Partner Evaluations Improve Firm Performance

Associates and partners have different attitudes about certain things. One is regarding evaluations. Associates generally want feedback and evaluations on their work and performance. In fact, they usually complain if they are not receiving them. On the other hand, partners in many firms resist or even resent being evaluated, although it's often the initial step in determining a partner's compensation.

The fact of the matter is that, while associate evaluations are extremely important, thoughtful and constructive evaluations of partners are even more important because they result in improved firm performance as well as improved performance by the individual partners.

The Right Culture

The ability to conduct partner evaluations depends, first of all, on a firm's culture. It must strike the proper balance between autonomy and accountability, with more emphasis on the latter than the former.

Evaluations won't be effective ' and probably can't even be conducted ' in firms that allow an excessive degree of partner autonomy or a 'sole practitioner' attitude. On the other hand, evaluating partner performance is an extremely effective procedure ' and one that is even welcomed ' in firms where the culture is such that the partners consider themselves accountable to each other and depend on one another for the firm's overall success.

Firms with a culture of accountability have other important characteristics as well. They encourage partners to be good partners. In these firms, a 'good' partner is one who is the other partners biggest supporter ' and severest critic. A good partner doesn't just make the other partners look better; a good partner makes the other partners be better. And in these firms all partners recognize that what's best for the partnership is more important ' and ultimately more productive ' than the goals or ambitions of a particular partner.

System Characteristics

In any system involving evaluations, the recipients may disagree with the findings. Moreover, no system is perfect. In any evaluative process, errors will occasionally be made. However, if the process is thorough, unbiased and equitable ' and is perceived to be so ” then fair and effective valuations will result. And, just as important, they will be accepted.

There are certain essential characteristics of an effective evaluation system:

The partners conducting the evaluations must be trusted or the system won't work.

The rules governing evaluations must be consistent and understood by everyone involved ' evaluators and recipients.

Judgments should not be made until every effort has been made to collect all relevant information and the partner being evaluated has been allowed to state his or her case.

Evaluations must be explained so that they are more readily understood and accepted.

Requirements

In addition to having all of the above characteristics, successful evaluation systems fulfill certain requirements as well.

Criteria. The first requirement is that there are criteria against which to evaluate each partner. Furthermore, these criteria cannot exist just in the minds of the evaluators. They must be published and recognized by all the partners as the basis on which they will be evaluated.

The list of criteria will vary from firm to firm. They will often include quantitative factors such as billable hours, collections, full realization (collections as a percentage of the dollar value of billable time) and, in some firms, origination (although some firms are no longer recording this).

The quantitative criteria can be based on averages for similar size or type of firms or the firm can develop its own standards, based on either its own needs or objectives.

The criteria should also include qualitative factors such as quality of work, management performance (firm or practice group), client service, pro bono work and community service (if the firm encourages or requires), teamwork and associate training and development.

Goals. The most effective evaluation systems also require having each partner set personal goals every year in a written business plan. A major benefit of this is that it produces greater buy-in by the partners to the entire evaluation process. These goals will vary from one partner to another but they should be consistent with the overall firm goals. They should be put in writing, both for discussion at that time and for review the following year.

Some of these goals will be quantitative, ie, to achieve a certain amount of collections, originate a specified amount of new business or write two articles for publication. Others, just as important, should be qualitative. For example: To establish and develop a new practice group, open a new office, improve associate recruiting or reduce associate attrition.

Whatever the partner's personal goals may be, the evaluation group should agree with them so that they become a 'covenant' between the partner and the group. Furthermore, once these personal goals are approved and accepted, each partner's performance should also be evaluated on the achievement of those goals in addition to meeting or exceeding the firm's criteria.

Additional Features. The characteristics and requirements discussed above are essential components of an effective evaluation system. Some of the most effective systems have additional features as well:

Self-Evaluation. The process begins with the partner evaluating his or her performance for the previous year against both the firm's criteria and the partner's personal goals. It is interesting to note that, in most cases, these self-evaluations are very honest and realistic.

They're written. It is generally better to first discuss the evaluation with the partner to obtain their reaction and comments; then it should be put in writing. While this requires additional time, the task can be simplified by hand writing the evaluation, along with the partner's comments (if any) at the end of the meeting. Of course a copy should be given the partner. In some firms a copy is also put in a confidential file that is available only to the managing partner or firm management.

Rewards. In the ideal world, partner evaluations should be conducted separately from determining compensation. But in the real world, they are generally done in conjunction with the compensation process. This is not necessarily bad, however. If the partner's performance is evaluated against published firm criteria, as well as against the partner's personal goals ' and not just the personal impressions of the evaluators ' the subsequent decision on compensation will generally be regarded as fair and will be accepted by the partner.

