Every practice needs partners who charm clients and perform brilliantly in financial terms. However, what do you do when the way they go about their work, or the way they behave, causes problems? Difficult partners are often successful precisely because they do not do things in the same way as everyone else. But, how can you manage their behaviour and, if they cannot be managed, at what point do the financial benefits they bring
to the firm cease to outweigh the problems they cause? What do you do then?
Not all mavericks are the same, but they generally fit into one of four main categories.
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The lone wolf. This partner works on their own. They do not work in teams with other partners or, generally speaking, share clients or contacts with other partners. They do not contribute to or participate in firm projects or activities. The work they do with their clients is profitable, but their clients are loyal to them personally, not to the firm, and there is limited potential for other partners to win work from those clients.
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The team builder. This maverick is rather like the lone wolf, except that they are very successful at building up a close-knit team of people who work for them, sometimes including other partners. But, the team is loyal to the individual rather than the firm. The team behaves rather like the lone wolf: it is successful with its own clients and is profitable, but it does not share clients with the rest of the firm. It becomes a team within a team, or even a firm within the firm. If the interests of that team diverge from those of the rest of the firm, serious conflicts can arise, especially over the allocation of resources, client conflicts and adherence to the firm's strategy.
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Wheeler dealers. Very often, these partners are not dishonest but are more closely aligned with their clients' interests than the firm's. This can compromise their objectivity and lead them into situations where ethical problems can arise which damage their own reputation, or the reputation of the firm. They will quite often move out of the law and into business, often in association with one of their clients.
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Misbehavers. These may exhibit a wide spectrum of behaviours which are incompatible with the cultural values of the firm. Such behaviours range from the obvious, such as bullying or harassing more junior members of staff (or even partners), through to the less obvious, such as undermining the authority of management, creating disputes with other partners and being just plain rude. Sometimes, they are not aware of the effect of their behaviour, but very often they are and just do not care.
Cost/benefit analysis
So, are mavericks worth the trouble they cause? Well, of course, it all depends. Every management team facing this issue will look at the financial benefits of a maverick, but this analysis is not as straightforward as you might think.
A maverick may generate and perform very profitable work, but the costs of their behaviour can be much less obvious. It may be that, although the maverick attracts some clients, there are others who will not use the firm, and will not even invite the firm to pitch for work as long as the maverick is there. It can be very difficult
to identify this loss of opportunity.
Sometimes a potential client will give feedback as to the reasons why they did not instruct the firm. I had one case where the sale of a professional services firm fell through largely because the buyer was not happy about the reputation of one of the partners. But, more often than not, there is no way of knowing the reason why an opportunity was lost or even that it has been.
Is their behaviour alienating employees or other partners? If so, those employees and partners will leave, making it difficult to build teams of experienced capable lawyers. Direct costs will increase because of the need to recruit replacements. Meanwhile, those former employees are unlikely to be well disposed towards the firm, potentially damaging its reputation in the recruitment market and making it even harder for the firm to attract good lawyers and good clients.
Is what these mavericks are doing undermining your firm's strategy? If you have decided to focus on advising borrowers, but the maverick continues to advise lenders, thereby creating conflicts of interest, what impact does this have on the firm overall? How much management time is devoted to dealing with this individual? Which other opportunities are lost?
Ultimately, to decide if the maverick is worth the problems they cause, it is necessary to look at all these problems in some detail to assess their overall impact. More fundamentally, even if, overall, the maverick has a positive effect on the firm's financial performance (and many do), any firm should be cautious about allowing one of its partners to behave in a way which is inconsistent with its own culture. Any organisation which allows this is likely to find its culture is badly damaged and that, before too long, it is in serious difficulties. A certain amount of difficult behaviour can be tolerated, especially if it is directed at (and dealt with by) management. However, 'abusive' behaviour cannot be accepted.
Managing mavericks
There are various ways of managing,
or attempting to manage, mavericks.
The imposition of financial incentives and/or penalties to reward good behaviours and penalise bad ones may be superficially attractive. The difficulty is in applying objectivity in any assessment process. Sadly, far too often, a system of financial penalties is divisive, leading to disputes over compensation. This, in turn, creates friction between partners due to perceptions of unfairness whilst, simultaneously, serving as a distraction from addressing the real problems.
In dealing with employees, fairness requires that a formal performance process be put in place. But, realistically, this is unlikely to be effective in dealing with maverick partners, who may well see it as a personal attack on them and will not engage with the process (or even accept it as legitimate). Some partnership agreements might require this as a preliminary step before expulsion (see below) but, otherwise, it is unlikely to serve any practical purpose.
Strong management oversight rather than a formal warning or performance management process might be a better option. However, this is time consuming for management, may not be effective and, if handled badly, may alienate the individual
just as much as a formal process.
Some firms operate a zero-tolerance approach and any behaviour which is contrary to the required standards will rapidly lead to sanctions, including expulsion. This certainly avoids the problem of the costs caused by a maverick's behaviour over a long period and the loss of management time. It may also be that this leads partners who would otherwise be mavericks into conforming with the cultural norms of the firm in a way they would not in a less strict environment. On the other hand, it may also lead to mavericks whose behaviour might have changed moving on quickly and the firm losing the financial benefits they bring.
