Legacy versus Mercenary
Which Type of Firm Are You?
We don't often hear the word legacy used with accounting firms, especially today when
so many firms (large and small) are merging. The American Heritage Dictionary defines
legacy as "something handed on from those who have come before." When a firm sells,
merges or just closes its doors there is no legacy. Too many CPA firm owners today do
not care about their legacy. It seems that there are many more important things to be
concerned about.
A recent study conduct by Rob Lees, Derek Klyhn and me found that "if partners don't
think about their legacy, about leaving something better for those who follow, rather
than just their own tenure, you end up with a group of mercenaries who are just in it for
the money, who have no interest in their fellow partners or the firm, and whose natural
instinct is to think of themselves first." [i]
As with most aspects of a firm's culture, Figure 1 represents two extremes of the
continuum. I don't know of any firms that are 100% mercenary or 100% legacy. Healthy
firms need to be at least in the middle of the continuum. The first thing for you to do is
to determine where you think you fall between the two extremes.
What is a Mercenary Firm?
We often relate the term mercenary with an individual or group that is concerned with
or totally motivated only by a desire for money or other material gain, or we may think
of a professional soldier who is hired by a foreign country. In either case it is all about
what the individual can get for themselves.
The same is true in a mercenary CPA firm. The partners (if you can call them partners)
are mainly motivated by what they can make. This is often an "eat what you kill" type of
firm. I even hesitate to call it a firm, because in reality it is merely a group of individuals
who gather under a common roof to work and go out to hunt.
August Aquila is an internationally known speaker, consultant and writer.
He is CEO of AQUILA Global Advisors. He is also the co-author of "Compensation as a
Strategic Asset" and "Client at the Core."
August can be reached at [email protected] or 1-952-930-1295. For
more information see www.aquilaadvisors.com
While partners in a mercenary firm can certainly make a lot of money, the problem is
they are not building or leaving anything for future generation of partners. For example,
partners in a mercenary oriented firm would not spend time teaching younger
associates. It would be a swim or sink environment. Individuals who are self-sufficient
and self-learners do well in the mercenary environment. They are very unlikely willing
to invest in the practice because it eats into their profits.
When you get to the extreme left of Figure 1, the partners feel that they are more
important than the firm and they hold on to their clients even if someone else in the
firm would provide better service. I have noticed that firms that have a difficult time in
cross-servicing their clients, usually have somewhat of a mercenary attitude since
partners do not trust anyone else with their clients.
You will often see a lot of prima donnas or lone wolves in the mercenary firms. It goes
without saying that these types of partners are the most dysfunctional and damaging to
the firm. Mercenary partners have strong personalities and can often bully other
partners into accepting their way.
Finally, management in a mercenary firm is usually weak. Mercenary partners don't
want anyone telling them what to do.
What is a Legacy Firm?
You can imagine that a legacy firm is going to be pretty much the opposite of a
mercenary firm. Legacy firm partners really put the firm first. For them, the firm is
more important than any individual partner. They see themselves as custodians. They
job is to take care of the entity, build it, enhance its value and then pass it on to the next
generation of partners. Staff who work in this type of firm will stay because they see that
the partners are doing what is right for the firm rather than what is right for them.
When it comes to clients, the legacy partners bring all the firm's resources to the client.
Clients belong to the firm and partners are not afraid to introduce other professionals
from within or outside of the firm to their clients.
Legacy partners can have strong personalities. They are not necessarily a bunch of push
overs. They strongly believe in the firm and they know how their strengths help the
entity overall.
August Aquila is an internationally known speaker, consultant and writer.
He is CEO of AQUILA Global Advisors. He is also the co-author of "Compensation as a
Strategic Asset" and "Client at the Core."
August can be reached at [email protected] or 1-952-930-1295. For
more information see www.aquilaadvisors.com
While mercenary partners distain firm management, legacy partners appreciate how
management helps them do their work better. You can't be a legacy partner unless you
feel that there is a real synergy by working together. The sum of the partners is much
greater than the results obtained by merely adding their numbers together.
You won't find prima donnas or lone wolves in the legacy firm. Here the partners can
best be described as team players who know their roles.
Which Type of Firm is Yours?
As I mentioned at the beginning of this article, there is no perfect legacy or mercenary
firm. I do, however, believe that to maximize a firm's profit, provide superior client
service and retain great and good people you need to be more legacy than mercenary.
The first thing you need to do is to plot where your firm falls on the continuum. If you
want to move more to the right in Figure 1, here are some suggestions:
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Review your compensation system to see what type of behavior you are
rewarding. There is nothing wrong with rewarding partners for their individual
efforts, but you also want to recognize their team contributions.
Have a one-on-one with those partners who you consider prima donnas or lone
wolves and see whether they can fit into the firm or should they go elsewhere.
Get the partners engaged in a robust dialog on this topic in order to get their
input and ideas.
Clarify what being a partner means in your firm.
Begin a team approach to serving clients.
Create a firm culture where all the partners work together to create an even better
firm.
While the legacy firm model will not be perfect, you will create a firm that openly
addresses issues and continuously strives to improve. And finally, a legacy firm has a
better chance of remaining independent or being the acquirer rather than the acquired.
[i] Leadership at Its Strongest: what Successful Managing Partners Do, Robert J. Lees,
August J. Aquila and Derek Klyhn (Bay Street Group, LLC, 2013), p. 25.
August Aquila is an internationally known speaker, consultant and writer.
He is CEO of AQUILA Global Advisors. He is also the co-author of "Compensation as a
Strategic Asset" and "Client at the Core."
August can be reached at [email protected] or 1-952-930-1295. For
more information see www.aquilaadvisors.com
August Aquila is an internationally known speaker, consultant and writer.
He is CEO of AQUILA Global Advisors. He is also the co-author of "Compensation as a
Strategic Asset" and "Client at the Core."
August can be reached at [email protected] or 1-952-930-1295. For
more information see www.aquilaadvisors.com