Four ways to Ensure Success in Hiring New Partners

Lateral hiring in professional service firms has an uneven track record.  Statistics consistently show that hiring a ready-made partner from another firm often results in disappointment both for the firm hiring them and in terms of the new partner’s own expectations.

There are four main tactics to avoid the usual traps.

Tactic One – Get the Business Plan Right.  One principal reason for failure is that the new partner’s business plan misfires. Even glossily prepared plans can prove to be unrealistic over optimistic.  The Partner may expect to bring over clients or staff and everybody is disappointed when these arrivals do not actually transpire. That is often because the old firm manages to take steps to protect its client base and because team members often decide to stick with the old firm. Hence it is important that the business plan of any new hire should be tinged with a large dose of realism.   Even where the plan is realistic and sensible, firms and their new partners often mutually misunderstand how long it takes to bed the partner in, to move to full productivity and to generate revenue and cash flow.

Tactic Two – Choosing the Best Partner.  Failures can occur when the firm is blinded by what the prospective new partner can bring by way of client following or specialism.  The firm then fails to take the necessary steps to ensure that their new partner is someone who will fit in to the firm. Proper on-boarding processes are important to ensure that the new hire is left with no opportunity to hide away in a corner or to operate as a sole practitioner within the new firm. Some lateral hires seem to make little or no effort to espouse the new firm’s behaviours or to take part in firm activities.  Care should therefore be taking in the early on-boarding and induction processes to gain early warnings of possible trouble. Particular attention should be paid where there is any risk that the new partner might tend towards being an individualist “lone wolf” who may find it hard to fir into the firm’s collegial culture.   Conversely, where the culture and values of the firm stress and reward individual effort over team performance, persistent communication channels may be required where new partners are used to working as part of a team and consequently might struggle to be left entirely to their own devices.

Tactic Three – Form and Execute an Integration Project.  In tightly knit firms, practice groups, used as they may be to their own friendships, informal rules and patterns of behaviour, can find it difficult to admit a new person to their inner circle and hesitate to make insufficient effort to integrate new people.   The new partner may try to force his or her way in but find it easier said than done.  I hate to say it, but many groups still suffer from latent prejudices when faced with new partner from different backgrounds, diverse ethnic origins or even different genders to the majority.  Some firms can still be categorised as bastions of white male privilege.   In this connection the firm’s leadership can often give a firmer steer to communicate both the standards of behaviour that are required and the ingredients for integration success.   The integration project should be treated both as a change management program and as a team building exercise.  It sometimes helps to use a cultural inventory to create action plans and to work out areas of difference between the practice group and the new partner which may need development. In this connection the project is not finished and cannot be signed off until you’re absolutely sure that you can say “he or she is truly one of us“

Tactic Four – Ensure Appropriate Support from the Firm.  Professionals should of course be self-starters, but some firms are too quick to adopt a “sink or swim” attitude to new hires.   It is about twenty years since I was a managing partner, but we introduced a rule that we would always try to find the first engagement for the new partner from the firm’s existing resources and client base.  This was partly to ensure that the new partner felt welcomed but also to assure new partners that we were not expecting them to rely entirely on their own efforts.  Support can also be missing if the firm turns out to be the wrong platform for the new partner – I recall one experience when my firm hired a pensions partner to a practice which had insufficient client or work type synergies to enable the new partner to thrive.

The brutal truth is that despite all efforts not everybody will always fit in or be successful.  However, it is seldom too late to work on integrating new people and it is worth checking with recently hired partners how firmly are woven into the fabric of the firm and what more can be done to enhance relationships.

Integration Or Disintegration, That Is The Question

The objective here is not to be alarmist or suggest that there is a binary choice between life or death, as in Shakespeare’s allusion. It is, however, meant to draw attention to the need for continuous focus on what keeps a professional services firm, and more particularly a partnership, ticking and successful, namely the integration and collective behavior of its partners.

Integration means that partners are working in the same direction towards a shared goal, that that they are aligned in managing their teams and representing the firm and that their capabilities, knowledge, experience and relationships complement each other.

Disintegration is a danger when there are conflicting priorities amongst the partners and divergent opinions about the way business should be conducted and individualistic rather than collective behavior becomes prevalent. The partners or groups of partners become isolated and unhappy and the firm may become a composite of fiefdoms rather than a homogenous unit.

