Ensuring Practice Group Effectiveness

Our joint research project with the Managing Partners Forum continues and our topic in February 2014  was practice group management.  Specifically, are there particular responsibilities practice group leaders should be taking on in order to drive effective practice management?  In addition, what kinds of base level support are firms providing to practice leaders (e.g., job descriptions clarifying the role, training for leaders, etc.)?

At the core, we found that firms experiencing higher levels of success with practice group management have different (and higher) expectations for their practice leaders.   Firms reporting the highest levels of success with practice group management ask their practice leaders to take on more responsibilities – the most common responsibilities in more successful firms can be summarized as:

  • Strategic planning for the group;
  • Work flow management (right people on the right matters at the right time);
  • Coordination and encouragement of teamwork, esprit and morale;
  • Coordinating and encouraging marketing to new clients;
  • Coordinating and encouraging professional development and training.

Those top responsibilities are depicted graphically below.

Top six effective firms

A complete documentation of the results of this survey on practice group management can be found at the Managing Partners Forum web site.  We welcome your questions and feedback regarding these findings.

Our March 2014 research focuses on best practices in law firm strategic planning.  Highlights will be presented here, a full write-up of results will be published at the Managing Partners Forum, and a more in-depth article will be developed for and published in the June edition of Legal Management magazine.

Partner Compensation System – What Drives Satisfaction (and Dissatisfaction)?

As noted at the outset of this year, Sterling Strategies has partnered with the Managing Partner Forum and TheRemsenGroup for a series of monthly mini-surveys of managing partners on topics of strategic importance to law firms and their leaders.  It bears strong similarities to our 2012 “strategy question of the month” series – with the added benefit of a partnership with the Managing Partner Forum.

Our first topic – for the January 2014 mini-survey – was the drivers of satisfaction (or dissatisfaction) with partner compensation systems.  The survey drew nearly 140 responses and the findings are informative.

  • Subjective systems, informed by objective data are the most common approach to setting partner compensation.
  • The overwhelming majority of systems are fully open (i.e., both performance data and compensation results are open to all partners).
  • The smallest firms encounter the highest levels of dissatisfaction.

See the full analysis of the partner compensation satisfaction survey at the Managing Partner Forum web site.  The results of these monthly surveys will be published under the “Leadership Matters” tab on the MPF web site.  We hope you find the results interesting and useful in your own firm.

Our topic for February 2014 is practice group management – and the approaches that lead to more effective (and less effective) practice management.  The survey is open to all managing partners (we recognize many of our readers hold other leadership roles – we need to find a good way to tap the collective wisdom of law firm leaders who are not lawyers by training).  If you are a managing partner and have two-minutes to share your experiences with practice group management, click here to be taken directly to the survey.

We welcome your feedback on the survey results and your ideas for capturing and sharing the collective insights and experiences of all law firm leaders.  Improving law firm management and leadership is the primary purpose of this blog and we are always open to your ideas.

You can join our mailing list by clicking here.

Non-Lawyers: A Critical Success Factor for the Law Firm of the Future

Having great attorneys – well-trained, highly capable, hard-working and client focused – has long been a critical success factor for law firms.  Strategically, it has become basic table stakes for competing effectively in the legal industry, particularly among more sophisticated law firms (i.e., BigLaw and BigEnoughLaw).  The big change coming to the legal industry is the growing criticality of non-lawyers.  Yet, it is currently an area in which many otherwise sophisticated law firms fail miserably.

Think about it for a moment.  Where else (besides large and mid-sized law firms) do highly educated professionals get placed on such limited career paths, essentially for lack of a JD?  Furthermore, what is it about obtaining a JD that qualifies a person as an expert in information technology, project management, business development, process redesign, innovation, knowledge management or really anything besides the law and precedent?  As Bruce MacEwen astutely observed in his Growth is Dead e-book, “lawyers are inclined to assume they can do anyone else’s job but no one else could possibly do what they do.”

The very term “non-lawyers” is a peculiar construct of law firms.  And, at many firms it is used in a way that devalues, even marginalizes, professionals who are not lawyers by training and education.  Given the trends affecting the legal industry, especially the trends facing sophisticated law firms, those with a cultural predisposition that devalues so-called non-lawyers will be at a distinct disadvantage in the future.  Consider three examples where non-lawyers will be critical to success.

