Big Sis Briefing: Partnership Is Changing Faster Than You Think

If you're a mid-career lawyer who sees law firm partnership as their ambition, you're probably thinking about timing.

When to make a move, what skills to build, which niche client cohort and practice area offers the clearest path forward. Those are good questions but they assume the destination stays constant while you are working toward it.

That assumption might not hold.

Over the past twelve months, I've watched conversations about private equity and legal service delivery move from theoretical to structural. Firm leaders are talking openly about capital, governance and the sustainability of traditional partnership models.

Managed Service Organisations (MSOs) are entering the market and AI is accelerating delivery economics. The mechanics of how law firms fund growth, distribute profit and define equity are shifting in ways that will touch your career whether you're paying attention or not.

I want you to pay attention now because macro trends shape micro decisions and timing matters.

If you're building toward partnership over the next five to ten years, you need to understand what's changing in the ownership and economics of law firms. Not five years from now when the new rules are already set, but right now while you still have time to adjust your strategy.

A LinkedIn connection of mine has been posting about private equity (PE) entering the legal industry for some time. She mentions managed service organisations and pressure on traditional partnership models. I admit I used to skim her posts and kept scrolling because at the time, my focus sat firmly in-house. I cared about buying legal services well, managing risk and getting decent delivery from external firms. The internal mechanics of law firm ownership and capital structure sat outside my field of view. It wasn't my problem.

Then my focus shifted. New career chapter, new work, new vantage point.

Suddenly the question landed differently.

• What is this PE and MSO trend actually about?

• Where did it come from?

• What does it really mean for the next generation of lawyers, my community, who still see partnership as their goal?

I started digging and here's what I found out:

The pattern plays out the same way every time

There's a useful historical parallel that helps frame this moment. Think about blacksmiths whose work focused on horseshoeing. For decades, demand stayed stable, skill passed down through generations, reputation mattered and the path ahead looked predictable. Then the car arrived. Not overnight, not all at once, but slowly at first, then faster, then everywhere.

The blacksmith who knew what was coming had options. They could re-skill into mechanical work, double down into premium specialist craft or adjust their time horizons and financial plans accordingly. The blacksmith who ignored the shift probably felt blindsided. One day the street looked different, demand dried up and the system moved on without them.

The lesson here isn't panic but awareness.

Professional services follow this pattern and we've already seen it play out in industries adjacent to law.

What happened to our friends in the numbers game?

Accounting firms started as classic professional partnerships where partners owned the firm, judgment and trust drove value, career progression followed a clear ladder and partnership signalled success. Then scale arrived.

Technology turned large parts of compliance work into repeatable processes, margins diverged and advisory work paid differently from delivery work. Consulting grew faster than audit, operations professionalised and “non-accountants” took control of pricing, systems and growth. Capital flowed toward scale and repeatability.

Partnership didn't disappear but they changed. Some partners gained influence and upside, others lost leverage, career paths diversified and the firm stopped being one thing.

If you work in a Big Four firm today, your experience of partnership depends heavily on which service line you're in, which clients you serve and whether you're building advisory relationships or delivering compliance work. The title stayed the same but the economics fractured.

What happened to the medical crew?

Medicine followed a similar path. Doctors traditionally once owned small practices where income was tied closely to personal labour and equity equalled seniority. Private capital entered through practice management companies. Clinics stayed doctor-owned in name but operations moved elsewhere.

Billing, staffing, technology and growth sat outside the clinical partnership. Efficiency increased, standardisation followed and autonomy shifted. Junior doctors gained structure and clearer career pathways, while senior doctors faced new economics and different control dynamics. The profession survived but the power map changed.

Law is next in line

Law now sits at this same inflection point though the regulatory landscape shapes how capital enters differently depending on where you practice.

In most global jurisdictions, private equity can't buy law firms outright. Regulatory restrictions keep ownership in the hands of lawyers, which means capital enters through side doors: managed service organisations, legal platforms, adjacent service providers and delivery infrastructure. Judgment and regulatory responsibility stay with lawyers, but operations, scale and capital move outside. The firm might look the same from the outside, but the economics and control dynamics shift underneath.

Australia sits in a different position

We allowed incorporated legal practices years ago, which opened the door to corporate structures and external ownership in ways that most other jurisdictions still prohibit. Slater and Gordon went public in 2007, becoming the world's first publicly listed law firm. That experiment had mixed results (the share price tells that story clearly enough), but it established a regulatory framework that permits corporate ownership and external capital in ways that remain impossible in most US states or most of Europe.

That regulatory difference matters because it means Australian firms have more options for capital structure and ownership than their global counterparts and we're further along the curve in terms of seeing how external capital changes firm economics and partnership models.

If you're practicing in Australia and watching offshore firms navigate these questions carefully through workarounds and adjacent structures, understand that Australian firms can move faster and more directly because the regulatory constraints simply don't bind us in the same way.

I know this all feels abstract until it touches your career, so it's worth understanding how partnership actually works and what changes when external capital enters the picture.

