The following is an excerpt from the publication made by José Luis Pérez Benítez for the newspaper El Confidencial in its February 13, 2024, edition (La tragedia de los comunes y la reputación como “bien en común” de un despacho (La tragedia de los comunes y la reputación como “bien en común” de un despacho (elconfidencial.com).
The “tragedy of the commons” is the well-known economic concept, put forward by HARDIN back in 1968, in which he explained the reason for the inefficiency of assets whose ownership is not exclusive, but corresponds to several owners.
HARDIN, and most of the economic and business management literature, maintains that common property always tends, sooner or later, to be misused, abused and inefficient, focusing also on the pernicious externalities it produces -especially for the environment-; however, we believe that this is not always the case, and that this theory is not absolute and can be wrong in specific situations. One of these specific situations is the management of a law firm’s reputation. The reputation of the firm as a common good, as an asset owned by several partners and as the main element of a partnership, can be an example of successful management of a communal good.
What are these characteristics and standards that have led to the success of community property management and which also seem to be the cause of the failure of those that have departed from these principles? They are mainly the granting of their own norms and capacity for self-management, which in many legal firms are part of their collective culture almost without being perceived so clearly. We can summarize them – with the permission of the 2009 Nobel laureate – as follows:
Clearly defined boundaries. The individuals with rights to use the resource must be clearly defined, as must the boundaries of the resource. This must be clear among the partners.
Consistency between the rules of appropriation and provision with local conditions. The rules of appropriation that restrict time, place, technology and quantity of resource units are related to the conditions of each user. This is usually embodied in the compensation systems of the partners.
Collective choice arrangements. Most of the individuals affected by the operating rules can participate in their modification. Here we see how inherent in the partnership is collective decision making.
Supervision. Every firm requires leadership and control and oversight mechanisms, sometimes with a “primus inter pares”.
Graduated sanctions. Appropriators who violate operating rules receive graduated sanctions (depending on the severity and context of the infraction). Perhaps the most difficult part and where law firms encounter the most enforcement problems.
Conflict resolution mechanisms. Internal mechanisms that resolve problems within the home and among peers.
Minimum recognition of organizational rights. Self-management and ability to provide their own rules, beyond the typical statutory or legal provisions.
Nested entities. That is, creation of subgroups when necessary, as happens with growth and divisions into areas, offices or similar. This is organization and supervision but divided into multiple levels of embedded entities.
In conclusion, we can state that, historically, the partners of many firms, following these rules, have been able to defend and enhance the joint reputation, while increasing and consolidating the future of their firm, their wealth, and their teams. Other partners, perhaps, have not been so capable, and the answer lies in analyzing which of the above rules was not – or is not being – as well applied.
Jose Luis Pérez Benítez.