Responding to Macro-Level Trends

The most obvious arena in which non-lawyers will drive the success or failure of law firms is in response to the macro-level trends influencing the more sophisticated segments of the legal industry.  Richard Susskind’s book is called The End of Lawyers in large part because it foretells a future in which legal training and expertise are necessary, but insufficient for survival and prosperity.  More sophisticated law firms will be (are being) forced by clients and competitors to embrace technology, knowledge management, project management, lean process, and other management tools more common outside the legal industry.

Successfully adopting any of those management tools requires attracting great people – well-trained, highly capable, hard-working and client focused – whose professional training is grounded in engineering, information technology, organizational psychology, management, and other fields.  Their training and backgrounds will not include a JD or a background practicing law (with rare exceptions).  Even in cases where those functional managers do have a JD, it will not be instrumental to the contribution they make to the success of their law firm.

In short, winning law firms in the future will attract (and will highly value) professionals across a range of professional disciplines.  Attorneys will defer to the expertise these professionals bring to the table.  And, attorneys will collaborate effectively with those professionals to apply their expertise to the firm’s practice and its relationships with clients.

Business Development and Marketing

Over the past twenty years, marketing professionals have been gradually gaining credibility and respect in law firms.  Marketing and business development positions have been elevated within the management hierarchy and investment in the leadership positions appears to be rising.  However, there is a long way to go to fully capitalize on the expertise of marketing and business development professionals in law firms.

As long as powerful partners can push marketing and business development professionals (and their own partners) away from direct contact with select clients, the firm is at a disadvantage and at risk.  That risk includes the potential of losing the partner (and his/her clients) to a lateral move.  Frankly, partners who keep others away from “their clients” raise a number of red flags.  Beyond the risk of purely mercenary behavior on the part of a partner, a lack of broader contact risks the loss of the client relationship.  Studies demonstrate that clients with multiple partner relationships and/or that use multiple practice groups are much more likely to remain with a firm.  Further, that broader contact improves the probability that emerging and/or nagging problems (e.g., responsiveness, pricing, quality of work, etc.) will surface before a client shops their work to other law firms.

Looking forward, business development and marketing professionals will play an increasingly important role in a number of areas including:  gathering genuine, actionable client feedback; expanding existing client relationships (e.g., facilitating cross-marketing); identifying opportunities to deepen and strengthen existing relationships via process improvement, technology, pricing and other innovations.  Marginalize marketing and business development professionals at your own risk.

Delivering Cost Effective Legal Services

Perhaps the most challenging (or controversial) change coming to the legal industry is the inevitability of involving more non-lawyers in the direct delivery of client services.  That growing involvement of non-lawyers will go well beyond (though it will include) the use of paralegals over the next five to ten years.

Ask yourself a few questions (thought experiments if you will).  Who is a better value to clients in managing document discovery, a well-trained paraprofessional with expertise in IT, database searches and document management or an associate earning three to four times the salary (with less grounding in large scale document management)?  Can a $60,000 per year professional with a finance degree add value to a transactions team (perhaps many times more value than a junior associate)?  Can a trained actuary add value to risk management assessments for major litigation clients?

Certainly, some firms have already made great strides in the use of non-attorneys in the delivery of legal services.  For instance, the best IP practices and firms are loaded with PhD and Masters level technical specialists.  In the future, firms across the practice spectrum will be challenged to become much more creative in integrating non-attorney professionals into their client service teams.  That will be especially evident in practices where clients and/or competition drive the market toward more cost effective solutions.

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So, if your firm still has a culture that devalues non-lawyers – that doesn’t draw upon the knowledge and expertise of other professionals – you better get started on changing that culture.  No silver bullet (technology or otherwise) will save you in the long run if the only voices that matter in your law firm are attorney voices (or even more narrowly, partner voices).

Intentional Management: Saying What You Mean and Doing What You Say

Over the past year we have noticed an important word showing up more often in the strategy deliberations of our law firm clients.  That word is intentional, literally meaning “done in a way that is planned or intended; thoughtful; deliberate; goal-directed.”

Frankly, we could not be happier to see our clients embrace the term intentional to describe strategic and managerial priorities.  For far too many law firms, for far too long, many aspects of firm and practice management have been anything but intentional.  On the contrary, many firms – including many with smart, well-conceived strategic plans – accommodated highly autonomous action on the part of practices and (especially) successful partners.  Firm strategy was essentially subservient to the needs and interests of individuals and small groups within the firm.

