Underperforming Partners

In the last couple of years, law firms across the country have struggled with the question ' what to do about underperforming partners?

Some firms choose to ignore the signs and hope those partners leave on their own accord. And although it may seem like a good idea at the time, disengaging from an underperforming partner can be a gut-wrenching experience and one that only gets worse the longer it is delayed. It is important for managing partners to take stock now and be prepared to offer resources for reversing the trend of underperformance. It will save you time and money in the long run.

In The American Lawyer's 10th annual Law Firm Leaders survey, 113 Am Law 200 managing partners and chairs were surveyed on U.S. and world economies, lateral activity, projected hiring by practice area and office, projected billing rates and profitability levels. www.americanlawyer.com/PubArticleTAL.jcp?id=12. The general consensus among firm managing partners is that with the uncertainty of the current U.S. economy, along with financial instability in Europe and China's economic slowdown, many firms must find the proper staffing mix in order to maximize profitability. Many of the firms surveyed stated they will ask underperforming partners to leave in 2013, making way for new attorneys in greater revenue-generating market niches. For example, 55% of managing partners surveyed said they intend to ask between one and five partners to leave in 2013, and 5% said they intend to ask between 11 and 20 partners to leave.

Similarly, The Smock Law Firm Consultants' annual survey of the legal marketplace conducted in January 2013, as distributed by the Managing Partner Forum and The Remsen Group, reported that “dealing with underperforming partners” has remained at the top of law firm management needs for the last three years.

What to Look For

You know who they are. They just never seem to get any traction, or have lost the traction they once had. There are several warning signs of underperformance to look for and address early, before it is too late.

The top signs include:

• Their billable hours don't match their peers.
• Their clients are never quite satisfied with the results.
• Their practice doesn't sustain itself.
• They are not bringing new clients or matters into the firm.
• They can't or won't adapt to a changing marketplace.
• They are tired, burned-out or just plain bored.

While these symptoms may urge firm management toward separation, taking such a radical step without approaching the problem with something other than a stern talking-to and a threat of job loss is unwise. You may have a great performer who just doesn't know how to get with the program.

Setting a Standard and Measuring Performance

Measuring performance is often the first step in determining whether a firm's attorneys are meeting their required goals.

Luckily, for Michael Hollingsworth, managing partner of Nelson Mullins Riley & Scarborough LLP's Atlanta office and co-chair of the firm's Mergers & Acquisitions group, asking underperforming partners to leave has not been an issue. The firm's culture is centered on baseline “economic hygiene,” where everyone, from the firm-wide managing partner to associates to paralegals, has a “personal collections goal” they are expected to meet on an annual basis. The total of personal collections can come from “business originations” or “working collections.”

“This performance model has been in place at Nelson Mullins a very long time and is firmly engrained in our culture,” said Hollingsworth. “We believe this system directly contributed to our continued success throughout the recession, because everyone knows coming up or in that they are expected to meet these goals year after year.”

For firms that don't have a long history of set expectations like Nelson Mullins, changing to such a system may prove challenging ' however necessary it may seem.

In a January 2013 article in The Wall Street Journal, managing partner Edward Newberry at the law firm of Patton Boggs LLP, was quoted as stating that the firm's attorney productivity goals for were only set up two years ago. The article notes: “Partners who aren't up to par may get additional training or be deployed to other, busier, practices.”

In the same article, Tony Williams, law firm consultant and former managing partner at Clifford Chance, was quoted as saying, “Firms are now much more clear in what they expect ' and much less forgiving if people consistently fall short.”

Addressing the Problem

Your underperforming partner may just need a break to get re-energized. Or, he or she may need the assistance of a professional who can help focus efforts where they will do the most good. A business development coach is one very good option. Professional organizers or time managers are another good example of help that can get the partner back in control of billable time and work product.

Nelson Mullins takes a proactive approach to performance. The firm's attorneys are divided into small teams of 25-30, each with a team leader. The leader monitors members' work flows and receives management reports with detailed financial metrics every month, or on a daily basis if desired. Hollingsworth said the firm also has a totally transparent system, where everyone has the ability to see everyone else's numbers. All attorneys have become aware of and use a desktop tool that allows them to see each others' numbers the day after they are recorded, enabling them to address a potentially negative situation before it becomes a full-blown problem.

