The partnership model is creaking: who pays for the bench-warmer?

Professional services likes to present itself as the most meritocratic sector there is. Whoever works hardest and brings in the most revenue climbs to the top and, at some point, becomes a co-owner. But there is a problem few firms discuss openly: the partnership model is excellently designed to let people grow into it, and barely designed to let them leave it again with dignity. Once someone becomes partner, they typically remain one until the bitter end, regardless of what they actually still contribute.

I wrote previously about how Gen Z is holding up a mirror to the sector: the promise of twenty years of hard work for a partnership that looks increasingly less appealing. That piece was about entry. This one is about the other side of the same coin: what do you do with the partners who are already inside, and no longer pulling their weight?

A business model that never adjusts itself

For decades, the conservatism of professional services has not been a weakness but a business model in its own right. Trust, tradition and stability sell well to clients who want to avoid risk. The problem is that this same reflex has now turned against the organisation itself.

A partnership is, at its core, self-regulating: partners appoint each other, assess each other and vote on each other, without an external board to settle the occasional awkward decision. That worked well in an era of steady growth, when almost every partner eventually managed to build up their own practice and client base. That era is over. Markets are saturating, clients are consolidating their advisers down to a handful of trusted names, and not every partner keeps producing at their best for twenty years straight.

Replacement revenue: the bill nobody opens on time

Every partner who retires, scales down or departs leaves a gap in revenue behind. Someone else has to fill that gap, and that is harder than it sounds, because that revenue often sits in personal relationships that cannot simply be handed over.

Most firms structurally under-plan for this. Succession is treated as a detail for HR, when it is actually a strategic risk that belongs at shareholder level. In practice, too many practice groups depend on too few people, and it is only once that person leaves that the organisation's lack of preparation becomes clear.

The bench-warmer: protected by the system, not by performance

Then the most uncomfortable question of all. What do you do with the partner whose best years are behind them, who no longer brings in new mandates, bills fewer hours, but still shares fully in the profits?

What strikes me most here is that almost everyone recognises the problem, yet few people feel addressed by the solution. I understand that too: someone who has contributed for years, built up clients and become a co-owner does not simply step back. That, to me, is where the real issue lies. We find it natural to plan for growth and entry, but far harder to have the honest conversation, in good time, about how contribution, role and reward continue to relate to one another later in a career. As a result, that conversation is often only held once the tension has already built up.

In almost any other sector, this would simply be called a performance problem. In professional services, it is called seniority.

Equity partnership is rarely designed with a way back: no glide path to a different status, no mechanism that realigns contribution and reward without it feeling like punishing a hard-earned life's work.

The result is a hidden tax on the rest of the partner group. The partners who are still fully productive effectively fund the profit distributions of colleagues who are no longer performing at full strength. This is not an incident; it is built into a model that ties reward to ownership rather than to current contribution.

And it is precisely the generation now entering the profession that senses this unerringly. Few things are as demotivating as working hard within a system whose senior layer no longer has to prove itself in the way that they still do.

Why almost nobody tackles it

Not because nobody notices. Managing partners watch it happen. The problem is that the solution demands something a partnership is structurally poor at: confronting a colleague about underperformance, when that same colleague is also your voting co-shareholder and often a friend of twenty years. Every proposal for a glide path, performance-linked profit sharing, or a mandatory move to a lighter role usually fails at the partner meeting, simply because the partners with the most to gain also hold the most votes to block it.

The firms that do manage to break this pattern usually share three things. They decouple status from profit-sharing, for example by creating a senior or counsel role that retains recognition and network without automatically sharing fully in the profits any longer, so there is a dignified way out without loss of face. They treat succession as a portfolio risk rather than an HR process, by sharing client relationships within teams in good time, so that replacement revenue becomes a planned handover rather than a surprise. And they deliberately bring in an external voice for appointments and appraisals, precisely because self-regulation within a partnership proves structurally too lenient once it concerns its own people.

Not unique to partnerships

This pattern is not confined to professional services. An earlier Odgers publication on CEO succession points to a similar mechanism among listed family businesses: a board with a family majority is less willing or able to replace an underperforming CEO than a board where independent directors hold the majority. Self-regulation, then, proves structurally too lenient not only within partnerships, but more broadly, whenever it concerns an organisation's own people.

The question that remains

The sector that preaches loudest about performance, meritocracy and client value is often, internally, the least willing to apply that same standard to itself. This is not an accusation against individual partners; it is a fault in the system itself. The question is no longer whether professional services can still afford this. The question is who has the courage to say it out loud to their own partner group: profit-sharing is not an inheritance, it is a result.

Get in touch

Are you facing a question around partnership, succession or profit-sharing within your organisation? Or would you like to explore how executive search can contribute to a future-proof partnership structure? Get in touch with Rosanne Ferrari, Partner Business & Professional Services, via rosanne.ferrari@odgers.com.