Walker Clark Worldview

In its Knowledge@Wharton site yesterday, the Wharton Business School, University of Pennsylvania, posted an interesting abstract about motivating employees: “Putting a Face to a Name: The Art of Motivating Employees.” This should be a quick, but worthwhile, entry on your personal “to read” list.

University of Pennsylvania professor Adam Grant draws several interesting conclusions from his research.  I believe that, although not drawn from observations in the legal profession, they have direct applicability to law firms.

People are motivated by an understanding of the positive impact that their activities have on others.  Here are summaries to two of their studies:

Grant and a team of researchers — Elizabeth Campbell, Grace Chen, David Lapedis and Keenan Cottone from the University of Michigan — arranged for one group of call center workers to interact with scholarship students who were the recipients of the school’s fundraising largess. It wasn’t a long meeting — just a five-minute session where the workers were able to ask the student about his or her studies. But over the next month, that little chat made a big difference. The call center was able to monitor both the amount of time its employees spent on the phone and the amount of donation dollars they brought in. A month later, callers who had interacted with the scholarship student spent more than two times as many minutes on the phone, and brought in vastly more money: a weekly average of $503.22, up from $185.94.

Even reading about the benefits that one’s work produces for other people can produce apparent increases in motivation .

In a follow up study to the one he published in 2007, he focused on lifeguards at a community recreation center. Some of them were given stories to read about cases in which lifeguards had saved lives. A second group was given a different kind of reading material: testimonies from lifeguards about how they had personally benefitted from their work. The results: Those who had been reading about their ability to avert fatalities saw their measure of hours worked shoot up by more than 40%, whereas those who had merely learned that a lifeguard gig could be personally enriching kept working at the same clip.

The Knowledge@Wharton post has links to the papers that Grant and his teams produced.

Some law firms try to minimize face-to-face contact with clients by junior associates and support staff.  Grant’s research suggests that this is a mistake.

Everyone in the firm needs to see the face of the client. In some cases this can be a simple face-to-face encounter, such as a partner taking time to introduce a client to associates and support staff who work on the client’s matter. Even when employees cannot literally see the face of the client, partners should make sure that each member of the team — from senior associates to the crew in the mail room — understands how their efforts ultimately benefit the client.

Norman Clark

An all-too-common sight on the bookshelves of many law firm partners is the thick, dusty binder labeled “Strategic Plan.” The partners, usually with the assistance of a consultant, developed an elegant, impressive, detailed strategic plan. They implemented almost none of it.

Implementation usually involves some significant changes in attitudes and habits.

• It requires a shift from a short-term mentality to a long-term commitment to sustainable business success. Partners need to focus on what they need to do now to build the long-term performance of the firm, and not just how much they can bill in fees this month.
• It involves discipline and a new ordering of priorities. These are essential to completing action items on time, measuring results against expectations, and making continuous improvements.
• It requires an understanding that the old ways of doing things will not necessarily work in the future. Many firms have done well in the past largely due to excellent lawyers, hard work, valuable clients, and good luck. The first two are excellent traits. However, at no time in recent years has client loyalty been weaker; and good luck eventually runs out. Past success guarantees nothing in today’s legal markets.
• It requires change leadership on the part of the firm’s managing partner and the entire management team. Unless the firm’s leadership team is willing to provide consistent, unequivocal, and unanimous support for the needed changes, the firm is probably wasting its time trying to improve.

Implementation is hard work, particularly for partners and managers who are already overloaded with everyday client work and administrative responsibilities. The choice for law firms is summed up in the old management proverb:

If you keep on doing what you have always done, you will get what you have always gotten.

Norman Clark

Once upon a time, only 15 years ago, law firms could learn many valuable lessons from all aspects of the Toyota management model. Toyota showed us how to identify and focus on our core business, understand how internal business systems operated, and — above all — the importance of quality management. Law firms that adapted principles of total quality management from Toyota and other leading Japanese companies saw remarkable improvements in client satisfaction and long-term profitability.

