The best leaders notice and understand the inherent risks in their firm’s business model. They ask the difficult questions: Why is revenue down? Why is our associate attrition rate so high? Why are so few women at the top? They know who is talking to whom about what, and who is only loosely connected to others in the firm. They know which processes and structures are responsible for the status quo and are prepared to change them when necessary.
They know that change begins with the right conversations with the right people, so they engage the right people in difficult discussions. They surface deeply rooted practice and culture problems and resolve them. Avoiding problems doesn’t make them disappear—it merely gives them time to develop stronger roots.
Does interpersonal conflict, especially with your partners, make you uncomfortable? Do you acquiesce when the conversation becomes uncomfortable, or avoid noticing or tackling certain problems that you know are highly charged? We regularly read and hear about firms with significant, long-term, avoidable problems resulting from ill-fated mergers, unhappy partners, expensive laterals, and high associate attrition. If only the partners had uncomfortable conversations first, these consequences could be avoided.
I spoke with five law firm leaders and pulled from my years of consultation to offer data from anonymous interviews with firm partners and professional staff about their difficulties in breaking with tradition or speaking up when decision-making is flawed. All names and any identifying characteristics of the firms have been changed or masked to protect that anonymity.
Take your head out of the sand, pay attention, and speak up.
“So many times, I went along to get along and regretted it.” This quote is from Sam, a former managing partner of a mid-size firm that merged into a very large firm. Sound familiar? The risks associated with not speaking up are huge! Decisions that few people want are made and opportunities to tackle business problems are missed. All partners in all firms must find their voices and speak up when they see something wrong, when they see something right, and when they have questions.
Patricia’s story, too, may sound familiar. I’ve heard variations of it repeatedly over the past 10 years. Patricia is a partner in a mid-size, multi-office regional firm. She joined as a lateral several years ago. The business model is centered on individual partners bringing in new clients and new matters and then doing that work themselves. Partners may offer some work to a few others, but they keep most of it for themselves. Partners share liabilities, however, are not developing strategies to grow the firm as a collective.
A substantial percentage of the annual revenue was due to a single client that “belonged” to Sally. Sally had a history of high associate attrition, and she complained about it regularly to the firm’s managing partner and management committee. Their response was to placate Sally by hiring two new associates at a premium. This did not solve the problem and Sally remained visibly unhappy.
Sally and another partner, Peter, worked closely on several matters with Thomas, who had a reasonable book of business and was close to retirement. It was assumed that Thomas would transition his book of business to Sally and Peter. Sally, Thomas, and Peter were a somewhat isolated clique in the firm.
To the surprise of their colleagues, Sally, Thomas, and Peter announced that they were leaving the firm. This meant that much of the firm’s revenue was also leaving. Many reasons may be behind unexpected partner departures, however, most involve a leader with a history of avoiding difficult conversations.
The firm’s leader missed out on two conversations with partners. First, the leaders should have spoken with the departed associates and then engaged Sally in a discussion about her associate attrition pattern, and her role in why those associates left. Telling Sally that she has a pattern and a problem is not a discussion. If Sally refuses to own the problem and seek a solution, even the best leader will be powerless to change the status quo. Losing a trained associate is costly. In addition to hurting morale, when too many leave, the cost to recruit, hire, and acclimate a new associate may include hard cash, as well as lost time from doing the work that matters to the growth of the firm. Throwing more associates into a bad situation, hoping that one of them cures the problem, only hurts the firm and the associates.
Effective leaders must have the difficult conversations and show, not just tell, partners how their behavior creates problems for the firm, especially if the behavior is a recurring pattern.
Everyone could see that Peter, Thomas, and Sally were disengaging from the firm and forming their own isolated clique if they took the time to notice. They spoke less and less to other partners and more among themselves. A leader would want to know why this was happening and ask.
Addressed early, problems can be discussed and resolved and a group re-integrated. If left unattended, isolated cliques develop an “us versus them” mindset that grows until the clique believes they are better off on their own. The conversations will not be easy: expect perception-based arguments without strong factual foundations. The stakes for firms are too high not to face the controversies and try to resolve them. Speaking truth to power means overcoming the fear of offending empowered rainmakers. Otherwise, the fear suffocates any possibility of an open and honest discussion about the business of the firm, increasing risks and losing opportunities for improvements.
Too much goes unnoticed at many firms, and this is not limited to partners on the brink of leaving. Collegiality is often an espoused value, yet the reality at one firm was described this way. “If a rainmaker says something questionable, everyone else stays quiet.” A leader notices who speaks up and is listened to, who speaks up and is not listened to, who is silent, who is invisible, who is most influential, and who is well-liked. Then the leader asks why that is. When not noticing or avoiding is ingrained in the culture, time and money are wasted and unintended consequences follow.
One firm took 18 months to pass an administrative policy on expense reimbursement for attorneys because the COO who authored the policy was not a lawyer. Despite this firm’s espoused collegiality, which should include professional staff, their leaders waited to get the same content from a partner and then wasted 18 months wordsmithing that content. The message sent to the professional staff was one of elitism rather than collegiality.