At the same time, it should also be recognized that there can be other rewards besides, or in addition to, compensation. Appointment to an important committee, transfer to a desired practice group or the granting of a sabbatical are only some examples of rewards that can result from a favorable evaluation.

Recognition. Partners who are doing an exceptional job or have performed an unusual and valuable service to the firm, ie, successfully launching a new practice group or negotiating a desirable merger, should also be recognized throughout the firm. This can be done at firm meetings or retreats, publicized in the firm's internal newsletter or by elevating the partner to an importance position in the firm.

Who Should Do the Evaluations?

In mid-size and large firms, it is usually the Compensation Committee that, for better or worse, conducts partner evaluations. While this is not the ideal world referred to above, the system can be effective if the Compensation Committee takes this part of its responsibility seriously and follows the requirements discussed earlier.

We have noticed another approach that some firms are beginning to use. The firm's management group, ie, the Executive Committee, does the evaluations and also decides compensation. There are benefits to this approach, which is derived from the way corporations handle these matters.

Another evaluation approach, used by some very large firms, is to have the firm's management group evaluate the practice group heads (and perhaps the office managing partners if that is the structure) and then have the group heads evaluate the partners in their practice groups.

Some firms have also used peer evaluations in which all the partners are asked to evaluate each other. While this approach has some benefits, it is almost impossible to use it in a large firm or in one that has more than one office.

Other Factors

One factor that is often not recognized in evaluation systems is that the process is not completed when the initial evaluation has been done. The evaluating body should allow time to discuss the evaluation with each partner and, where productivity is considered low in certain areas, discuss with the partner how it will be improved.

Finally, throughout the entire process, it should be remembered that the primary reason for a firm's measuring and evaluating the performance of its partners should be to improve both their performance and the firm's. The purpose should not be to penalize them or remove them from the firm because they are 'unproductive.' It is no coincidence that the firms that recognize this are, in the long run, the most successful.

Robert W. Denney is president of Robert Denney Associates, Inc., a law firm management, marketing and strategy consulting firm based in Wayne, PA. Telephone: 610-964-1938; Web site: www.robertdenney.com.

Associates and partners have different attitudes about certain things. One is regarding evaluations. Associates generally want feedback and evaluations on their work and performance. In fact, they usually complain if they are not receiving them. On the other hand, partners in many firms resist or even resent being evaluated, although it's often the initial step in determining a partner's compensation.

The fact of the matter is that, while associate evaluations are extremely important, thoughtful and constructive evaluations of partners are even more important because they result in improved firm performance as well as improved performance by the individual partners.

The Right Culture

The ability to conduct partner evaluations depends, first of all, on a firm's culture. It must strike the proper balance between autonomy and accountability, with more emphasis on the latter than the former.

Evaluations won't be effective ' and probably can't even be conducted ' in firms that allow an excessive degree of partner autonomy or a 'sole practitioner' attitude. On the other hand, evaluating partner performance is an extremely effective procedure ' and one that is even welcomed ' in firms where the culture is such that the partners consider themselves accountable to each other and depend on one another for the firm's overall success.

Firms with a culture of accountability have other important characteristics as well. They encourage partners to be good partners. In these firms, a 'good' partner is one who is the other partners biggest supporter ' and severest critic. A good partner doesn't just make the other partners look better; a good partner makes the other partners be better. And in these firms all partners recognize that what's best for the partnership is more important ' and ultimately more productive ' than the goals or ambitions of a particular partner.

System Characteristics

In any system involving evaluations, the recipients may disagree with the findings. Moreover, no system is perfect. In any evaluative process, errors will occasionally be made. However, if the process is thorough, unbiased and equitable ' and is perceived to be so ” then fair and effective valuations will result. And, just as important, they will be accepted.

There are certain essential characteristics of an effective evaluation system:

The partners conducting the evaluations must be trusted or the system won't work.

The rules governing evaluations must be consistent and understood by everyone involved ' evaluators and recipients.

Judgments should not be made until every effort has been made to collect all relevant information and the partner being evaluated has been allowed to state his or her case.

Evaluations must be explained so that they are more readily understood and accepted.

Requirements

In addition to having all of the above characteristics, successful evaluation systems fulfill certain requirements as well.

Criteria. The first requirement is that there are criteria against which to evaluate each partner. Furthermore, these criteria cannot exist just in the minds of the evaluators. They must be published and recognized by all the partners as the basis on which they will be evaluated.

