Set baseline standards for all partners, regardless of performance levels

The management of top and bottom-line performance forms a key role for the leaders of any organisation. Integral to this is the enforcement of performance standards.

There is, no doubt, a philosophical debate in many law firms about partner independence and the extent or desirability of prescriptive intervention by the firm’s leadership. Indeed, the very term ‘performance management’ has negative overtones in some firms.

I spoke to one managing partner not so long ago who talked about placing an under-achieving partner into ‘performance management’, as if the rest of the partners could be left to carry on without any form of monitoring or control. This form of management by exception may work very well in firms where practice groups and partners are self-starting, disciplined and focused.

However, as margins continue to tighten and workflows remain at low ebb, managing partners and practice group heads need to keep a firm hand on revenue production as well as overheads control. This inevitably leads to the application of some measure of control and accountability for all of the firm’s people, including partners and equity members.

A further part of the philosophy of many law firms focuses on the choice between carrot and stick. The carrot approach assumes first and foremost a belief that partners – particularly partners who are at the lower end of the performance table – can be motivated to work harder by being offered the chance of higher rewards or better compensation. A harsher view holds that it should be possible to shake partners out of lethargy, laziness or comfort zones by the threat of being penalised through the compensation system.

If, however, a firm is seeking to introduce any system of partner accountability, a good starting point is to agree what the firm expects of its partners and what roles and responsibilities it needs them to perform.

Partners, equally, need to be clear how they are to discharge their various roles as owners, managers and producers. While it is clear that law firms are considering and valuing outcomes and results more than effort, work ethic remains an important element of a firm’s values. One possible early step, therefore, is for the partners to agree what time commitment is expected of them as partners.

Next, the firm should agree and define its standards not just in vague and conceptual terms, but in propositions that can be supported by data and measured by reference to baseline performance; the failure consistently to attain this baseline becomes a measure of underperformance.

Partner underperformance can be defined as the consistent failure of a partner to meet the firm’s reasonable expectations or standards for productivity, profitability, quality, technical proficiency, client service or interpersonal relationships.

Underperformance includes poor managerial competence and behaviours (such as bullying, emotional abuse, discrimination and uncontrollable anger) which are inimical to the firm’s values and agreed cultural norms.1

The setting of standards on all of these elements is therefore vital to ensuring the firm meets its overall objectives, while retaining its culture of fairness and integrity. In many firms, the existence of clear and measurable performance yardsticks is enough to enable the firm’s leaders to manage ?with a fairly light touch and to allow partners and practice groups to be ?self-managed within a culture of discipline ?and hard work ethic.

The big area of difficulty, however, remains the tricky area of assessment. Whatever shift is made towards some element of partner performance management – including the management of underperformance – it is a huge challenge to figure out and then implement a fair and just system of judging partner performance, particularly in so-called subjective or soft areas of performance and behaviour.

Best practice principles

It is clear that law firms are trying to take particular care to clarify the evidenwce and data which is to be examined in any assessment. There are also a number of best practice principles at play.

First, the firm’s leaders should connect the dots between the firm’s vision and strategy and the day-to-day expectations of partner performance. There should, in other words, be a clear line of sight between a partner’s personal objectives and the ?firm’s overall objectives.

Second, the decision-making process should be carefully decided and the assessment process and forum for assessment and decision-making should be accepted as fair and reasonable ?by all partners.

Third, the system must be able to retain sufficient flexibility so that decisions can take into account overall intangible contributions as well as market factors, so as to ensure that high flyers are treated in such a manner as to minimise the risk of defection, while ensuring that low flyers are treated fairly.

Nick Jarrett-Kerr advises law firms worldwide on strategy, governance and leadership development (www.jarrett-kerr.com)

Endnote

1. For further information, see ?Tackling Partner Underperformance ?in Law Firms, Nick Jarrett-Kerr, 2011