The current reality of disruption with rapid changes in demand and supply chains is challenging leaders and management in the corporate world. In a partnership such challenges are often magnified by the fact that partners consider themselves co-owners of the business, desire to have a say in how business is conducted and wish to share the benefits.

While overseeing the quality of work, client relations, finances, talent, business development and efficient operations, management needs to be attuned to the concerns, motivation and behavior of partners that, untreated, might be detrimental to the achievement of goals in all those areas. Just as a relationship of a married couple needs to be managed so does a partnership, except that in the latter case the marriage counsellor has to deal with multiple people!

Clearly management deals with partner issues on a daily basis and often this means putting out fires and/or spending a great deal of time in managing people’s expectations or explaining why a certain decision makes sense. Issues will always arise but would it not be more efficient to have integration as a permanent item on the agenda knowing that it will require continuous action as the firm grows and changes and as its partners’ careers advance and ambitions change?

Conditions that might indicate the need for greater integration efforts include:

• partner grievances or departures
• extensive partner discussions on strategy, structure or processes
• incompatibility between partners
• doubts raised by partners about contributions of others
• reduced partner performance or motivation
• unsuccessful lateral integration
• reduced retention rates of attorneys
• individual v institutional behavior
• offices or practice groups working autonomously
• different approaches to service delivery and client management
• little or no sharing of information
• “my clients” attitude prevails rather than “our clients”
• partner compensation system not perceived as fair
• complaints of excessive centralization or lack of flexibility
• inconsistent quality of service perceived by clients

These conditions might not have been a common trait but as a firm grows, the partner ranks grow, the number of offices/practices grow and the firm adapts to market conditions, they may develop quickly. If they are not isolated and become a pattern, management needs to evaluate the causes and adopt a remedial action plan.

As suggested earlier, it is preferable that this be done on an ongoing basis taking the temperature of the organization and the status of the partnership on a regular basis and adjusting accordingly – what we might call the integration “agenda”.

The integration agenda should aim to ensure:

a) Partners are “supporting sponsors”

The alignment of partners with the vision and strategy of the firm and their consistent adherence to common and agreed-upon principles is key to leading the firm in the right direction. They should all be supporting sponsors of the firm’s direction and communicate a consistent message in that regard. Partners are largely the face of the firm to clients and its professionals and their behavior weighs heavily on the way the firm is perceived.

b) Strategy drives structure

Whatever the message for integration, if a firm’s structure drives behaviors that are not aligned to that strategy, it will not succeed. As the Harvard Business Review once stated “leaders can no longer afford to follow the common practice of letting structure drive strategy”.

A crude example: if two offices of a firm are organized as two business units with their own local management and the partners in each office are compensated largely based on the results of their own office, a strategy of sharing resources and cross-selling might be prejudiced or, at a minimum, not incentivized.

c) A collaborative environment

Collaboration generates internal synergies (e.g. sharing talent and knowledge) and external benefits (e.g. client development) while allowing partners to feel more connected to each other, reduce their levels of stress (hopefully!) and enjoy more work freedom. Incentives and support for collaboration that reflects a more institutional approach to conducting business are to be encouraged. This is by no means inconsistent with an entrepreneurial approach to business or rewarding individuals for extraordinary performance.

It is not uncommon to find firms consisting of different groups or individuals that are somewhat autonomous, take different approaches to service delivery and client development and work largely in isolation from others (the “composite of fiefdoms” mentioned earlier). This is rarely a pre-meditated or deliberate action but rather derives from different cultures and work habits (resulting from previous experience in other organizations) and behaviors driven by the firm’s governance and partner compensation system (i.e. what is my decision-making authority and how is my compensation determined).

To be an “integrated” firm, a firm that is effective in providing solutions for clients and is efficient in its use of resources, it is imperative to create a unified culture and adopt governance and compensation models that motivate a one firm approach. Consequently, principles that typically underpin integration may be summarized under three headings:

Governance

• the governance and decision-making structure be clear and understandable
• the management structure reflects diversity of practices and offices, but with all decisions aligned to the firm’s strategy and to the best interests of the firm as a whole
• the governance structure reflects the importance of practice and industry groups as natural integrators across offices and jurisdictions
• authority and policies for decision-making be delegated as appropriate to avoid shackling the organization while allowing for risk mitigation
• Committees and task forces with appropriate partner representation deal with ongoing issues (e.g. Compensation Committee, Talent Management) and specific projects (e.g. Strategy Review, Remote Working), respectively
• a partner communication structure that allows partners to be continually informed and feel they are being consulted on issues of relevance to the business

