Over the past year, journalists have repeatedly asked me to help make sense of developments in professional service firms.

The stories themselves have been remarkably varied. The Financial Times interviewed me multiple times about falling partner promotions in the Big Four, stressed associates in elite law firms, rising partner pay in accountancy firms, ethical scandals in Australia, and the impact of AI on consulting. Bloomberg asked me about McKinsey and other elite firms cutting executive support staff, while the Telegraph interviewed me about the declining lure of partnership. The Telegraph and Observer also asked me about the challenges facing the consulting sector. Most recently, I have been talking to the Financial Times  about the pressure on the Big Four to strengthen central control over their international networks.

Each is a significant story in its own right. But, viewed together, they reveal something even more interesting about the pressures building within professional firms.

Looking beyond the immediate explanation

Journalists usually approach me because they are following a lead about something that is going on in a particular firm. I always aim to go deeper beyond the immediate news, to analyse the underlying causes and consequences of the most recent development.  This helps to put ones firm’s issue in a broader perspective.

When consulting firms cut staff and point to AI, for example, it is tempting to conclude that AI is replacing consultants. Look more closely and a more complicated picture emerges, involving post-Covid over-hiring, weak demand, and longstanding questions about the leverage model on which consulting firms have traditionally depended. When elite firms remove executive assistants from their senior fee earners, the obvious story is about technology and efficiency, but it is also about changing power relations between professionals and management, and the disappearance of people who may hold considerable institutional knowledge and act as the cultural glue within their firms.

Other developments raise questions about the relationship between professionals and their firms. Falling partner promotions are partly a response to economic uncertainty, but they also potentially alter the implicit compact at the heart of professionals’ dreams of success. Rising partner pay is happening alongside intensifying performance pressures on partners themselves.

I took a similar analytical approach in an article I wrote for the Financial Times earlier this year, analysing the cumulative effect of reputational scandals in consulting. Some firms may blame a few “bad apples” and critics may blame “partners’ greed”, but neither explanation gets us very far. Reputational damage is bound up with changes to consultants’ business models,  professional identities, relationships with clients, and organisational governance. The scandals matter not simply because they damage individual firms, but because they can undermine the confidence on which the claim to professional expertise ultimately depends.

A fragile equilibrium

I have spent more than 30 years researching professional organisations across sectors. This has taught me that professional partnerships are built around a series of tensions which can never entirely be resolved.

Professionals accept extraordinary demands in return for autonomy, status, identity, financial rewards, and the prospect of joining the partnership. Partners submit to collective constraints while retaining considerable individual power. Firms reconcile intense internal competition with the need for collegiality and collaboration. Their leaders need to exercise authority over professionals who may also be owners of the organisation they are supposedly leading.

AI challenges traditional assumptions about leverage and the value of junior professional labour. Private equity introduces new owners, incentives, and time horizons. Rapid growth can weaken traditional forms of peer control, while professional management can shift power away from individual partners. Changing expectations among younger professionals put pressure on established career bargains. Regulators, meanwhile, are increasingly questioning whether the governance structures of the largest professional firms remain adequate for organisations of such scale and significance.

The current debate about the globally federated structure of the Big Four is a good example. Greater central control may strengthen consistency, quality control, and accountability. But local autonomy is deeply embedded in how these organisations have developed and how power is distributed within them. Strengthening control at the centre therefore has implications for much more than governance – it embraces leadership, culture, and organizational change (four of my favourite topics).

My perspective is different

Law firms, accounting firms, and management consultancies have different ownership structures, regulatory obligations, competitive dynamics, and cultures. Leaders understandably focus on developments within their own sector and will generally understand them in far greater detail than an outsider ever could.

My perspective is different.  Looking across sectors, and drawing on many years of research and work with these firms, I see connections between developments that may initially appear unrelated. A law firm struggling to reconcile the expectations of younger lawyers with the demands of its partnership model may seem to have little in common with an accounting network wrestling with global governance, or a consultancy threatened by AI-enabled competitors, or any professional firm contemplating private equity ownership. Yet many of the same questions lie beneath these apparently different problems.

Who holds power, and on what basis? What binds professionals to their organisation? What happens when autonomy is constrained? How much inequality will professionals tolerate? How do firms sustain collaboration among highly competitive individuals? Ultimately, who controls organisations in which ownership, management, and professional expertise have traditionally been intertwined?

This is why I am wary of explanations that attribute current upheavals to a single disruptive force, such as by AI, private equity, regulators, or generational change. It is also why I remain fascinated by researching and advising these firms.

The individual stories will keep changing, but the deeper challenge for leaders remains remarkably consistent: They must understand what holds their organisations together and recognise when that equilibrium is  becoming dangerously fragile.  Above all they must think carefully about the unintended consequences of the changes they are currently contemplating.