Most firm leaders say they want to remain independent, but partners don’t always have the same idea of what that means. It’s understandable to conflate ownership with independence, but that definition is too limiting.
Taking a step back and thinking through this fundamental question can begin a path toward true independence without the need to merge up or seek private equity investment.
Understand that Ownership and Independence Are Not the Same
The fact is, most firms don’t operate independently now. Firm owners can’t act on their own, or at least they shouldn’t. Votes are few, and the impact is minimal, especially if the firm is led by a strong managing partner. Total independence ends when a sole proprietor takes on a second partner after all.
Firm ownership does not equal independence. Independence means having the ability to make autonomous, long-range, tough decisions that are in the best interest of clients and the firm. That takes more than ownership alone.
I don’t minimize ownership. Instead, I urge you to challenge the traditional thinking that keeps the firm stuck in the status quo.
Find the Disconnects
I recently explored these ideas with a firm’s leaders. In the initial discussion, partners said they valued independence, but a disconnect appeared once the conversation went deeper. Vocal support turned into hesitancy.
Independence requires the wherewithal to stop repeating the same processes that led to success so far. I encourage firms to re-examine governance structure, innovation, investments in technology, outsourcing, and re-leveraging the firm. Independent firms need to challenge the norm, adopting an entrepreneurial mindset to change and compete.
Sometimes, the changes can be dramatic, and there’s the rub. Change is uncomfortable. I fear that some firms use “staying independent” as a reason to avoid doing the hard work required to truly meet that goal.
Step Back
I suggest hitting the reset button. Partners should revisit their five-year vision for the firm. I’m not talking about a full-blown visioning exercise—I can imagine your eyes glazing over at the prospect—but a practical, wide-ranging discussion. Don’t limit your thinking. Consider anything—net revenue, number of partners, culture, geographies, or any other metric.
A clear vision sets motivation into motion. If it’s too difficult to understand the ‘why,’ you can’t gather the army necessary to fight the independence battle. Once partners come to some agreement as to what the firm should look like in five years, they can dive into specifics.
Don’t Go It Alone
How to remain independent and create real competition with private equity-funded firms is one of the most perplexing questions firms face today. A thought leader and advisor can help you understand your options and assist you in finding the resources you need to remain independent. I can guide you through a systematic process of exploration and untangle the knotty questions that arise in determining what’s right for your firm.
