Beyond drudgery: Develop meaningful career paths for partners and staff

In today’s challenging legal market, law firms will only succeed if they can gain and maintain a competitive advantage over their rivals – otherwise they will fall by the wayside. One of the major factors contributing to achieving this edge is the ability to ensure the firm’s lawyers perform at higher levels than its rivals. To do this, firms need to take steps to prioritise the development, management and retention of talented lawyers.

The economic conditions and consequent downturn in work have resulted in a deferment of training contracts, redundancies, short-time working, de-equitisation of partners and an increasing number of law firm failures. Given such an unhappy state of affairs, it is no wonder that there is now increasing disillusionment with careers in legal practice (although law schools continue to churn out large numbers of young lawyers) and, in particular with making partner, which has for long been the holy grail.

Talent development programmes can pay significant dividends through improved performance and reduced costs of partner and staff turnover. They are necessary to:

• manage career expectations throughout a lawyer’s ?working life;

• bring associates through to partnership and beyond;

• recognise that not everyone wishes or is suited to become a partner;

• manage succession planning as partners move towards retirement;

• create viable long-term career paths for lawyers who move into management; and

• meet the new career challenges presented by alternative business structures (ABSs), which permit external investment in law firms.

Too often, scarce resources are wasted by law firms in relation to their investment in their people. Investment in human capital should be focused and channelled in ways that are specifically aligned with achieving the firm’s strategic objectives. In particular, investment in people will help to ensure the firm is able to consistently provide its clients with the advice and services they require and to reduce wasteful staff and partner turnover.

Career expectations

Have you ever asked your partners and staff what they want from their careers? Taking steps to find out what motivates (or de-motivates) them does not require a great deal of investment, other than the thoughtful use of time. You should consider:

1. conducting confidential firmwide partner and staff?surveys to uncover the reasons for staff losses and disillusionment; and?

2. reviewing appraisal (and associated reward) processes to ensure they are getting the best out of your people.

 

1. Exit interviews

Well-managed exit interviews can reveal invaluable information about your people’s aspirations, areas requiring attention and what is really happening within your firm.

Confidential questionnaires can be a vital way of finding out what makes your partners tick. Unless you can find out what your partners really want from their careers, you are unlikely to ever know whether you have the right partners on board who are able and willing to consistently perform in a manner that enables your firm to provide clients with what they require.

Excellence of client service should be the paramount objective if your firm is to effectively compete with its rivals. Gaining such knowledge will be equally important for partner succession planning.

2. Appraisals and rewards

A carefully constructed and managed 360-degree feedback process as part of your assessment and development processes can result in improved performance and higher morale across your firm.

Partner development

Developing, managing and retaining talented lawyers should be a top priority. Nowhere is it more important to get this right than at the crucial transition points from associate to partner, and from salaried or fixed-share partner to equity partner.

Investing in an effective partner development programme can pay significant dividends through improved performance and reduced costs associated with staff and partner turnover (see box: Benefits of a partner development programme).

Potential new partners should not just be selected but supported and prepared for their future roles. This process should begin several years before they are made partner.

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Benefits of a partner development programme

• Groom potential new partners so that they are ready to make an immediate business contribution

• Avoid unnecessary churn of potential partners who leave because of uncertain career prospects or disillusionment

• Avoid appointing new partners who are not yet ready for the role

• Introduce aspiring partners to the expected behaviours and attitudes

• Manage the career expectations of those who want to make partner but are not yet ready for it

• Motivate those who decide that they do not want to join the partnership or are not suited to it

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Succession planning

Planning is key – for both your firm and partners. Ideally, any ‘people plan’ should aim to make optimum use of all productive human resources within the firm. This is even more important in smaller firms, where resources of every kind are usually most scarce.

Given the economic pressures to reduce equity partner numbers and the gradual lowering of partner retirement ages, careful planning needs to be undertaken well in advance. This is particularly important where the age profile of the partnership means that a number of partners are likely to retire within a short period of time. This can put potential pressure on cashflow and your firm’s ability to continue to manage important client relationships.