Partner Compensation

• the compensation system provides clarity on expectations of contributions from partners and aligns compensation with such contributions
• adopt the right mix of compensation criteria to motivate and reward both behavior that drives the firm strategy (revenues, originations) as well as collaborative behavior that encourages teamwork and partner investment in the growth of the pie, rather than a struggle for a larger share (cross-selling, training initiatives)
• couple the collection of objective data with subjective inquiries to adequately measure partner contributions and allow for appropriate discretion in applying compensation criteria to promote fair and equitable results
• consistent partner feedback process

Leadership

• build and support a culture with a shared mission, joint long-term goals and shared risks and rewards
• align structure to strategy, clarify roles and responsibilities and enforce accountability
• promote transparency and open communication and be inclusive
• build trust and confidence facilitating interaction between partners and creating a healthy dose of interdependence amongst them

Firms can easily lose the focus on integration, an intangible asset, while they are busy dealing with the tangible issues of day to day operations, developing business, serving clients and controlling finances. It is better to manage integration than recover from disintegration.

Gerry Riskin’s Immutable Laws of Law Firm Success

When Edge International was formed, I was optimistic that by this century, we could all make the following statement – and it would be true:

Dateline 21^st Century: Most professional firms today and their practice groups are led by individuals who have not only mastered practice skills but are equally adept in organizational behaviour. They understand group dynamics and the art of facilitation. They conduct highly effective meetings, coach individuals to achieve their personal best performances, and create an environment in which professionals thrive. Managing partners are masters at “managing the managers” by ensuring that they are working toward relevant, well-defined and achievable goals. That is why most firms are highly profitable, achieve very high levels of internal satisfaction, and give exemplary client service. Turnover has dropped to nearly zero and clients are extremely loyal, thinking it absurd to even consider switching firms.

“Dream on” you say. Well, yes, I do dream on and as a perennial optimist I believe that what I have described is still very much achievable. The major ingredient missing in 99% of today’s professional firms is simply “The Will to Manage.”

The following 12 immutable laws represent my assessment of the most critically important components of successful firm management.

Law #1. The Managing Partner Must Be Willing to Manage: The managing partner must assist the partnership in achieving a clear vision complete with a describable, quantifiable destination. Firms cannot succeed with managing partners who were selected for their uncanny ability to ruffle no feathers and who discern the predominant direction of the firm and then run out in front to give the appearance of leadership. Management requires courage.

Law #2. Leaders Need Power: Most leaders are chosen because of their seniority, rainmaking prowess, and book of business. How does such a leader get influence over others who may outrank them on any one of those attributes? The power comes from understanding what the members of the group aspire to, and then helping them achieve it. This requires “asking” and “listening” — not “telling.”

Law #3. Leaders Must Coach: The art of coaching is to strike the right balance between being supportive and continually demanding. Talented, rich and famous athletes accept coaching, and when they see the benefits, your partners will also.

Law #4. Managing Must Yield a Financial Return: Unless a leader understands the mathematics of the return on investment that is realized as a result of the managing effort, the role may be seen as honourary and not critically important.

Law #5. Leaders Must Motivate: The only way to change a practice group is one person at a time, and the only way to motivate an individual is to find out what they want and help them get it.

Law #6. A Group Requires Shared Ambition to Function: You cannot move forward until you’ve got some sense of where you want to go together. Each individual needs to answer the question: “What can I accomplish in this group that I cannot accomplish alone?”

Law #7. Teamwork Requires Enforceable Rules: Your strategy is not what you aspire to; your strategy is what you are prepared to enforce. To have a strategy you have to decide: “What sensible rules are we prepared to establish for our club?”

Law #8. Profitability Comes From “Smarter,” Not “Harder”: If the way you are making more money is by working harder, you should take that as a sign of personal failure, not success. Profits come from being ever more valuable, not from working eight days a week.

Law #9. Build Skills and Foster the Sharing of Knowledge: Intellectual capital walks out the door each night. Too much of it is a heartbeat away from being lost to the firm forever. By ensuring that appropriate skill dissemination and knowledge sharing is occurring, a firm can create tremendous additional value and an insurmountable competitive advantage.

