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"know thyself" is the cure, the answer, the process, the goal, the result


Keep Associates and Keep them Happy: Start Grading Partners on the Curve

It is axiomatic that associates are tired, frustrated and ready to walk at a moment's notice. Many commentators have warned that the sky is going to fall on the profession if we can't as a group figure out how to make lives for lawyers more bearable (read here and here and here). And yet, of course, the world keeps right on spinning and lawyers keep right on billing. I think there is no danger that the "legal market" as such is going to implode, but it is true that many firms are losing profits needlessly and that many poorly-managed law firms find themselves either facing extinction, absorption or reduced greatly in prestige. To bring it closer to home, just how much is your firm spending for every instance of associate turnover? That's what I thought. What to do?

Well, there have been many well-meaning folks who have tried to preach the gospel of basing partner compensation on soft factors (you know, time spent mentoring, 'team-player' attitude, pro bono work). Trouble is, the only way to make these work is to have highly arcane and individualized compensation structures that tend to breed discontent and rightly so: if you are going to infuse a rational process with subjective standards, you are going to get irrational results and decreased loyalty and morale.

Moreover, everybody knows about (and I constantly harp on) the need for law firms to incorporate some of the more modern and humane management principles long-ago adopted (or at least embraced) by the business world. Where is the nexus?

I'll tell you, and this should be easy for a law-school-survivor to figure out: start grading partners on the curve.

Now I'll tell you right now I do NOT mean these "360-degree" reviews where associates colleagues and practice group leaders alike get to weigh in with more subjective talking points. (Those are fine for identifying the "screamers" but I don't think they are an adequate tool for judging productivity). Rather, we need to start making equity partner compensation based solely (or very largely) on the gross revenues and profitability of his/her team.

Here's my analysis:

1) We need partners to be motivated to do whatever it takes to retain their associates and non-equity partners (of counsels, etc.). We all know that simply raising associate salaries in lock-step or otherwise will help (and lock-step is better), but does not fix the problem. The "whatever it takes" part means actually spending time with individual lawyers in the firm mentoring them, helping them improve their work, motivating them, socializing with them. There is no substitute for this work. And I'll tell you that every single new lawyer wants this and says so--the rest just want it but don't bother saying it anymore, even to themselves.

2) To do this, equity partners must go back to the days of high associate/partner ratios. To be clear, that means more bodies per equity partner. Any decent economist--and lots of economists with JDs and a law firm practice behind them--will tell you this. So why does it not happen? Well, the partners on the ground say it is because their clients want to see only senior people working on their cases given how high rates are. I think this is bunkum. Clients will be happy if you give them high value for money. Giving them high value for money in part means paying high dollar for high-value (strategic) work (partner work) and less money for grunt work (research, run-of-the-mill hearings, drafting contracts). No, the real reason partners are hoarding work is that they are desperate to cover the tracks of their inability to lead associates and build a team. That, and the fact that law firms aren't universally compensating them for their aggregate billings, or it is difficult to assign things appropriately.

3) People will work harder, longer, and better when they feel part of a group that gives them esteem.
Building teams means that people actually have to work together. This means that they don't operate as free-lancers ready to take whatever comes along. Thus, associates' time should be monopolized and assigned to a single equity partner. I can tell you that associates will grumble far less about working weekends when they know: a) their partners actually notice they are there; b) their partners are actually invested and investing in their professional development; c) they know their partners and know that the one's future is all tied up in the other's. The much-vaunted benefits of associates working for every tom, dick and jane in the firm are over-rated: this is just more "non-learning", but with more people involved in the confusion, and with loyalty and connections diluted.

4) Further, equity partners must be compensated solely upon the effectiveness(revenues and profitability) of their individual teams. This is going to force partners to spend more time hunting down that work, yes. And it is going to force partners to spend the time keeping their team motivated. In short, it will help partners actually take the time to educate themselves about management principles, rather than just review memos and to their junior partners' and associates' work for them.

5) Partners must be "graded" (compensated) relative to each other.
We need to break out of the miasma of accepting "ok" profits and force equity partners to innovate in terms of emotional-intelligence (human management) skills. To do that, we are going to have to continually compensate partners relative to each other in terms of team revenues. And I don't care if one group has different rate sensitivities, etc., etc. The presidents of small divisions at huge multi-nationals do not get compensation the same as large ones. Get over it. The point is that partners will work toward high compensation as a group. To do that, we must force them to spend the time and thought-resources strategizing how to maximize their team's overall productivity. They cannot be spending 75% of their time doing traditional billable work. That is insane. If they know that the financing of that Jamaican beach-house is tied to how effectively they can actually manage their subordinates attorneys, and that there is NO WAY that they can personally bill themselves out sufficiently to do it--they will actually start thinking about building their teams.


If we want law firms to enjoy greater stability, better profits, world-class management, high retention rates and overall a higher-quality service to their clients, they are going to have to start treating equity partners as VP-level business managers. Practice-group leaders and regional managing partners are going to have to start acting like company presidents, and managing partners as CEOs. Team-building is essential. Mark my words, firms that refuse to adopt practices that will reward partners--on a rational and consistent basis--for overall productivity will fall in prestige, size and profitability relative to those that do.

Have a great rest of your Monday!

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