In his landmark article “Patterns in Strategy Formation,” (pdf) Henry Mintzberg accurately characterized this as the strategy of “muddling through.”  This approach is inherently reactive and leads to continual bargaining vis-a-vis priorities and goals.  As a result, strategy is fragmented and often reflects the narrow interests of powerful individuals, rather than the proactive pursuit of best opportunities available to the organization as a whole.  Sound familiar to anyone?

What do we mean by “intentional management?”  It simply means saying what you mean (i.e., being clear about the direction the firm is heading and the priorities it will adopt in its pursuit) and doing what you say (i.e., following through on those priorities).  Now, it is easy to define intentional management, but more difficult to live it.  Living it requires linking strategy across and through the firm.

Cascading

It also requires actively managing, monitoring and measuring progress toward the firm’s primary goals.  Passively waiting for annual (or less frequent) partner compensation discussions is not sufficient.  There need to be clear commitments to action at the firm, practice, departmental, and individual level.  And, the whole endeavor benefits immensely from tracking what is working (and what is not working) via outcome measurement.

After all, we adopt strategies and implement those strategies with particular outcomes in mind (e.g., revenue growth, improved realization, stronger client relationships, a more effective work force, etc.).  If we are following through on our commitments (i.e., managing intentionally), then we can use outcome measures to identify what is working, make appropriate adjustments, and challenge the strategy when circumstances dictate.

Intentional management applies to virtually every aspect of the law firm.  For instance:

  • We need to be intentional in our approach to people management – especially in recruiting, training and professional development.
  • Client relationships benefit from intentional management.  That is particularly true for relationships threatened by clients’ demands for greater value and/or cost reduction (e.g., where project management, knowledge management, or other aspects of the ACC Value Challenge are in play).  It is also true of relationships that can benefit from greater breadth and/or depth (i.e., where others in the firm can help substantially in cementing the client relationship).
  • It is certainly a requirement for effective business development if that is going to be anything more than heroic individuals going to market on behalf of the firm.  Any meaningful targeting, leadership in industry segments, and/or team-oriented selling is a function of intentional management.
  • Pricing decisions (e.g., rate setting, creation of alternative fee arrangements) and other basic economic decisions (both revenue and cost related) benefit from intentional management.
  • Finally, the ultimate decision of who owns the law firm (and at least here in the US, that means who becomes and remains an equity partner) should be driven entirely by intentional management.

So, three cheers to the firms out there embracing an intentional approach to management.  It will serve you well as the legal marketplace becomes increasingly competitive.

Five Tips for Sustaining a Great Law Firm Culture

Steven Harper wrote a terrific piece on law firm culture in response to the latest Citi Private Bank/Hildebrandt update on the legal market.  Harper is incredulous of Citi/Hildebrandt’s warning that “Law firms discount or ignore firm culture at their peril.”  He makes the point that “consultants have encouraged managing partners to focus myopically on business school-type metrics that maximize short-term profits…what has resulted from that focus: the unpleasant culture of most big firms.”

The reverse does not have to be (in fact often is not) true.  Namely, firms with a strong, collegial culture are not inherently doomed to poor economic performance.  They may not top $3mm a year in profits per equity partner, but everyone working in those firms earns a very good living, they have strong and enduring client relationships, and they enjoy a balanced and rewarding professional life.  Having that kind of positive firm culture requires work and discipline – and, especially, a commitment not to throw away long held values in the face of short term economic challenges.

Our recent survey on best practices in law firm strategic planning confirmed this point.  Namely, the firms experiencing the most successful results from strategic planning are much more likely to have articulated shared values or principles as part of that process.  At the same time, those highly successful firms are much more likely to adopt and track measurable objectives as part of the strategy process.  In other words, the most successful firms balance a strong commitment to long held cultural values with a pragmatic approach to setting objectives (i.e., financial, client relationship, and other measures).

Having had the pleasure and privilege of working with a number of firms over the years that have cultivated and sustained great cultures, here are five suggestions for how you can cultivate, embrace and sustain a set of shared values that define a great law firm culture.