That firm’s corporate clients would have passed the policy within one week. Can you imagine what their clients would think of the firm’s efficiency? It’s fashionable to spend money on technology and learning how to bring efficiency and quality together, like Lean and Six Sigma programs. An effective leader looks at the loss of income from partners who are spending time on work better sourced to their professional staff and makes it stop.
Hold up a mirror.
Sometimes, partners are inundated with so much information and clouded by their own goals that the firm becomes gridlocked with ineffective decision-making. That’s the next story.
Mark was the COO at a medium-size regional firm that was started in the 1800s by a group of close friends. Two hundred years later, Mark described the culture as “frat-like or a dysfunctional family.” At that time, there were few defined roles, responsibilities, and measures of accountability to align lawyer behavior with the firm’s business model for survival and growth.
The partners received 70 pages of financials each week that they argued over at every meeting, instead of addressing the firm’s problems of attracting good associates and figuring out why their competition regularly outperformed them financially.
No policies or processes guided case selection and the firm took on several cases that were not financially feasible.
Lawyers did not know how to talk about themselves and their niche practices, so the firm had no clear brand that could be conveyed to a prospective client or used in marketing materials.
No process was in place to curtail excessive reimbursements. This vacuum led to competition among partners for spending the most on CLE trips unlikely to generate new business.
No succession pool or plan for grooming the next generation of firm leaders and experienced counsel to take over the firm’s clients was adopted. The partners lived from draw to draw with no master plan or vision.
Neither surprising nor unusual, everyone had a different opinion about the reasons for the firm’s problems. The managing partner limited his availability to discuss firm issues to one day a week for the one hour of the day when most people were still at home or traveling. The net effect was the absence of discussion about controversial issues of vital importance to the firm’s survival. Avoidance coupled with rehashing data at partner meetings was a strategy that maintained gridlock. The partners were aware of performance issues, however, they avoided discussing the problems openly and fairly.
Mark focused on revenue generation under their existing business model and the disparity in revenue generated by different lawyers in the firm. He used a boat metaphor and diagram to show partners how the different roles and responsibilities in a firm were like the parts and crew of a boat. He demonstrated the need for different functions to be performed in alignment for the boat to sail forward. They used the boat metaphor to talk about their firm, leadership of the firm, and respective roles and responsibilities to see where efforts were missing or misaligned.
Mark then convinced the partners to receive a dashboard summary of the firm, practice groups, and each partner’s own performance instead of getting 70 pages of financials. He also persuaded them to receive these reports every three months instead of weekly. They could not see how any other partners ranked but knew their relative ranking on the criteria important to their business model.
It took approximately three years after Mark “held up the mirror” for the culture to change. The firm slimmed down and became very profitable. It changed its compensation and rewards model to put more money in partners’ pockets to use as they wished while eliminating reimbursements for professional or business development. It developed branded messaging for practice groups and individuals. For the first time, the firm’s goals and financial interests aligned with its management and compensation programs.
Yes, some partners and associates left the firm. What the firm wanted to become could not be built by those who did not share the vision. The firm held up a mirror to itself and transformed from a weak, desperate firm that needed a merger to dig itself out of a self-made hole into a healthy, profitable firm that did not need to merge, but would consider one with a firm having the right political, culture, and financial fit.
Think first, then speak, discuss, and decide.
Think, speak, discuss, and decide is the order for having difficult conversations. Before making assumptions, jumping to conclusions, and rushing to decisions, take your time to explore the root cause of problems and implications of decisions. If you can’t locate the pros and cons, you haven’t spent enough time asking open-ended questions—who, what, when, where, how, and why—about the situation and possible solutions.
Failing to take the necessary time for a decision can lead to shortcuts in decision-making that damage trust in leaders. Trust, once damaged, makes the path forward against the wind. In small group decisions, trust is frequently injured when the group prefers vote-taking rather than consensus-building on important decisions and consensus-building rather than vote-taking on urgent, yet relatively unimportant, decisions.
Deciding by consensus can take longer than a majority wins vote, but tallied votes do little to help everyone understand the issues and ramifications of those opposed to the proposal. If you were in the minority and your concerns were not heard or addressed, how hard would you work to implement the change? Invariably, when decisions are rushed through committee and close to half of the people do not agree with the decision, those people will either do nothing to support the implementation of the decision or through words and subtle actions block implementation.
Facilitating discussions to reach consensus differs from requiring every partner to weigh in on every decision for running the business. That may lead to decision-avoidance. Not every decision has serious consequences for partners, and some urgent decisions have serious consequences when delayed. Voting and consensus both have their proper place in law firm management. It’s the responsibility of leaders to figure out when one is better than the other.
Charles, a COO at a regional firm, observed the consequence of executive committee members deciding on a partner’s qualifications to lead a project or group using opinions instead of facts, treating a 4-3 decision with strong dissent as if it was unanimous, failing to appreciate input from people affected by and expected to implement change. The consequence was an erosion of trust and inability to implement strategic decisions. The partner could not lead successfully.
Have a clear vision, communicate it, and let it inform priorities and decisions.
