profit, or as a legal contract entered into by two or more persons in which each agrees to furnish a part of the capital and labor for a business enterprise, and by which each shares a fixed proportion of profits and losses.

According to him, not many viewed partnership in the light of a tailored business relationship based on mutual trust, openness, shared risk and shared rewards that results in business performance greater than would be achieved by the two firms working together in the absence of partnership.

Using PWC as a test case, the PWC partner explained the basic principles of partnership and how professional service firms have been under pressure to be more corporate or business-like in their structure. With this, he explained, partners are expected to take seriously their roles as part-owners of businesses; no matter the configuration of their businesses or the entities through which they trade & generate assets.

“This means we must assume collective ownership of our different client portfolios and assets – current client portfolios, goodwill, etc., and all of our capacity to generate future revenues. Partners have an undivided interest in the business. They are the managers of our business and therefore accountable for our Performance and ultimately our Results,” he stated.

“Accordingly, we must hold each other accountable to one another, and to the firm. Despite the impact of brand, synergy and leadership roles on our results, we may largely be able disaggregate our results and map to individual partners.”

Akpata informed participants that performance and results should be primarily focused on financial performance, portfolio growth from new work (briefs/transactions), new clients, top line revenues from delivered work, cost contained, managed &/or optimised, and bottom line results. Explaining further that for each key metric there was a partner responsible, and who is usually held accountable.

Observing global Trends in Legal practice Partnerships, the senior executive form PWC noted that more law firms around the world were reforming their partnership arrangements in ways that bring them closer to their counterparts in other parts of the world; while they ensure their partnership models remained profitable during economic downturns.

He urged legal practitioners in Nigeria, particularly law firm owners and partners to adopt a culture of accountability, that bother around transparency, clarity & specificity (of objectives, strategy, process and actions), dialogue and communications, sharper focus on results, teamwork, trust, effective communications, effective execution and follow-through.

In his conclusion, he explained that annual partner income should be driven by three (3) components namely, Responsibility income, Performance Income and Equity.

“Whether each partner is playing Client service/delivery role, business development and relationships, practice management – including staff mentoring and development, thought leadership etc. This is usually between 60 -80% of ‘expected’ income available for distribution. The higher percentage considered for more junior partners i.e. putting less of the total expected income at risk,” he explained.

With Performance income however, he noted that it was important for each partner to have a duly agreed personal plan. This according to him is usually between 10 -20% of ‘expected income, while the lower percentage is considered for more junior partners. Each Partner’s performance will be evaluated against set expectation as determined by the agreed responsibility. The components of Equity Income are said to be based on the partners’ relative contribution to the business over the years. Also a reflection of capital contributed to the business “As with performance income, this is usually between 10-20%,” he stated.

Participants at the session agreed that Partnerships continue to provide the most successful platform for profitable governance of professional service firms, the world over.

Theodora Kio-Lawson