How partnership models actually work

Many early and mid-career lawyers work inside firms without ever being taught the mechanics of partnership, which isn't a failure so much as a cultural gap. At a high level, partnership models involve three moving parts.

• First, ownership: equity partners own part of the firm, while salary partners hold the title without the ownership stake.

• Second, economics: profit shares vary depending on the system. Lockstep rewards seniority, eat-what-you-kill rewards originations and most firms sit somewhere in between.

• Third, funding: traditional partnerships fund growth through partner capital, retained earnings and debt, while external capital introduces different expectations and timelines.

Capital pressure changes incentives in ways that matter for your career planning.

Time horizons shorten because external investors expect returns on defined schedules and not whenever the partners feel like distributing profit amongst themselves (Andrew wants his second beach house now!).

Governance tightens because investors want visibility and control over how capital gets deployed. Reinvestment competes with partner drawings in ways that create tension between building the business and taking money out of it. The meaning of equity shifts because ownership might come with less autonomy and different risk allocation than it historically carried.

How the market is splitting into tiers

I came across the term "stratification" for the first time while researching this piece and it captures something important about how industries respond to the kind of pressure we're seeing in legal services right now.

“Stratification” describes the process of something separating into distinct layers or levels. In professional services, it means the market doesn't collapse when technology and capital arrive. Rather, it reorganises itself into different tiers with different economics, different client expectations and different career pathways.

Again, lets look to history for clues.

Accounting didn't disappear when technology automated compliance work but it did split it into distinct layers.

• High-end advisory work stayed expensive and relationship-driven.

• Mid-tier work became more standardised but still required professional judgment.

• Volume work moved toward automation, offshore delivery and tight pricing.

Law is already following the same pattern. Premium judgment work is separating from high-volume delivery. The bet-the-company litigation, the complex cross-border M&A, the novel regulatory advice, that work stays bespoke, expensive and built around relationships with senior lawyers who've earned deep trust over decades.

High-volume delivery work (contract reviews, disclosure processes, routine employment matters, compliance workflows) is becoming systematised, technology-enabled and priced much more tightly. Operations is becoming a discipline of its own, with professionals who aren't lawyers running pricing, project management, knowledge systems and delivery infrastructure.

This shift creates risk but it also creates leverage for the lawyers who see it coming.

If you're mid-career and building toward partnership, you need to position yourself in the part of the market that rewards the skills you're building. That means making deliberate choices about practice area, client type and the kind of value you're known for delivering. It also means understanding which tier you're in, because partnership in the premium judgment tier looks very different from partnership in the high-volume delivery tier and the path to get there requires different capabilities.

Two tracks worth building right now

For lawyers with partnership ambition, two tracks matter more than they used to.

The first is technical judgment: choose work where judgment stays scarce, whether that's complex disputes, high-stakes deals, regulatory risk or crisis work and become someone who's trusted under pressure.

• This is the traditional path, but it matters more now because judgment work is harder to commoditise and systemise.

• If your work can be templatised, automated or moved offshore, your leverage decreases.

• If your work requires deep expertise, contextual understanding and high-stakes decision-making under uncertainty, your leverage increases.

The second is business-of-law literacy: understand pricing, understand margin, understand how work flows through systems and understand how the firm actually gets paid. Most lawyers ignore this second track entirely, which is precisely why it compounds for those who don't.

• If you understand the economics of legal service delivery, you understand which practice areas are under margin pressure, which clients are profitable, how the firm makes money and where the growth opportunities sit.

• That knowledge changes how you position yourself, what work you take on and how you negotiate your progression.

What this means for your career planning

This isn't a warning siren but it is a map. A choose your own adventure!

Awareness expands choice and choice expands agency. Partnership still exists and will continue to exist, but it rewards different strengths than it once did. Those who see the shift early tend to adapt best, while those who wait often inherit rules they didn't help shape.

If you're thinking seriously about partnership, you need to ask yourself a few questions now:

• Are you building skills in work that stays scarce or work that's moving toward commoditisation?

• Do you understand the economics of your practice area and how your firm makes money?

• Are you positioned in a part of the market that's growing or one that's under margin pressure?

• Are you building relationships with clients who value judgment and expertise or clients who are primarily price-sensitive?

Those questions matter more now than they did five years ago and they'll matter even more five years from now.

Remember the blacksmith

The ones who saw the car coming and adjusted early had options. They could reskill, reposition or recalibrate their expectations with enough runway to make smart decisions. The ones who kept their heads down and assumed the street would look the same in ten years often found themselves blindsided when demand shifted faster than they expected.

The lawyers who answer those questions honestly and adjust their strategy accordingly will be the ones who build sustainable, rewarding partnership careers. The ones who ignore them will find themselves working toward a destination that moved while they weren't looking.

If you're mid-career and thinking seriously about partnership, this is the conversation to have now, not in five years when the new rules are already set. Work with a professional mentor or career strategist who understands both the technical side of legal practice and the business side of law firm economics.

Get clear on where you're positioned, what skills you're building and whether your current trajectory aligns with where the market is actually heading.

The investment you make in that clarity now will compound over the rest of your career.

Onwards!

Mel