Private equity, AI and the pressure on firm culture

On Tuesday 22 September, I joined the Managing Partners' Forum Strategy and Marketing Group in London for a roundtable on growth, retention and the commercial side of professional services firms. Rippan Vig of the Forum chaired the session, and Carpmaels & Ransford hosted us on Southampton Row.

It was a member-only session and the conversation was candid, so what follows is the substance rather than the room.

The two pressures turn out to be one pressure

More firms are taking private equity investment. AI is changing how the work gets done. Rippan and I had talked beforehand about how alike the two pressures are once they reach a commercial team.

A managing partner in a firm that has taken investment now fields a call on a Monday morning. How is development this week. What proposals are out. How is the cash. What came in. What is on the clock. For a good number of firms that is the first time anyone has been asked to account for commercial performance in those terms, and calling it a shock to the system would be an understatement.

I have sympathy with the demand itself. When I started in professional services, business development was not taken seriously at all. The discipline I would have wanted then has arrived. Careful what you wish for.

What gives first is culture

The change I see most clearly in firms is not the numbers. It is what the numbers do to the culture on the way down.

A conversation at the top table about fees and cash feels like one thing in that room. It feels very different by the time it reaches the people doing the work, particularly when it arrives without any structure attached. A target for the quarter is not a plan for the quarter. Where there is no structure underneath it, I have watched cultures built over decades get flattened very quickly.

The room was clear that this is not an argument for leaving things as they are. Culture can be a reason to grow or an excuse not to, and firms know which one they are dealing with. The question is how to do both, and whether anyone has said out loud which direction the firm is actually travelling in. Where firms have come together through acquisition and nobody has said it explicitly, teams leave, and they take their version of the culture to the next firm.

Partners are moving, and firms are not integrating them

I have seen more partner movement this year than at any point in my career. Partners arriving with a tranche of clients, in law, in accounting and in tax, and sometimes moving on again a year later with a slightly different tranche. Goodwill payments, which were once rare, are becoming ordinary.

Firms used to be disciplined about this. When a firm acquired another firm, there was a proper integration. Systems, training, client handovers, the team that would service the work. That discipline has not followed the lateral hire.

A partner joining with a client portfolio is a small acquisition and it deserves the same treatment. Get the clients onto the systems. Introduce them to more than the one person who brought them. You have paid for those relationships, and a relationship that still rests on a single partner can leave the same way it arrived.

The word is the obstacle more often than the work

There is still real resistance at equity partner tables to the language of commercial growth. Not to the activity. To the words.

What I have learned is to take the labels off. In the US I see the same work running under the name of trusted adviser programmes, where the commercial discipline is simply part of it rather than the title of it. Firms that found the language impossible have got a long way by framing it as a duty to serve a client properly, or as what a responsible business owes the people whose livelihoods depend on it. The work is identical. The framing decides whether anyone will do it.

What holds a client

Underneath all of it, the thing that keeps a client is still depth. A client who deals with one partner and one service line is easy to move and easy to squeeze on price. A client whose work runs through several parts of a firm is neither.

Visible expertise in a specific sector remains the most reliable way I know to hold the sense that a firm is worth its fee, rather than ending up in a conversation about price. That has not changed because of private equity, and it has not changed because of AI.

My thanks to Rippan Vig for chairing, to the Managing Partners' Forum for the invitation, and to everyone in the room who shared their experience so generously.