Charles also explained the difficulties a COO faces when the firm lacks a clear vision, and everything seems urgent and important to the firm’s leadership. Without a vision, goals, and a strategic action plan, no criteria apply to making decisions. The most important responsibility of the managing partner and executive committee is to set the vision, direction, and strategy.
Decision-making criteria, goals, and challenges are what distinguish the urgent from the important. Priorities must be discussed; otherwise, short-term goals take priority over long-term goals for organizational sustainability. Anyone would be reluctant to be the lone voice challenging a decision. Without a clear vision and direction for the firm’s survival and growth, people cannot point to objective decision-making criteria to demonstrate the difference between urgent and important.
Often, the main obstacle to a settled, cohesive strategy is getting all partners to buy-in to a plan. Buy-in results after ongoing strategy discussions centered on a clearly articulated and sufficiently detailed vision.
The purpose of a vision statement is mostly for internal guidance as contrasted with a mission or brand. A vision statement should at least imply important milestones: financial, revenue, client-based, and industry-based. It should do so in specific and measurable terms and explain how they will be attained. With an end date, it is more effective as a motivator of action.
In today’s rapidly changing world, an overly broad, vague, ambiguous, and mostly-wishful vision statement isn’t very useful. A useful vision statement is two or three sentences, and easy to distill into a discrete milestone and shorter-term goals, which provide substance for weekly partner meeting discussions. It is the responsibility of firm leadership to develop the vision statement and communicate that vision to everyone in the firm.
What happens without the clarity of a vision statement? Charles indicated that his firm leaders decided there was a risk management need for an adjustment to a business-critical internal process. They asked everyone on the committee for comments on possible adjustments. No clear consensus emerged on how to adjust the process. No changes were made, despite awareness it posed an imminent risk. A vision statement could have helped prioritize the possible adjustments to help guide the partners to a decision.
When leaders at the top of the firm avoid deciding an important question, the decision is pushed down to practice or industry groups, other committees or individual lawyers. This leads to inconsistent results, conflict among those affected, and prevents a consistent client experience which hurts the firm’s brand. These conflicting decisions undermine firm culture and create unnecessary interpersonal conflict while also undermining trust in leaders. Also, flip-flopping on decisions if one person complains loudly enough, especially combined with a lack of clarity in compensation decisions, leads to unfair disparity among lawyers’ compensation leading to more interpersonal conflicts, resentment toward and diminished trust in firm leadership, and rises in attrition.
Meetings are for relationship development, discussions, and decision-making.
Strategy is nothing without implementation. Without the buy-in from the people being asked to change or tolerate changes, implementation never begins. Canvassing one partner at a time is no substitute for partners talking together about the business of the firm.
When the only discussions on important issues take place between the managing partner and individual partners, or once-a-year at the annual meeting, the managing partner shouldn’t be surprised if a vote doesn’t go as expected in the partnership meeting. The process is the cause. People need an opportunity to share their thoughts and listen to the thoughts of others on important issues before being asked to cast a vote.
People need to understand what is important to others and the emotions anchored to a person’s position. They also need to feel heard and understood. That doesn’t happen unless people discuss important issues together. Only then is there a chance to reach a consensus decision.
It’s important to discuss the signs of an unhappy client, whether there is a risk of losing a significant client, and how to turn the situation around. I cannot count the number of times a client was lost, the firm leadership knew the problem in advance, but nobody would speak with the partner or the client.
Instead of turning to the phrase, “Work is just a little slow right now,” talk about declining billings and how to help the lawyers and firm get more work in the door and to the people who have the capability and time to do it. No compensation system is a substitute for this conversation. Although the compensation process nudges certain behaviors; it doesn’t help lawyers strengthen their networks, show lawyers how effectively to “sell” themselves and the firm to new clients, or enable trusting relationships to form among attorneys for cross-selling purposes.
If little or no diversity exists at the highest levels of power and compensation, this is a firm problem to discuss and solve. If associate attrition is rising, this is a problem to discuss and solve as a partnership. Open lines of communication to find out in advance whether associates or partners are thinking about leaving the firm and if so, why. Then, discuss how to address the problem.
Annual retreats are valuable; the glow they create, however, fades well before the next retreat. Weekly and monthly meetings where partners can develop relationships with people they might not otherwise interact is the only way to develop the trust needed for cross-selling and the discussions to explore those possibilities. Much can be accomplished in 45 minutes with a planned agenda and the right processes.
Conclusion
We have the power to choose what to discuss and what to avoid, when to acquiesce and when to disagree, what to do and what not to do. Any partner in any law firm has the power to improve the firm’s performance by demonstrating an interest and curiosity in the ideas, interests, and concerns of their partners, associates, and professional staff and speaking up to be heard and to make sure the perspectives of other partners are also voiced and heard. Using that power may require challenging others to find alternate views to solve a pernicious problem and demands acknowledging oneself and others, who have contributed to the problem. It is the only way to lead in today’s environment and grow a successful law firm.
About the Author
Susan Letterman White is the managing partner of Letterman White Consulting, a practice advisor at Mass LOMAP, and an adjunct professor at Northeastern University, where she teaches organizational leadership and personal and career development courses. Contact her on Twitter @susanletterman.