Peer pressure can be effective. Strong leadership can maintain strong cultural values, which put pressure on individuals to conform, even if it is not normally in their nature to do so. Appointing the right 'buddy' partner to engage with a maverick and bring them into the firm (rather than leaving them
to operate in their own way) can be surprisingly effective.
A high risk but sometimes successful strategy is to put the maverick into a management position. A maverick whose natural tendency is to ignore the wider interests of the team or the firm may, if
given responsibility for managing the team, rise to the challenge and lead a tremendously-successful team. This is particularly true of 'team builders'. Of course, this is a high-risk strategy since it is important that anybody in a leadership position provides the right sort of leadership. It is unlikely to be the right approach to take with a maverick who is a 'wheeler dealer' or where the issues are related to ethics or abusive personal behaviour.
TIPS FOR DEALING WITH MAVERICK PARTNERS
DO
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Perform a cost/benefit analysis
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Take account of hidden costs and their impact on the firm’s culture
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Have clear boundaries
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Act promptly when a red line is crossed
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Engage with the maverick
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Appoint a buddy partner
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Consider giving more responsibility rather than less
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Make sure that, if all else fails, you have the right of expulsion
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Follow the expulsion process in the partnership deed
DON'T
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Consider only financial costs and benefits
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Tolerate truly unacceptable behaviour
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Delay taking action
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Risk the firm’s reputation
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Forget about clients, employees or other partners
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Expect financial incentives to manage behaviour
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Expect management instructions on their own to be effective
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Wait for the next appraisal
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Rely on formal performance processes
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Breach the partnership
Parting ways
If it is not possible to live with the partner's behaviour or to manage it, the firm and the partner will inevitably have to part ways. Sometimes this can be achieved through encouragement, such as a word in the partner's ear that it would be in their best interests to move on voluntarily before they are left with no choice. But, if this is not successful, compulsory retirement or expulsion will have to be considered.
Whether the firm is a traditional partnership or an LLP, there is no right to expel, unless this is expressly stated in the partnership deed. If expulsion is not possible, then some sort of financial settlement is normally the only practical route available. The financial terms of any settlement are likely to depend on how difficult it would be to secure either expulsion or compulsory retirement.
If the partnership agreement does provide for compulsory retirement or expulsion, then these routes can be followed and, unlike an employee, the individual partner usually has relatively little protection. Compulsory retirement is typically a basis for terminating without cause on giving a period of notice, often in the region of six months. Expulsion usually, although not always, depends upon finding some breach of the terms of the partnership agreement. However, I have seen partnership agreements where immediate expulsion without cause is allowed if supported by
a unanimous partner vote.
If it is necessary to go down the compulsory retirement or expulsion route, it is likely that a vote by the partners would be required. It should be born in mind that, unless the partner has done something very serious, it may be difficult to persuade other partners to support a compulsory retirement or expulsion, particularly if they are concerned that they may be next in line. Going down this route will have financial consequences, not only in terms of the loss of the profits generated by the departing partner, but also any financial settlement required under the partnership agreement. Even the repayment of capital, usually required over a period of time, may be quite significant.
If there is any doubt about the terms of the retirement or expulsion provisions in the partnership deed, it should be borne in mind that they will normally be interpreted strictly against the party seeking to rely on them. For this reason, it is important to think about any ambiguities in the partnership deed and also what effect going down this route will have on protections for the firm. It may be that, if a partner is expelled by a vote but there has been no breach of the partnership deed on their part, post-termination restrictions designed to protect the business of the firm will fall away, leaving the partner free to take their clients and even to approach other clients of the firm.
Whilst a partner in this position has less protection than an employee would have, there are still some grounds of objection to an expulsion or compulsory retirement:
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that the partner was subject to unlawful discrimination on the basis of a protected characteristic (such as sex, race, age, disability or religion).
It would normally be difficult for a partner to prove bad faith. In a traditional partnership, each partner owes a duty of good faith to the other partners and to the partnership itself. In an LLP, the situation is more complicated but, where the power of expulsion is exercised, the duty of good faith requires that it be exercised bona fide for the benefit of the LLP as a whole. In either case, if there were no reasonable grounds for expulsion/compulsory retirement, that may be grounds for a finding of bad faith, as might the existence of some ulterior motive.
Engaging in an expulsion or compulsory retirement and calling for a potentially-divisive vote of partners is best avoided where possible. However, if it is necessary to go down this route, as well as carefully considering the process to be followed and the justification of doing so, it is important to look ahead to what happens if the vote is passed. Can the partner be put on garden leave? What restrictions will apply? What steps can be taken to keep the rest of the team and its clients on board?
Prompt action
Whichever way a firm deals with a difficult partner, the key point is to identify as soon as possible that there is a problem and to start taking some action to deal with it. Many managing partners will say that the thing they most regret, looking back, is not taking action about underperformance or partner behaviour sooner.
Adrian Crawford is a partner at Kingsley Napley (www.kingsleynapley.co.uk)
and has expertise in employment
and partnership law.
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