  1. Honor the Founder(s) – When I started my consulting career at Arthur Young (that dates me), John Smock made sure everyone in the practice got a copy of a relatively short book entitled, Arthur Young and the Firm He Founded.  That little book encapsulated many of the core values of the firm – and traced them to the values of the hard working Scotsman who immigrated to America and started the firm.  Whether your firm was founded 20 or 200 years ago, you are likely to find some of the roots your firm’s values and culture in the character of your founder(s).  Honor those roots.
  2. Celebrate a Milestone Year – Round number anniversaries lend themselves to celebrations (10th, 50th, 100th).  So do record years, though they tend to arrive with more frequency and less fanfare.  Take the opportunity of a milestone year to reemphasize the shared values that brought the firm to that point.  Embrace and celebrate your culture and your shared values – not just the anniversary or the record.
  3. Document Your Stories, Your History and Your Culture – I have a number of books in my collection from clients – both law firm and corporate – in which the history of their organization (and its culture and values) is documented and described for posterity.  Sometimes those books are commissioned in conjunction with an anniversary, others mark the passing of great leaders, and still others were done simply to capture the stories before they were lost to memory.  Those stories may be the very best window into truly understanding the firm’s culture and the values – they are a way to connect our rational understanding of the values to our emotional understanding of values (see this brief slideshow for more).  Stories can even be used when you need to drive cultural change (see Peter Bregman’s HBR article on the topic).
  4. Ask Your People to Define the Culture – We have used a technique very successfully over the years to isolate core values and help organizations coalesce around them.  Ask a very simple question, “What three words best describe the values that endure over time in our firm?”  The resulting word-cloud is enlightening and it helps to define (or reinforce) the firm’s shared values.  It can be used in many settings to spark a discussion of shared values and the culture – keeping that culture front and center as other decisions are being made (e.g., employee reviews, partner compensation, lateral hiring, strategic planning, etc.).
  5. Put It In Your Plan – Finally, take a lesson from the firms having the most success with strategic planning and strategy implementation.  Articulate your values as part of your overall strategy.  Include a long term mission as part of your strategic plan and include a concise articulation of your core values in that mission.

While the embrace of firm culture and values may be belated for some, it is welcome nonetheless.  Whether your firm is large, mid-sized or small, sustaining a positive firm culture is a critically important element in a genuinely successful law firm strategy.  Who knows, it might even land your firm at the top of the Vault.com rankings for best firms to work for.

 

Top Insights from 2012 Strategy Questions of the Month

Throughout the course of 2012, Sterling Strategies conducted monthly mini-surveys, each focused on a single strategy topic.  The intent was to develop some empirical data on what works and what does not work relative to a variety of strategic management challenges.

We certainly learned something every month.  Often the findings and insights were entirely new (if not entirely counter-intuitive).  Occasionally, the findings confirmed something we believed, but lacked the data to support.

Before setting our sights on advancing the state of strategic management in 2013, we thought readers might enjoy a highlight reel of sorts of the most significant findings from the 2012 strategy question of the month series.  The list is presented as a “top ten,” but the insights are ordered for readability and flow.

  1. Grow your own – When developing a strategy for generational succession, it is best to develop people yourself (rather than seeking to hire future leaders laterally).  Our November 2012 survey found that “high lifer” firms (i.e., firms with higher percentages of people who were hired at the entry-level and stayed) have dramatically higher confidence that future leaders exist within every experience level of their firm.
  2. Confront the elephant under the rug – The August 2012 survey focused on what approaches to managing under performing partners actually work and which do not.  What we found was that under performance rarely improves without frank discussion and accountability.  More importantly, confronting under performance actually has a reasonable success rate.
  3. Show me (more than just) the money – What characteristics make up a “model partner?”  That was our question in July 2012 and what we found was that, while originations and billings are very important characteristics in a model partner, subjective factors (e.g., training associates, bringing legal acumen to the table, being a good corporate citizen) comprise nearly 50% of the mix of characteristics firms want from the hypothetical ideal partner.
  4. See no evil, hear no evil, speak no evil (at least when it comes to partner compensation) – Our inaugural survey in January 2012 examined the question of what approaches to setting partner compensation lead to the highest levels of satisfaction.  It turns out, objective (i.e., formula) systems correlate with the highest levels of satisfaction.  And, so-called “closed systems” in which compensation and other data are not published are also closely correlated with higher satisfaction.
  5. The “vision thing” is a key to effective strategic planning – We took an objective look at what tools and approaches lead to more effective strategic planning in law firms (beyond, obviously, hiring Sterling Strategies) in June 2012.  The firms with the most effective strategic planning processes are much more likely to have articulated a vision for the future, a set of shared values, and measurable objectives to track progress toward achieving major goals and strategies.
  6. Focus practice group leaders on things that make a real difference in group performance – Firms with the most effective practice group management experiences are much more likely to ask practice groups to focus on cross-marketing, on profit drivers for their respective group, and on aligning practice strategy with firm-level strategy.  Meanwhile, the least effective groups get bogged down in administrivia.
  7. Better budgeting practices – Firms with the most effective budgeting processes are more likely to plan for growth (in addition to looking for cost savings).  And, the more effective budgeting processes are considerably more likely to involve practice group leaders in the budget development process.
  8. 2012 profit growth was driven by production and realization improvements – The bloom was clearly off the rose relative to using rate increases to drive profit growth (unlike the decade before the financial crisis).  Bonus question – is leverage dead?  On the surface the answer would appear to be ‘yes,’ but the reality is that leverage is wearing new disguises (e.g., more income partners, larger top-to-bottom compensation differentials, growing use of contract attorneys, etc.).
  9. Data, data, data (if you hope to be successful with AFAs) Alternative fee arrangements are growing across a number of categories.  Law firm leaders were emphatic in noting that the key to success with AFAs is well analyzed data (both cost data and historical work load data).
  10. Practice portfolios are driving domestic law firm mergers – Allowing for alignment of fundamentals (e.g., firm cultures and economic compatibility), the most important driver of mergers these days is finding a merger partner with complimentary practice area strengths.

