A Truly Cynical Analysis of Why Up or Out Policies Persist

Here is a truly cynical analysis of why firms maintain up or out policies. A professor at Case Western makes the argument that “up or out” is the best way to protect the firm’s only real assets (i.e. the client relationships.) The argument goes that if you keep around bright people but don’t make them partners, that they will walk away with the clients.

This is faulted logic on so many levels. For starters, many law firms have already adopted (and continue to adopt) multi-tier partnership systems (i.e. the professor seems to be overlooking the reality at many law firms today.) In addition, as the professor himself notes, lawyers cannot be bound by non-compete agreements. In other words, there is nothing stopping a senior associate who leaves from soliciting business from a client (whether or not the attorney has stuck around for a while after getting passed over for partner.)

The analysis also overlooks the negative impact on the client relationship when senior partners must continue to introduce new associates to service key clients (while removing senior associates who have built up trust with the client.)

A much healthier way to preserve client relationships is to institutionalize clients and make the client feel that everyone in the firm is available to help the client with his or her needs. When partners hoard client relationships and control client access, clients are poorly served and junior attorneys miss valuable opportunities to learn more about a client’s business. This leads to bad morale. I could go on and on (but I won’t.)

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