Planning to avoid such problems needs to be focused on the continuation of valuable client relationships and on ensuring that there will be a continuous pool of young talent coming through the firm who will be able and willing to take over the mantle from their more senior colleagues. Consider:

• Who will there be to take the place of your retiring partners?

• Will you have the appropriate ‘people resources’ in place to enable your firm to achieve its future objectives?

If satisfactory answers cannot be provided to such questions, then your firm may need to consider a merger or some other option.

As part of succession planning, it is important to get the best out of the partners moving towards retirement. First and foremost, make them feel valued, because they are likely to be far more motivated if they can retain their self esteem within the firm.

Also, try to harness the skills and experience senior partners have developed over the years. Find beneficial roles for them as mentors and coaches, in addition to them continuing to manage vital client relationships.

At the same time, appropriate financial arrangements will need to be worked out to fairly match reward to contribution as partners move towards retirement. Unfortunately, the inability of some partners to retire when they have not provided sufficiently for their retirement, combined with the inability of some firms to manage their cashflow to enable them to repay capital, are creating new financial challenges for firms as the economic downturn continues to bite.

Management career paths

What can the lawyer who becomes managing partner at the age 45 look forward to in terms of his career at the firm at the end of his five-year stint in management? This is an increasing problem as more and more firms realise that they need full-time managing partners who, in order to carry out the role, pass their clients on to other partners. To many, the choices at the end of their term seem stark – either a return to fee earning, which can be difficult if not impossible, or leave. Are these the only realistic choices that should be available?

If a firm asks one of its partners to change career direction at a relatively young age and, for the good of the firm take on a managerial role, then it should be incumbent on the firm to provide realistic and fair options for that person when that particular role comes to an end.

How many partners who have the potential to become good managers and leaders have been put off because of the lack of a visible career path after the management role comes to an end? These days, law firms need more management, not less. There is a wealth of talent in law firms and the productive potential of that talent should not be thrown away.

Ideally, anyone who becomes managing partner should build into his contract ‘parachute’ arrangements to provide for a worthwhile future career in the firm after his term ends.

Impact of ABSs

The advent of ABSs in the UK has already led to partnership numbers in certain types of firms being reduced as part of plans to obtain external investment. Small partner numbers can make decision-making easier when the time comes to sell, and of course, the fewer partners there are, the greater each partner’s ultimate payout will be.

External investment can however reduce young lawyers’ prospects of joining the partnership. How will a wholly or partly-owned ABS be able to motivate its brightest and most ambitious people who have worked all their careers to make partner, but suddenly seen their aspirations blocked? Persuading such people (who are often the ‘engine room’ of the firm) that there will still be a worthwhile career for them in the firm is likely to become a major priority for those running an externally-owned ABS. Unless they are able to do so, their best talent is likely to migrate elsewhere.

However, we have already seen a trend developing whereby much of the external investment to date seems to have been into firms that have developed volume, commoditised and process-driven legal businesses, where the key to gaining competitive advantage is more often the effective use of systems and technology, rather than relying on the experience and judgement of individual lawyers, as in the more traditional law firms.

Different issues will arise in relation to managing the career aspirations of lawyers in such firms which, in future, may simply be focused on earning a reasonable living rather than achieving career progression. The real career issues to be managed in such firms are perhaps likely to relate more to the professional managers (both lawyers and non-lawyers) running such businesses. The ‘legal factory’ will truly have arrived.

Investing in tomorrow

Your firm’s main investment in the development of your people is likely to be time based. However, by demonstrating that your firm is investing in its people, you can expect considerable returns, including improved performance through enhanced skills and the ability to attract and retain fresh talent.

Peter Scott advises law firms on financial, strategic, people and risk management issues (https://peterscottconsult.co.uk)