Law #10. Give Recognition and Celebrate Successes: Brilliant leaders have a knack of setting goals that are sufficiently stretching to be worthwhile — but achievable — and then fueling the behaviour by fostering encouragement and celebrating successes.

Law #11. Encourage Innovation and Remove Obstacles: The essence of having a competitive advantage is not waiting for others to pioneer the way, but to constantly ask: “What are other people not yet doing that we have a suspicion clients might like?”

Law #12. Differentiate With Perpetual Action: When virtually every firm has essentially the same strategic plan, the real competition is not about having a better idea; victory goes to those who are better at execution. Effective leaders help individuals break their objectives down into bite-sized incremental bits and then relentlessly follow up to ensure that progress is continuous.

Estée Lauder, the business titan, said in a television interview many years ago, “I am not famous for my ideas but rather for what I have done” (italics mine). Therefore the management game is ensconced in what I call Law #13: Get to your war room and start creating your action plan. What is your first small step… and then… and then…? Only by doing will you join the ranks of the greatest achievers and, like Michael Jordan, Tiger Woods, Estée Lauder and whomever else you regard as heroes. People will wonder how you did it — or think you were just lucky. But we’ll know differently, won’t we?

What will you do to breathe life into these laws in your firm?

Note: Those of you familiar with the work of David Maister will see his profound influence on my thinking in this article…. I am forever grateful to him as a mentor and as a friend.

Career Planning for Managing Partners

Law firms often debate the advantages and disadvantages of professional managers as opposed to traditional lawyer managing partners. Each comes with different attributes and experience. The professional manager is sometimes viewed as just a hired hand and needs time to learn the business of law, but has management knowhow. The managing partner has credibility and a deep-rooted ownership stake in the firm but often very little by way of management experience.

The matrix illustrates the need for both legal industry knowhow and managerial expertise and, depending on the size and context of the firm, will in many cases indicate that the firm’s leaders (supported by appropriate specialised management support) should still be lawyers.

However, would-be managing partners must take time to learn or acquire the leadership, strategic and management skills to do their job. It follows from all this that incoming managing partners should develop, and be encouraged by their firm to develop, sophisticated and well worked career plans which encompass management and leadership training and development, specific job descriptions and rules of engagement, and a management style which is aligned both to the needs and profile of the firm and the characteristics of the managing partner.

In my view, two provisions should be made from the very start.

Unqualified Support

First, and in order to maximise the benefits of medium to long-term equilibrium, the firm needs to ensure that the managing partner has ongoing job satisfaction and job security whilst he or she is doing the job. Interference must be low and support must remain high. The judgment of the managing partner must be capable of being challenged but must essentially be trusted. The high investment, which the firm has made in an internal appointment, must be nurtured and protected. There also must be an acknowledgment that the job of managing partner is above all else a lonely one, and the managing partner should be given and should take every opportunity to engage an external mentor or coach and to seek external consultancy advice on an ongoing basis. External mentoring and advice allows managing partners not only to remain objective, but above all to have the regular discipline of raising their eyes above the parapet and to plan strategically.

Re-Integration Provisions

The second step is to arrange (in advance, as part of the incoming managing partner’s deal) for the managing partner’s eventual re-integration into the firm at the end of the term of office. This will involve re-training and the rebuilding of a client base, and the ex-managing partner’s remuneration arrangements should be protected for a reasonable period whilst this takes place. The ultimate cost of this should be taken into account from the outset of the appointment. Many firms are allowing at least a two-year period for this protected re-integration, and when I stood down fifteen years ago my own firm was generously no exception in my case. The exit package should also recognise the possibility that the ex-managing partner may no longer wish to return to full time fee-earning at the end of his or her term of office, and provision should be made for the possibility of an alternative career plan.

How Managing Partners Can Support Law Firm Administrators

Note: This article was originally published in the Jan/Feb 2015 edition of Administrator’s Advantage, the newsletter of the Greater Chicago Chapter of the Association of Legal Administrators

Managing partners hope that administrators will cause fee earners to do the following:

• show enough self-discipline to record their time daily;
• optimize the use of the firm’s IT systems;
• cooperate with their practice group, industry group and/or client team leaders to perform at peak, satisfying clients and generating new business.