The list of criteria will vary from firm to firm. They will often include quantitative factors such as billable hours, collections, full realization (collections as a percentage of the dollar value of billable time) and, in some firms, origination (although some firms are no longer recording this).

The quantitative criteria can be based on averages for similar size or type of firms or the firm can develop its own standards, based on either its own needs or objectives.

The criteria should also include qualitative factors such as quality of work, management performance (firm or practice group), client service, pro bono work and community service (if the firm encourages or requires), teamwork and associate training and development.

Goals. The most effective evaluation systems also require having each partner set personal goals every year in a written business plan. A major benefit of this is that it produces greater buy-in by the partners to the entire evaluation process. These goals will vary from one partner to another but they should be consistent with the overall firm goals. They should be put in writing, both for discussion at that time and for review the following year.

Some of these goals will be quantitative, ie, to achieve a certain amount of collections, originate a specified amount of new business or write two articles for publication. Others, just as important, should be qualitative. For example: To establish and develop a new practice group, open a new office, improve associate recruiting or reduce associate attrition.

Whatever the partner's personal goals may be, the evaluation group should agree with them so that they become a 'covenant' between the partner and the group. Furthermore, once these personal goals are approved and accepted, each partner's performance should also be evaluated on the achievement of those goals in addition to meeting or exceeding the firm's criteria.

Additional Features. The characteristics and requirements discussed above are essential components of an effective evaluation system. Some of the most effective systems have additional features as well:

Self-Evaluation. The process begins with the partner evaluating his or her performance for the previous year against both the firm's criteria and the partner's personal goals. It is interesting to note that, in most cases, these self-evaluations are very honest and realistic.

They're written. It is generally better to first discuss the evaluation with the partner to obtain their reaction and comments; then it should be put in writing. While this requires additional time, the task can be simplified by hand writing the evaluation, along with the partner's comments (if any) at the end of the meeting. Of course a copy should be given the partner. In some firms a copy is also put in a confidential file that is available only to the managing partner or firm management.

Rewards. In the ideal world, partner evaluations should be conducted separately from determining compensation. But in the real world, they are generally done in conjunction with the compensation process. This is not necessarily bad, however. If the partner's performance is evaluated against published firm criteria, as well as against the partner's personal goals ' and not just the personal impressions of the evaluators ' the subsequent decision on compensation will generally be regarded as fair and will be accepted by the partner.

At the same time, it should also be recognized that there can be other rewards besides, or in addition to, compensation. Appointment to an important committee, transfer to a desired practice group or the granting of a sabbatical are only some examples of rewards that can result from a favorable evaluation.

Recognition. Partners who are doing an exceptional job or have performed an unusual and valuable service to the firm, ie, successfully launching a new practice group or negotiating a desirable merger, should also be recognized throughout the firm. This can be done at firm meetings or retreats, publicized in the firm's internal newsletter or by elevating the partner to an importance position in the firm.

Who Should Do the Evaluations?

In mid-size and large firms, it is usually the Compensation Committee that, for better or worse, conducts partner evaluations. While this is not the ideal world referred to above, the system can be effective if the Compensation Committee takes this part of its responsibility seriously and follows the requirements discussed earlier.

We have noticed another approach that some firms are beginning to use. The firm's management group, ie, the Executive Committee, does the evaluations and also decides compensation. There are benefits to this approach, which is derived from the way corporations handle these matters.

Another evaluation approach, used by some very large firms, is to have the firm's management group evaluate the practice group heads (and perhaps the office managing partners if that is the structure) and then have the group heads evaluate the partners in their practice groups.

Some firms have also used peer evaluations in which all the partners are asked to evaluate each other. While this approach has some benefits, it is almost impossible to use it in a large firm or in one that has more than one office.

Other Factors

One factor that is often not recognized in evaluation systems is that the process is not completed when the initial evaluation has been done. The evaluating body should allow time to discuss the evaluation with each partner and, where productivity is considered low in certain areas, discuss with the partner how it will be improved.

Finally, throughout the entire process, it should be remembered that the primary reason for a firm's measuring and evaluating the performance of its partners should be to improve both their performance and the firm's. The purpose should not be to penalize them or remove them from the firm because they are 'unproductive.' It is no coincidence that the firms that recognize this are, in the long run, the most successful.

Robert W. Denney is president of Robert Denney Associates, Inc., a law firm management, marketing and strategy consulting firm based in Wayne, PA. Telephone: 610-964-1938; Web site: www.robertdenney.com.