Resolving conflict between partners and overhauling partner remuneration

I have previously written several articles in the Edge Communiqué[1] regarding the resolution of partner conflict.

In writing this article I want to start a discussion about a different aspect of partner conflict than I have previously written about, and that is the extent to which entrenched conflict between partners can impede a reconfiguration of partner remuneration or the setting up of an entirely new partner remuneration system or set of processes, and what steps can be taken in order to remove that roadblock.

In a recent law firm engagement, where I was involved with a colleague in the overhaul of a partner remuneration system, it was necessary to get the partners aligned around the proposed new remuneration system. In the context of the particular engagement, achieving an alignment was relatively easy as the partners, broadly speaking, had shared goals in relation to the new remuneration system and there was generally a very good functional relationship between the partners.  Nonetheless, as will usually be the case, we had to hold several rounds of discussions with the partners and with the firm’s steering group in order to achieve partner buy-in to the principles of the new system, before getting down to the nitty-gritty of implementation.

There will inevitably be competing interests and goals in any case where partner remuneration is going to be reconfigured, or a new system or set of processes put in place. It is always going to be necessary to have rounds of conversations and, in a sense, to mediate between those conflicting interests and goals in order to come up with an acceptable new system.

I have recently encountered, in a couple of different situations, a somewhat different situation, going above and beyond the typical need to achieve alignment.

Over the last few months, I have had discussions with a couple of law firms and their retained ‘remuneration’ consultants with regard to their challenges around sorting out a reconfiguration of their remuneration systems.

In both cases, a clear impediment to the work required to do the ‘usual’ alignment described above is that there was an entrenched conflict between two or more of the partners. In the one case, there was a fundamental and quite nasty conflict between two of five senior equity partners. Two of the equity partners had reached a stage of almost complete breakdown in their relationship.  They had all but stopped talking to each other. When they were obliged to talk to each other it often ended in heated acrimony, with the other partners having to intercede to smooth things over.  It was proving impossible to make decisions about a possible new remuneration process because any discussion involving the two partners would descend into a shouting match.  One of the other three partners commenting on what was going on described the situation as completely dysfunctional; “we are at a loss to know how to proceed. And every year the annual remuneration discussion brings the firm to the cliff edge.  It is an exercise in brinkmanship where, every year, at least one or both of the partners threatens to leave the firm which would be disastrous”.

In the other case, there was a difficult and entrenched conflict between some of the more junior equity partners and some of the most senior equity partners. There was (very much in summary) bad blood between the more junior equity partners and some of the senior equity partners.  The junior equity partners held various grievances – including grievances about the alleged marginalisation of women by some of the more senior equity partners; and grievances about the alleged ‘protection’ from ‘consequences’ of a couple of the senior equity partners, whose behaviour to some of the more junior equity partners was regarded as unacceptable.

In both cases it was proving impossible to get anywhere close to the meat of discussions about a revamp of the remuneration process – let alone to decision-making – because the discussions always ended up being derailed by discussions or disagreement about the ‘unresolved’ conflicts outlined in summary above.

My thinking about how to resolve these conflicts is emerging. I would welcome contributions and reactions to this short introductory piece.  These contributions and reactions will help to shape my thinking, and I will be reflecting on those contributions and reactions before writing a further article, which will hopefully in turn help others trying to change their remuneration systems but hitting a roadblock or roadblocks in doing so.

My provisional thinking is as follows:

• it is always going to be necessary and essential to tackle the more complex conflict, before working on the more basic alignment described above.
• It seems highly unlikely to me that without resolving this conflict (unless truly unrelated to the remuneration issue), the work of alignment around the proposed new remuneration system can take place successfully.
• Entrenched conflicts are, by their very nature, highly distracting and time-consuming. The inevitable distortion of human relationships because of these conflicts is likely to frustrate alignment around an issue such as remuneration, which is not just a mere matter of numbers, but has both emotional significance and resonance in relation to perceived status within the partnership hierarchy.
• For example, if one partner has “beef“ with another partner about a perceived ongoing slight in relation to their relationship, he or she is less likely to align around a proposed new remuneration system which is going to tilt the partnership hierarchy in favour of the partner perceived to be disrespectful – even if that proposed change makes sense and has nothing to do with the dynamics of the relationship between the two partners, but is objectively and commercially justified.
• It might be possible for trusted ‘voices’ in the firm to get involved and for the conflict to be resolved through their intervention and sensitive facilitation.
• My many years of experience in consulting to law firms of all sizes, nationalities, cultures etc. is that a resolution through internal mediation will often fail.  These are difficult conflicts to resolve at the best of times, and resolving them in the context of a looming or actual discussion about remuneration is going to be particularly difficult and charged.
• An external consultant might be able to help to resolve the conflict. This will almost certainly have to be someone not involved in consulting about the remuneration system itself. 
• There are at least two reasons for this. First, those consulting about the remuneration system won’t necessarily have the skills required to help resolve the conflict.  Second, trying to get involved in resolving a difficult conflict will almost inevitably skew relationships required to be highly functional in order to achieve alignment about the remuneration system itself (and then to help with the implementation and ‘nitty-gritty’ of the new system and processes).
• The separate external consultant will need to mediate / facilitate resolution of the conflict. That mediator / facilitator will need to use his or her range of conflict resolution techniques to achieve this aim (e.g. rounds of one-to-one conversations with those in conflict; ‘shuttling’ between those in conflict; holding a facilitated meeting or meetings with those in conflict etc.). See my other articles for some further details – I will expand further when I next write on this topic.