Firms dealing with underperforming partners typically give that individual a year to turn things around. It doesn't have to be a year in every situation, but it does have to be a reasonable amount of time to allow for change to occur based on each practice area's sales cycle.

“We use a three-year trailing average to determine an attorney's baseline compensation,” said Hollingsworth. “People have bad years every now and again, but if it is because of a busted deal or the client cannot pay, it's not a death sentence. That year gets averaged in with two other years which could have been really great years.”

“What it does affect is the attorney's annual bonus,” continued Hollingsworth. “The annual bonus is a great incentive for our attorneys to ensure that they are meeting or surpassing their annual collection numbers each year.”

Smock Law Firm Consultants suggests that “for those [who] want to improve, develop an improvement program/plan with measurable milestones (not just billable hours) and objectives” and then, “routinely and periodically measure, evaluate and communicate results of that program/plan.”

Second Chances

What if the second chance provided is not effective and the underperforming partner just cannot seem to get the proper foothold to turn a profit? Well, now it may be time to say good-bye. There are a few ways you can help the individual make a graceful exit and transition into the next phase of his or her career, whatever that may be. Consider the following options:

• Provide a minimum of six months of outplacement services in the form of one-on-one legal career coaching.
• Establish a reasonable timeline for supporting their job search efforts.
• Provide office space, support staff, e-mail, and voice mail so they can appear to be employed while they are looking for their next opportunity.
• Discuss arrangements for their supporting attorneys and staff so that they are provided for at the firm or in their own career change.

Whatever path is taken, always remember that respect for partners as individuals should be separate from their necessary transition.

Robin M. Hensley is founder and president of Raising the Bar. Named as one of the country's top business development coaches in the National Law Journal's “Best of 2013,” Hensley specializes in coaching managing partners and other key law firm profitability leaders.

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In the last couple of years, law firms across the country have struggled with the question ' what to do about underperforming partners?

Some firms choose to ignore the signs and hope those partners leave on their own accord. And although it may seem like a good idea at the time, disengaging from an underperforming partner can be a gut-wrenching experience and one that only gets worse the longer it is delayed. It is important for managing partners to take stock now and be prepared to offer resources for reversing the trend of underperformance. It will save you time and money in the long run.

In The American Lawyer's 10th annual Law Firm Leaders survey, 113 Am Law 200 managing partners and chairs were surveyed on U.S. and world economies, lateral activity, projected hiring by practice area and office, projected billing rates and profitability levels. www.americanlawyer.com/PubArticleTAL.jcp?id=12. The general consensus among firm managing partners is that with the uncertainty of the current U.S. economy, along with financial instability in Europe and China's economic slowdown, many firms must find the proper staffing mix in order to maximize profitability. Many of the firms surveyed stated they will ask underperforming partners to leave in 2013, making way for new attorneys in greater revenue-generating market niches. For example, 55% of managing partners surveyed said they intend to ask between one and five partners to leave in 2013, and 5% said they intend to ask between 11 and 20 partners to leave.

Similarly, The Smock Law Firm Consultants' annual survey of the legal marketplace conducted in January 2013, as distributed by the Managing Partner Forum and The Remsen Group, reported that “dealing with underperforming partners” has remained at the top of law firm management needs for the last three years.

What to Look For

You know who they are. They just never seem to get any traction, or have lost the traction they once had. There are several warning signs of underperformance to look for and address early, before it is too late.

The top signs include:

• Their billable hours don't match their peers.
• Their clients are never quite satisfied with the results.
• Their practice doesn't sustain itself.
• They are not bringing new clients or matters into the firm.
• They can't or won't adapt to a changing marketplace.
• They are tired, burned-out or just plain bored.

While these symptoms may urge firm management toward separation, taking such a radical step without approaching the problem with something other than a stern talking-to and a threat of job loss is unwise. You may have a great performer who just doesn't know how to get with the program.

