This is a fascinating book, and I am grateful to Akshay Jaitly, one of the founders of Trilegal for having written this history of Trilegal. It takes a lot of intellectual honesty to lay bare the challenges, etc., that Trilegal went through, including internal conflicts and divisions, particularly given it is still continuing / flourishing as a firm, and recently completed its 25th anniversary, which I suppose is one reason for the timing of the book.

Awesome description

Lots to read in the book, from how the founders met, and their motivations for launching Trilegal, the early days, the multiple crises including how the first set of partners quit to launch another firm, their best friends agreement with Allen & Overy, and then its unwinding, its rapid growth in the post-COVID period, and so on. Still, the spine of the book is really around how they iterated on and fine-tuned their profit-sharing mechanism. There is a fascinating line in the book that “There is probably no single thing that shapes a law firm’s culture more than how you divide the money” and this is the central theme of the book, a topic to which Akshay Jaitley returns repeatedly, for each intervention around profit-sharing reset incentives and reshaped culture and behaviour of the firm.

The book describes how the partners initially shared the profit amongst themselves. There is an interesting passage around how Rahul Matthan who represents the then smaller Bangalore office refuses to integrate into the firm with 20% less equity; Bangalore remained separate until its revenues increased and another founding Partner Prem Ayyappa quit, to make the profit pool large enough to make consolidation viable. Equal partnerships, Jaitley says, are emotionally powerful but structurally fragile, requiring conscious acts of principle from everyone to make it work.

As the firm grew, and they started

As the firm grew, and they started expanding, they decided to adopt the lockstep mechanism that the U.S. law firm Cravath, Swaine, & Moore, had popularised, albeit with some modifications.

They had a two-tier structure for Partners distinguishing between salaried and equity partners, with salaried partners having to hit a revenue target to become equity partners.

This led to a very interesting second-order effect: they saw salaried partners hoarding work to hit their revenue targets, rather than passing it to better-placed colleagues; not the collaborative outcome they were intending.

They decided to eliminate the two-tier structure; thus if you made Partner, you became an equity partner right away. A few years later, a new problem surfaced: the non-financial criteria for lockstep advancement had never been clearly defined. As a result there was excessive focus on revenue metrics. This led to the last iteration, and the present lockstep model, where there are both financial and non-financial targets (e.g., promoting juniors to partnership, enabling each other’s practice development etc.). Financial targets in turn have targets for direct, and indirect / referral revenue. Clever.

I found the iterations that the firm went through on the profit-sharing central to the narrative, for incentives sit upstream of behaviour and culture, and it is really the structure around profit-sharing which sets incentives in motion, which in turn drives behaviour and shapes culture. In addition I thought it was also a fascinating glimpse into the personalities, practices / processes, and mechanisms underlying a formidable professional services firm, and that too an Indian firm.

This is a great read for any lawyer but it is also useful for folks from other professional services firms such as consultants or even VCs / PEs. VCs and PEs of course have their own carry mechanism for reward-sharing, but there is still a lot here that they can borrow and learn from this book. Recommended.