As a bonus (since many may have missed it with the crush of year-end collections and the holidays), see our December 2012 findings regarding the use of objective measures and scorecards in law firms.  Short summary – firms are universally good or excellent at measuring financial objectives and results, but do a poor job measuring the strength of client relationships, people development, or much of anything else related to their operations.

We are immensely grateful to the many, many law firm leaders who completed the short (usually two-minute) strategy surveys throughout 2012.  That input enabled us to build a nice body of empirical data regarding a number of important strategic management topics.  It was helpful for law firm managers – and to us as strategy consultants.  We intend to take a slightly different approach in 2013 (shooting for five-minute surveys on a quarterly basis).  That will reduce the number of times we have to pester you all for input over the course of the year.  In place of some of the monthly surveys, we will share insights and proven approaches gained directly via other channels.

Best wishes for a very healthy and prosperous 2013.

SURVEY RESULTS – Goals, Measures and Balanced Scorecards – December 2012 Strategy Topic of the Month

Our final strategy topic  for 2012 focuses on what law firm management is doing relative to setting objective measures for their strategic plans. More specifically, what do law firms measure and are those measures in any meaningful way connected to their own strategies?

What we learned – in short – is that law firms measure financial results with real consistency.  Beyond financial results, measurement is relatively limited and is often unconnected to firms’ strategies.  That puts law firm management roughly 15 years behind corporate management – where balanced scorecards enable companies to translate strategies into measures in four primary categories:

Balanced Scorecard Graphic

The balanced scorecard idea was novel when Robert Kaplan and David Norton introduced it in the mid-1990’s.  Essentially, they recognized the peril in having a company focus only on financial performance – without consideration to its performance vis-a-vis customers, employees and underlying business processes.  Since then, research has demonstrated the positive impact of adopting measures in key areas beyond financials.  For instance, a 2008 study published in Advances in Accounting found that “firms that adopt the balanced scorecard significantly outperform firms that do not (including financial returns).”

No one responding to this month’s survey has formally adopted a full scale balanced scorecard approach.  However, roughly 40% of the firms responding to the mini-survey have either adopted portions of the balanced scorecard (25%) or are working with an informal version of the balanced scorecard (15%).  This is consistent with what we found in early 2009, when we were putting together case studies for Balanced Scorecards for Law Firms – namely, very few firms have formally embraced a balanced scorecard approach to strategy implementation and/or performance measurement.

Unsurprisingly, 100% of law firms report having and using financial measures.  In fact, the overwhelming majority of them consider their financial metrics to be either “solid and reliable” (24%) or “excellent and highly informative” (72%).  To the extent firms have measures linked directly to their strategic plans, those measures are predominantly financial.  Asked specifically if they have measures linked to their strategy, only about half of responding firms reported make any effort to link measures (financial or otherwise) to their strategic plans.

A summary of how prevalent measures in each of the four balanced scorecard categories are within law firms underscores the overwhelming reliance on financial results as a proxy for everything else.

