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LEGAL BUSINESS |
Has Your Firm Got a Flat Tyre?
'Flat tyres' exist in most firms, but surprisingly,
many choose not to repair them, let alone change them, risking a catastrophic
blow-out for the firm in the process. I'm talking of course about partners
who perform at levels significantly lower than their other partners.
Many firms do neither themselves nor such partners any favours by failing to address the issue head on. Flat tyres not only often rip themselves to shreds if they are left unattended for too long, but the whole vehicle can become unmanageable under their influence. Staff, standards, plans, clients and profits are all compromised.
A little anticipation and careful attention to
early signs of wear can prevent blow-outs that often fatally cripple firms
for years.
Financial Issues
If the issue is considered purely from a financial perspective, the impact
on the firm can clearly be demonstrated. The table below assumes an eight
partner firm where the average fees billed each year, by the partners, with
the assistance of their teams, is $1.1M. The one exception is Partner 4, who
is only managing $500K. The earnings of the partnership whilst that situation
prevails, (assuming a profitability of say 50 per cent), is $489K per year.
If that one partner could be brought up to the partnership average then each
partner would be better off to the tune of $33K per year. Over three years
this amounts to a loss per partner of $100K.
The position is even worse as you might imagine
if you have two flat tyres. In the above example, the additional profit to
be gained, if you can get both partners up to the average performance of the
others, is $67K per partner and $200K over three years.
Other Issues
The impact is not only financial, however. Underperforming partners usually
demonstrate their shortcomings most dramatically in their lower overall team
rather than individual fees. Their effect is widespread within the firm.
They usually perform very well as against their
personal budgets but:
1 Have no one to delegate to and don't seem to want anyone - nobody ever seems
good enough.
2 Will not delegate even if they could.
3 Do not wish to build a new practice?where the old practice has fallen away.
4 Often expect unquestioning support
from fellow partners.
Of course there are many other causes but in
my experience in firms ranging from three partners to 300, these four factors
are the most common. The good news in that they are all capable of being remedied
providing:
1 The issue is recognised early ?enough.
2 There is sufficient goodwill in the partnership to extend assistance to the partner to overcome the problem.
3 A plan is devised which will give the partner a chance to rectify the situation.
4 The partner has an insight into the issue and
is willing to accept the help being offered.
Early Symptoms
Delegation - Many practitioners are so possessive of their clients
and work that they actively resist delegation. Modern practices cannot effectively
operate without sufficient leverage, say 1:2 or often much higher. A partner
who leverages his work will be able to generate the $1.1 million my example
requires, but the practitioner who wants to do it all himself will never be
able to reach those targets.
A lack of delegation usually indicates that the partner probably doesn't have enough work to delegate and hence, there are signs the work is simply not there or the partner needs help in getting it. A failure to delegate can also be indicative of poor recruiting/training and mentoring skills. This too can be addressed once the issue is identified, a plan created and the partner is willing to accept help.
In my experience, the solution is often to insist the partner takes on additional help and is entirely responsible for 'feeding' the newcomer with work. The pressure of having an extra mouth to feed often gets the partner moving, but again close monitoring is essential to ensure the newcomer is not abandoned or snapped up by more voracious partners.
Most partners who organise their workflow carefully realise that about one third or more of it is quite capable of being delegated. I have heard many excuses as to why this is not possible in various types of practices but have yet to see a convincing case made out. Help the partner decide what and when delegation is possible and insist it happens. Assist in recruiting the right juniors.
Marketing - Lack of marketing activity and other conduct supportive of the partnership as a whole, is also an early sign of a puncture. The partner often asserts there is simply not enough time. Usually there is, but a negative view of the need to market and a failure to delegate is often the real cause of such conduct.
Again, marketing is not an activity that comes naturally to many of us. Early resistance to expanding the practice, improving client contact, seminars etc can all be early warning signs. Most partners will be well aware of the diminishing nature of a fellow partner's work load. Considerable effort and persistence is required to address the issue rather than try and continue to drive the firm forward, missing a wheel or two. Many such partners will welcome intervention and assistance from the firm. Outside assistance is probably more often effective, but a clear indication of support from the partnership is the ?first step.
There will never be sufficient time to market
or develop a practice without delegation, planning and all the other activities
required to keep a practice healthy. Helping the partner understand what is
required is important.
Conclusion
1 Review your 'path to partnership' guidelines to minimise promoting unsuitable
partners.
2 Look for early warning signs, such as low team fees, unwillingness to delegate/recruit and low marketing activity.
3 Get the partner to recognise where the problems are and have a plan to help them be remedied - don't let the puncture turn into a blow-out.
4 Ensure the plan has the support of the other partners - re-threads are possible.
5 Get outside assistance to plan and implement the changes that are required, as this may often be more acceptable to the partner concerned.
If all fails then change the tyre! Most of your staff will be wondering at this point why you took so long to do it anyway. Special 'reduced targets', 'limited applicability' of partner standards and the multiple excuses that emerge in these situations must be taken on and addressed one by one. If you are the senior or managing partner, this is the time to demonstrate your leadership qualities. Remember most leaders fail because they fail to lead!
Good staff will leave while you are dithering and bad partners/staff will be happy to remain, seeing how much latitude you have given the partner concerned. Senior associates whom you may desperately want as partners will review their options, if they are being asked to share the downside of such a partner. You can only guess at what impact the partner's attitude and lack of delegation may be having on clients.
The effects can be very widespread and as it is a common experience in most firms, clear guidelines and policies should be agreed upon in order to deal with the situation when it inevitably occurs.
Duncan Hart
Duncan Hart Consulting
E-mail: dh@duncanhartconsulting.com
| Year 1 | Year 2 | |
| Partner 1 | $1,200,000.00 | $1,200,000.00 |
| Partner 2 | $1,400,000.00 | $1,400,000.00 |
| Partner 3 | $1,000,000.00 | $1,000,000.00 |
| Partner 4 | $500,000.00 | $1,100,000.00 |
| Partner 5 | $1,200,000.00 | $1,200,000.00 |
| Partner 6 | $1,100,000.00 | $1,100,000.00 |
| Partner 7 | $1,300,000.00 | $1,300,000.00 |
| Partner 8 | $1,100,000.00 | $1,100,000.00 |
| Total fees | $8,800,000.00 | $9,400,000.00 |
| Income per partner | $488,888.89 | $522,222.22 |
| Profit lost (or to be gained | $33,333.33 |