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The erratic attempts at policy coming from the Trump government in the United States have made commercial and financial prospects more unpredictable than perhaps in any period since the 1930s. Many investors and business people, as well as traditionally friendly governments, now wonder -- often with good reason -- whether the United States can be trusted to honor its international commitments at any level of enterprise or international engagement.

These forces and risks ultimately affect almost every law firm with any significant international or regional practice. This is a real challenge for the legal profession, because clients traditionally have looked to lawyers and law firms for analysis and problem solving in uncertain times. Yet the business futures of many of those firms are perhaps even less certain than those of their clients.

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As one managing partner of a U.S. law firm recently commented, "Today we have to be experts in subjects that they never taught in law school -- not even five years ago. Being an excellent lawyer is no longer good enough."

Advising clients about compliance with international economic sanctions is one such challenging "new law" area.

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This is not just something that we can blame on "the Millennials." 

For the past 20 years, partners from law firms of all sizes, in almost every part of the world, frequently have told me that they can't understand why so many of their best associates and non-equity partners decline the offer of equity partnership.

"We have a responsibility to protect your data, and if we can't then we don't deserve to serve you" -- Mark Zuckerberg, CEO, Facebook Inc. 21 March 2018

We agree.

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Even the most effective partner compensation systems sometimes have difficulty basing a partner's remuneration on the profitability of his or her practice.

This is because they try to take too simplistic an approach to a complex and highly individual concept.

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In a previous posting in this blog, we pointed out how an "eat what you kill" system of partner compensation can introduce toxic elements into a law firm, which frequently counteract any motivating effect on lawyer performance.

This short article outlines the features of an alternative to "eat what you kill" compensation in law firms. It works well in any size law firm, but is especially suited to small and midsize firms.

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An "eat what you kill" system of partner compensation does have some good points for some law firms.

For most law firms, however, "eat what you kill" can kill the partnership.

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In the past two years, we have observed a new trend in some legal markets. For a variety of reasons, senior associates and non-equity partners are leaving their law firms to start their own. 

A common factor in these departures, however, is a conclusion that there no longer is a persuasive business case to remain in the firm, and that, notwithstanding the risks, the opportunities are better in one's own firm.

Are you thinking about starting your own law firm? Here are some things to think about.

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No matter how large, how famous, or how successful your law firm has been in the past...

...if you want to increase the chances of your law firm still being in business ten years from now, you must have a Chief Innovation Officer.

Sorry, there are no exceptions.

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A recurring theme of this blog has been that smaller law firms have much less tolerance for poor management. The loss of just a few clients or even one partner can have a disproportionately larger impact than in a larger firm.

One of the biggest risks to a small law firm -- and one that is frequently overlooked or, in some partnerships, deliberately ignored -- is its partner compensation system.