Managing partners hope that administrators will cause marketing professionals at their firm to:

• arrange for appropriate groups and individuals within the firm to create effective business development plans that are meaningful and achievable; and
• ensure that the fee earners execute those plans resulting in significant fee generation to the firm.

Most managing partners are busy with their own practices, trying to get a consensus among the partners regarding the strategy of the firm, and possibly worrying about ways to combat stagnant or falling profits in an increasingly competitive market. The managing partner may also be looking at merger or acquisition suggestions and perhaps lateral hires.

The administrative team wants to please the managing partner and achieve all of her/his objectives. However, there are some challenges:

• Busy fee earners often fail to respond to requests for information;
• Senior fee earners interfere with scheduled meetings for their associates and staff relating to IT training or business development because they feel that their current matter would be disadvantaged by permitting a member of their team to be AWOL during a significant step;
• Senior fee earners often disregard requests (and sessions to which they are invited) sometimes because they are too busy and sometimes because they are not convinced that the purpose of the sessions to which they have been invited have sufficient value for them;
• Many fee earners rationalize that client work is far more important than the activities anticipated in the business development plans and therefore simply do not engage in the anticipated activities.

The list goes on but you get the idea.

Many administrative teams have the experience and training to manage effectively but are powerless to do so because they do not have the support of the managing partner for their initiatives.

In most cases, the failure of the managing partner to support the initiatives of the administrative team is more inadvertent than intentional, and perhaps a consequence of the typical law firm structure and behavioral patterns.

So how can the managing partner better support the Legal Administrator (and administrative team)?

Strategically Align with the Administrative Team: Just as parents should never disagree in front of their children, the managing partner and the administrative team need to resolve issues and challenges privately. They should engage in robust debate just as Jim Collins prescribes in the best selling business book in history, Good to Great. The purpose of that rigorous debate is to come to a resolution which is then brought back to the firm as a team. If rank-and-file members of the firm see that they can divide and conquer the managing partner and the administrative team because the managing partner will not stand behind that team, the frequency of undesirable behavior will skyrocket.

Confront Problem Behavior: The managing partner has to be willing to diplomatically confront the senior partner who would not permit the associate to attend the training. There is nothing less pleasant nor anything the managing partner is less eager to do than confront problem behavior on the part of senior lawyers. However, the failure to do so is tantamount to sabotaging the efforts of the legal administrator. Exchanges between the managing partner and the partner exhibiting less than desirable behavior need not be catastrophic or extreme. With some training, the managing partner can learn to deal with situations of that nature with some level of comfort. Having been a managing partner myself, I understand better than most why we might be reluctant to have the confrontation. The binary choice is to learn to deal with it or undermine the legal administrator, whether intentionally or not. At the very least, if the managing partner will not confront the behavior, then some slack has to be given to the administrative team for not accomplishing some of the objectives of the managing partner, as outlined above.

Apply Consistency in the Subjective Components of Compensation: The subjective elements in compensation must be transparently utilized to reward those who support the administrative functions and offer disincentives to those who do not. The extreme “eat what you kill” law firms are basically hotels for lawyers and there is little leverage to obtain good citizenship from the occupants. Where a firm has a more evolved compensation system that includes subjective factors, discretion must be exercised with discipline in terms of how the individual accommodates and respects the internal policies, systems and protocols of the firm.

The Legal Administrator’s Responsibility: The greater power resides in the managing partner and therefore, in my estimation, so does the greater responsibility. Having said that, I believe it is incumbent upon the legal administrator, in her or his own way, to confront the managing partner in a manner analogous to the way the managing partner should confront the problem partners. I think often the challenges I have described go on for so long that everyone in the firm becomes slightly numb to them. People stop noticing or at least simply accept them on the basis that “This is simply the way things are in a law firm.” I don’t think that has to be the case. I think it is not only fair but is a responsibility of the legal administrator to address these issues with the managing partner. The message for the managing partner is that it is not an overt act of going over the administrator’s head that is the problem… it is the absence of support which creates the same result. The bottom line is that if a partner knows that they don’t have to do what the administrator’s team asks and there will be no consequences, then continuing to evaluate the administrative team on the basis of results simply makes no sense. The polite interpretation of the message, therefore, is “support me or moderate your expectations.” At the highest altitude, the legal administrator can offer constructive support and suggestions to the managing partner as to how she/he can help the firm achieve its desired outcomes.