Survey Table

The most striking thing here is that although over 95% of all firms have solid or excellent financial measures, 80% of firms have limited (or no) measures of client satisfaction.  This is consistent with our October 2012 strategy topic of the month.  In that study we found that relatively few firms have structured client feedback programs focused on their top clients.  Frankly, this is both a huge missed opportunity and a potentially critical mistake.  Even if you never seriously evaluate or adopt a balanced scorecard – at the very least augment your financial metrics with systematic feedback from clients.

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As always, we thank you for your input and willingness to share your insights via these brief monthly surveys.  We will return next week with a recap of the top ten insights gained from the 2012 strategy question of the month surveys.

Best wishes for a healthy and prosperous 2013.

 

Partner Development Strategy – November 2012 Strategy Question of the Month – Survey Results

Our strategy topic for the November 2012 focused on where the future leaders of law firms will be coming from.   There is a simple industry wide issue relative to generational demographics.  A very large cohort of baby boomer partners will be retiring over the next 20 years.  In fact, by 2020 (eight years from now) half of the boomer cohort will be 65 or older.  If you look at the broader demographics, the generational cohorts create something akin to a roller coaster.
 
 
  • Baby Boomers are a large cohort of over 80 million people
  • Generation Xers  are a smaller cohort of roughly 60 million people
  • Millennials are a large cohort of over 80 million (similar in size to the boomer generation – with many still in high school)
So, how do you overcome the overall industry (and societal) demographics to ensure you have strong people across all generational cohorts?  Our findings point emphatically to the value of hiring and developing ‘lifers’ (i.e., people who stay with the firm they join at the entry level).  In other words, the best path to ensuring you have great people across the generations is to hire and develop your own!  To quote a  couple of respondents:
 

  • “We are blessed with strength throughout the demographic ranks, as well as a culture that is attracting like minded star/potential star laterals. We highly value having high quality lawyers at all levels (including entry level), training and mentoring, and making it such that all who work here can, if they do their parts, make a career at our firm.”
  • “(Our future leaders are) most likely from “lifers”.  We have a good group of them.”
Firms who reported that 50% of more of their current attorneys are ‘lifers’ (let’s call those firms ‘high lifers’) are dramatically more confident in the future prospects of their young people.  Asked the importance of various generational cohorts in future succession (i.e., who are most likely to produce business developers and leaders over the next 10 years):
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  • ‘High lifers’ are three times as likely to consider their current associates to be a very or critically important source of future leaders (compared to ‘fewer lifer’ firms).
  • Similarly, ‘high lifers’ are 3.5 times as likely to have confidence in associates that they ‘plan to hire and train in the next ten years.’
  • ‘Fewer lifers’ on the other hand only truly have confidence in their mid-career (over 45) and younger equity partners.
 
More broadly, no one expresses much confidence in the ability of future lateral hires to be key players in 10 years.   However, there were firms anecdotally expressing great confidence in their laterals.
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  • “We have grown over the last 10 years 200%, mainly from lateral hires. It is from this group that we see our future leaders.”
  • “(Our future leaders will be) highly successful laterals that subscribe to our business philosophies and firm culture.”
In addition, there is not much confidence in the future prospects of younger (under 45) non-equity partners.  While not entirely surprising, the lack of confidence in non-equity partners raises enough questions about their long term role(s) to fill its own blog post.

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Hiring at the entry level has been consistently lower across the industry – as compared to pre-recession levels.  The following pie chart explains why that condition persists quite clearly.
 
Finally, a couple of respondents looked into the proverbial crystal ball and offered predictions about where the future generation of law firm leaders will emerge.
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  • “They will come from the middle tier of law schools, they will have worked their way thru college and law school, they will have started working early in their teens and understand how to make a dollar.  They will display a high level of emotional intelligence and a majority will be women.”
  • “From those who have a business/entrepreneurial bent as opposed to simply applying a legal analysis to a set of facts.”
As always we thank those who took the time to share their insights with peers and colleagues.  Comments are open and we welcome your emails and phone calls as well.

Partner Development Strategy – November 2012 Strategy Question of the Month

The demographics of the legal industry are clear – a very large cohort of baby boomer partners will be retiring over the next 20 years. In fact, by 2020 (eight years from now) half of the boomer cohort will be 65 or older. While it is certainly true that productive people work beyond age 65, there will clearly be a need for a new generation of highly capable partners to develop and manage client relationships, to train and mentor future partners, and to lead their firms and practices.

