“I’m so old, I don’t buy green bananas anymore.”
~ Lou Holtz
From my 71-year-old vantage point, I have come to realize that our perspective on many issues is often affected by where we are on our journey through life.
For example, a few years ago, it was raining inside of my house, and I found myself having to choose between cheap roofing shingles with a 30- year guarantee, and a more expensive metal roofing product with a 50-year guarantee. I thought that the cheaper shingles would suit my needs just fine. I figured, “oh, well, I’ll be dead when the roof fails in either case.” My much younger wife thought that we should buy the more expensive product.
Of course, we bought the more expensive roof because there is no stage in the life journey when it makes sense to tell your wife that it sounds like a “her” problem.
I could give more examples, but you get the idea. We think about things differently when we are older and can see the end of the road, than we did when we were younger and thought that life went on forever.
I find it interesting to think about how these differing perspectives play out in professional firms.
For example, a partner who is two years from retirement may not be in a rush to authorize a large investment in technology that will pay off over a ten-year period. Of course, a financial formula could be developed to amortize the compensation hit over a number of years, so that the soon-to-be-gone partner does not pay for something that will never benefit them. However, I imagine that the younger folks would resist that and argue that the older partners have maximized their partnership compensation by delaying making the necessary improvements, and it is only fair that they pay their full share before they leave.
It would not be shocking if the younger partners then piled on and brought up issues pertaining to the older generation of partners now working less, but earning more, based on client origination credits that should have, in their mind, expired long ago.
I remember when the oldest partner in my firm wanted to implement a pension plan. The younger folks, me included, thought that he was crazy. The idea sounded much better as the years went by, but there were always plenty of younger partners around to squash it and everyone knew it, so it was never proposed again.
Around and around it goes. People at different stages of their careers can be expected to see things from the perspective that favours them. And, if they are lawyers, they will be very adept at arguing their side.
Of course, if instead of contemplating our mortal demise, we focus instead on the probability that there are always some partners who are thinking about the possibility of leaving their firm, we can extrapolate from being near death to being near jumping ship. Or, if the firm has a mandatory retirement age, those approaching it may have the same attitudes. In all these situations, partners may resist having their firms spend money that they will not be around to benefit from.
What would it take for a firm to overcome human nature, and make business decisions that are not sabotaged by those who are not planning to stay around for the long term? I imagine that it would take come combination of: (i) the careful selection of partners for maturity, ethics, and generosity of spirit; (ii) a great compensation system that forestalls the creation of resentments over the years; and (ii) a well-thought out plan that takes into consideration the time-horizons of different partners when planning major expenditures.
It may also be necessary to create reasons for partners to stay with their firms over the long term, and to keep them invested in the success of the firm after their departure, such as a pension plan. My former partner may not have been so crazy after all.
This article was originally published by Law360 Canada, part of LexisNexis Canada Inc.