So 3 key points in summary:

• Acrimony or conflict between partners can derail an otherwise potentially constructive attempt to reconfigure how remuneration is worked out.
• If a law firm and / or its remuneration consultants hit a roadblock in deciding on or implementing a new remuneration system and that roadblock is rooted in a conflict between partners, other resource might have to be deployed to help resolve that conflict. Remuneration consultants do what it says on the tin; they advise on remuneration; they are not experts in mediating or resolving conflict. Resolution of the conflict will have to happen before further productive work on the new proposed process can resume.
• If you have experienced the sort of situation outlined above, please let me know. I would welcome your feedback and thoughts. All emails to me will, of course, be treated in the utmost confidence. Unless with clear and written permission I will anonymise any feedback given to me and make sure that the identity of anyone or any firm that gives feedback is not compromised.

[1]  All of my previous articles can be read in the repository of articles at www.edge.ai

Partners in Conflict

No matter how strong a firm’s culture seems to be, there will be periods when some partners are in conflict. The conflict may not be material – perhaps a shouting match in a meeting that later calms down, or it may be a brief outbreak of longstanding animosities that are normally avoided by keeping the partners apart. However, some conflicts grow to a level that causes one or more partners to leave the firm, perhaps ultimately leading to a dissolution.

Law firm leaders need to be aware of both latent and open conflict between partners, but they also have to be ready to act quickly when serious or lasting disputes emerge. We have the resources to deal with conflict in our profession, but leaders often fail to call them up soon enough.

A firm can strengthen its culture by using conflict-resolution resources and developing better skills in formal leaders and supervisors. Assuming that leaders have their ears to the ground and are aware of partner-conflict situations, there are at least four resources to draw upon.

The Neutral Friend

Sometimes the intervention of a leader will seem heavy-handed. One or both parties may deny that conflict even exists (despite all the evidence you’ve received). If the leader can find a respected partner who can talk to both and remind them of the firm’s mission and culture, that partner can achieve a near-term solution. This quiet approach may be appreciated by partners who want to put the dispute behind them.

The Internal Mediator

Every firm that has a litigation team may have a partner who is a trained mediator. Many litigators have taken certification programs (often 40 hours or more), not to become mediators, but to understand how mediators tackle disputes between clients. A leader might approach that mediator/partner to intervene in a partner dispute. A trained mediator is always going to make it clear to the parties that: (1) they have no ability to “rule “on the issues: (2) the parties own the solutions: and (3) the mediator’s neutrality and confidentiality are guaranteed before and after the process. Because the internal mediator knows the firm well, he or she may be able to align the interests of the disputants with the firm and each other.

The External Mediator

At Edge, we have been asked a few times to act as an external mediator in a partner dispute. Two situations often lead to this outside referral. First, the partnership may be small and no one may be seen as sufficiently neutral or skilled to mediate the issues. Second, the dispute may be fairly high-stakes, and other internal attempts may have failed. While there are many available mediators in your community, you will want to do what we do for our clients – engage a mediator who understands the law firm business. A mediator, after advance preparation, typically takes one to three days to tackle serious disputes. Lawyers, conscious of lost time, may work harder to get to “yes” sooner than later. The cost to the firm is substantially less than ongoing conflict or litigation would be.

Develop Basic Conflict Resolution Skills for More Leaders and Senior Partners

Many leaders and senior partners have a reservoir of respect and trust throughout the firm. Their status has been earned. Those leaders can be front-line conflict resolvers if they have some training in mediation skills (without taking on certification). In my experience, such leaders are building on some communication skills they already have. For example, in a recent course that I designed for legal-services organizations and public-interest law firms, the leaders practiced:

• identifying and adjusting their preferred conflict-resolution style,
• structuring a “difficult conversation,”
• active listening,
• re-framing negative statements, and
• generating options for parties to consider.

To add some conflict resolution skills to a leader’s toolkit is to recognize reality. We dislike conflict. We’d rather avoid it. We hope that our culture will overcome the conflict. Yet conflict happens, and it can disrupt client service, partner harmony and the firm’s future. Leaders have to act rapidly to intervene with a third party or their own skill set.