If you look at the broader demographics, the generational cohorts create something akin to a roller coaster.

  • Baby Boomers are a large cohort of over 80 million people
  • Generation X  are a smaller cohort of roughly 60 million people
  • Millennials are a large cohort of over 80 million (similar in size to the boomer generation)
There are clearly cultural differences between (and within) each generational cohort – something demographers have studied and documented.  However, simply looking at the size of the cohorts underscores the challenge facing law firms over the next 10-20 years. A large generational cohort has begun to retire and will continue to retire over the next 20 years.  Meanwhile, the generational cohort behind them is smaller (and we see many firms with fewer equity partners from this generation).  The Millennial generation represents a new, large cohort (boding well for the long run), but the oldest Millennial is still an associate today – and many are not even out of high school yet.

The question then is, “where will law firms’ future leaders come from?”

The very short survey below should only take two or three minutes to complete.  Your individual responses will remain anonymous and confidential – collective input will be published here at the end of the month.  Please complete the survey by the close of business (PST) on November 28, 2012.  If for some reason you do not see the survey in the box below, click this link and you will be taken directly to the survey.

As always, thank you for your willingness to share your experiences with your peers in the legal industry.

Managing Under Productive Partners

The August 2012 law firm strategy question of the month focused on managing under productive partners – what approaches firms take to the issue; what works and what does not; and how the process plays out over time. In a very practical sense, this topic is the counter point to the July 2012 question of the month – what characteristics comprise a ‘model’ partner?

The term “under productive partner” implies that ‘problem’ partners are primarily an economic issue. Certainly, persistently weak revenue production  is the most common reason for frustration with partner performance. However, a number of law firm leaders noted in open-ended comments that “citizenship issues” and other qualitative factors regarding professional demeanor can also lead to a firm insisting a partner work to turn his or her performance around.

A Daunting Task, But Not Hopeless

Asked how often under productive partners manage to turn it around, over 95% of law firm leaders agreed that fewer than half of all ‘problem’ partners manage to have a “career renaissance.” In fact, over 50% of law firm leaders have found that fewer than 10% of partners manage to make an effective turn around. The silver lining – not a single law firm leader has found the well to be completely dry – everyone has seen a successful turnaround within their own firm.

Patience is a Virtue…

Firms are generally, but not universally, patient with regard to under performance. Many leaders noted that partner performance statistics are averaged over multiple years, so it takes time before performance issues are considered a persistent problem. Over two-thirds of the leaders responding to this survey noted that it takes at least two years of weak performance before the issue is addressed at all.

What Are Firms Doing to Address the Issue?

Asked to share which approaches they have tried and how well they have worked, law firm leaders were candid. The most commonly used approaches to address partner under performance:

  • Every firm has tried reducing compensation and holding one-on-one meetings with ‘problem’ partners.
  • Nearly everyone has tried “doing nothing and hoping things improve” (NOTE: It does not work – 90% report it “never works”).
  • Over 90% of law firm leaders have tried threatening compensation reductions and 90% have tried individual partner plans.

Conversely, a few approaches have not been as widely adopted, though some (as will become evident below) are actually reasonably successful in their own ways. Less frequently tried approaches include:

  • Only about half the firms indicated that they have tried to actively outplace partners (i.e., at client organizations, on the bench, etc.).
  • Slightly more than half of all firms have tried using a professional coach with under productive partners.
  • About 60% have tried “group interventions” (i.e., more than just a one-on-one meeting).

Now, it is absolutely true that actively outplacing someone is not really a turnaround per se – at least within the confines of the firm. However, for many partners, leaving (and landing well) is a tremendous career turn around. And, as it turns out, it is by far considered to be the most successful approach (by those who have tried it).

Blunt Tools

The other more successful approaches included actively cutting compensation; holding one-on-one discussions with under performers; and requiring individual plans. As one managing partner noted, compensation is a blunt tool and one you only get to use once a year (at most). In fact, these are all fairly blunt tools. However, a combination of one-on-one discussions along with individual turnaround plans has the direct benefit of creating accountability and a path forward for the partner in question.

Ultimately, the clear take-away messages:

  • Doing nothing and hoping it gets better never works;
  • Confronting the issue, creating a path forward, and holding people accountable has a reasonable success rate; and
  • Actively out placing those who cannot or will not turn it around is remarkably successful.

We welcome and encourage your comments below and your emails to John Sterling – jsterling@sterlingstrat.com .