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Ideas Above Your Station

“In a hierarchy, every employee tends to rise to his level of incompetence”.

Several conversations this week have given me cause to contemplate the nature of that most curious of beasts – the law firm structure. I think it is fair to say that if you were seeking to set up a multi-million dollar business in just about any profession or industry your peers would think you insane to contemplate a partnership of more than two or three as your ideal structure.

In addition the economic success of this structure revolves around how it is leveraged below partner level and the relationship between the PQE of the lawyers and rates at which they can be charged out to clients. As recruiters this then translates into salary levels and prospects for progression for those leaving and joining teams around town.

Twice this week we have been faced with a situation where everyone acknowledges the capabilities of particular individuals, but there has been little appetite to recognise that in terms of any additional remuneration or status within the firm. Surely in a modern labour market, dealing with educated professionals the concept of strict ‘salary bands’ is almost comically old-fashioned. In fact it reminds me of The Class Sketch from the sixties classic The Frost Report starring comedy legends John Cleese, Ronnie Barker and Ronnie Corbett.

And yet, this is how most firms continue to operate. There is some wiggle room within the bands and bonuses that reward some exceptional individuals, but it is about as far from a meritocracy as you can get.

There are a few firms breaking the mould and certainly other jurisdictions are a little more creative than New Zealand, but the strict hierarchy continues to rely on the conservatism, compliance and conscientiousness of those working within it. It will be interesting to see how that plays out with the well-informed and ambitious millennials who will be hitting our workforce in the not too distant future.