Setting a Standard and Measuring Performance

Measuring performance is often the first step in determining whether a firm's attorneys are meeting their required goals.

Luckily, for Michael Hollingsworth, managing partner of Nelson Mullins Riley & Scarborough LLP's Atlanta office and co-chair of the firm's Mergers & Acquisitions group, asking underperforming partners to leave has not been an issue. The firm's culture is centered on baseline “economic hygiene,” where everyone, from the firm-wide managing partner to associates to paralegals, has a “personal collections goal” they are expected to meet on an annual basis. The total of personal collections can come from “business originations” or “working collections.”

“This performance model has been in place at Nelson Mullins a very long time and is firmly engrained in our culture,” said Hollingsworth. “We believe this system directly contributed to our continued success throughout the recession, because everyone knows coming up or in that they are expected to meet these goals year after year.”

For firms that don't have a long history of set expectations like Nelson Mullins, changing to such a system may prove challenging ' however necessary it may seem.

In a January 2013 article in The Wall Street Journal, managing partner Edward Newberry at the law firm of Patton Boggs LLP, was quoted as stating that the firm's attorney productivity goals for were only set up two years ago. The article notes: “Partners who aren't up to par may get additional training or be deployed to other, busier, practices.”

In the same article, Tony Williams, law firm consultant and former managing partner at Clifford Chance, was quoted as saying, “Firms are now much more clear in what they expect ' and much less forgiving if people consistently fall short.”

Addressing the Problem

Your underperforming partner may just need a break to get re-energized. Or, he or she may need the assistance of a professional who can help focus efforts where they will do the most good. A business development coach is one very good option. Professional organizers or time managers are another good example of help that can get the partner back in control of billable time and work product.

Nelson Mullins takes a proactive approach to performance. The firm's attorneys are divided into small teams of 25-30, each with a team leader. The leader monitors members' work flows and receives management reports with detailed financial metrics every month, or on a daily basis if desired. Hollingsworth said the firm also has a totally transparent system, where everyone has the ability to see everyone else's numbers. All attorneys have become aware of and use a desktop tool that allows them to see each others' numbers the day after they are recorded, enabling them to address a potentially negative situation before it becomes a full-blown problem.

Firms dealing with underperforming partners typically give that individual a year to turn things around. It doesn't have to be a year in every situation, but it does have to be a reasonable amount of time to allow for change to occur based on each practice area's sales cycle.

“We use a three-year trailing average to determine an attorney's baseline compensation,” said Hollingsworth. “People have bad years every now and again, but if it is because of a busted deal or the client cannot pay, it's not a death sentence. That year gets averaged in with two other years which could have been really great years.”

“What it does affect is the attorney's annual bonus,” continued Hollingsworth. “The annual bonus is a great incentive for our attorneys to ensure that they are meeting or surpassing their annual collection numbers each year.”

Smock Law Firm Consultants suggests that “for those [who] want to improve, develop an improvement program/plan with measurable milestones (not just billable hours) and objectives” and then, “routinely and periodically measure, evaluate and communicate results of that program/plan.”

Second Chances

What if the second chance provided is not effective and the underperforming partner just cannot seem to get the proper foothold to turn a profit? Well, now it may be time to say good-bye. There are a few ways you can help the individual make a graceful exit and transition into the next phase of his or her career, whatever that may be. Consider the following options:

• Provide a minimum of six months of outplacement services in the form of one-on-one legal career coaching.
• Establish a reasonable timeline for supporting their job search efforts.
• Provide office space, support staff, e-mail, and voice mail so they can appear to be employed while they are looking for their next opportunity.
• Discuss arrangements for their supporting attorneys and staff so that they are provided for at the firm or in their own career change.

Whatever path is taken, always remember that respect for partners as individuals should be separate from their necessary transition.

Robin M. Hensley is founder and president of Raising the Bar. Named as one of the country's top business development coaches in the National Law Journal's “Best of 2013,” Hensley specializes in coaching managing partners and other key law firm profitability leaders.

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