Now Toyota has another important lesson for law firms everywhere — the importance of not sacrificing quality to profitability and growth. To do so is a fool’s choice, as the recent Toyota debacles demonstrate. For every thousand dollars saved by cutting corners on quality assurance, a business can ultimately lose millions of dollars in customer goodwill and market reputation.

An article in this morning’s Washington Post provides interesting insights about what happened inside Toyota to produce the recent quality fiascos. As Blaine Harden points out in his article “‘Toyota Way’ was lost on road to phenomenal worldwide growth,” the blunders were not isolated mistakes, but the natural result of a long-term deterioration in the quality mind-set that accounts for much of Toyota’s success in the 1980s and 1990s.

But now, as the company recalls millions of flawed cars around the world, there is an expert consensus that growth itself derailed the Toyota Way, blurring its focus on quality, thinning its stable of expert mentors and undermining its capacity to respond to consumer complaints.

This one paragraph presents an excellent checklist for law firms of any size:

• As your law firm has grown, have you blurred your focus on consistently delivering “best-in-market” levels of professional quality and client service? Quality assurance is not “nice to have” or a sideline. It should be at the core of your operations.
• Are you making a serious resource commitment to quality assurance? Quality assurance is more than having “spell check” on your computers. It requires probing into the operations of your firm to identify and prevent the causes of errors, rather than trying to catch them and fix them after they happen.
• How do you respond to client complaints? The real test of a law firm’s commitment to quality is not their slogans, but how they respond to client complaints. Unfortunately, most law firms do not have any systematic procedure to address client complaints, but instead rely on crisis-to-crisis damage control, which is much more expensive and usually much less effective.

Harden’s article also reminds me of something that a senior partner in a large, international law firm in London told me about 12 years ago, as his firm was embarking on a campaign of dramatic international expansion:

No matter how big we get, we still get only one chance to get it right with our client.

Norman Clark

There was an interesting interview in the business section of the 17 January 2010 edition of the New York Times. In “Structure?  The Flatter the Better,” Cristóbal Conde, the President and CEO of SunGard, a software and IT services firm, discussed the role and effect of organizational structures on colloboration and productivity.

As the title suggests, Conde favors a relatively “flat” structure, which is facilitated by, and to some extent driven by, the emergence of “flattening” technologies in business:

…[W]ith the explosion of information, and flattening technologies starting with e-mail, I think that a C.E.O. needs to focus more on the platform that enables collaboration, because employees already have all the data. They have access to everything.

You have to work on the structure of collaboration. How do people get recognized? How do you establish a meritocracy in a highly dispersed environment?

The answer is to allow employees to develop a name for themselves that is irrespective of their organizational ranking or where they sit in the org chart. And it actually is not a question about monetary incentives. They do it because recognition from their peers is, I think, an extremely strong motivating factor, and something that is broadly unused in modern management.

This sounds like a law firm, doesn’t it?  One of the hardest challenges for growing law firms is to preserve the lateral communication and collaboration that account for much of the continued viability of the traditional law firm structure, which otherwise would be an obsolete business model, while at the same time accommodating the practical need for a more “corporate” pyramid structure.

Conde also offers an interesting idea for performance feedback:  Do it in threes.

A boss once told me: “Cris, you’re a smart guy, but that doesn’t mean that people can absorb a list of 18 things to do. Focus on a handful of things.” Very constructive criticism, and the way I’ve translated that is, when I do reviews, everything is threes.

So, “Look, Charlie, these are the three things that are going well. These are the three things that are not going well.” Now, that’s very important because then people know that everybody’s going to get three positives and three things they should do differently. Then they don’t take it personally. I’ve found that to be an incredibly valuable tool.

As one law firm partner described her firm, “We’re over 100 lawyers, but we still feel like the 12-lawyer firm I joined 30 years ago.”

Growing firms that keep that “small firm” culture of professional intimacy and collaboration usually work hard to keep internal communications free flowing and multi-directional, rather than channeled and “top down.” This requires a combination of communications tools, workplace habits, and a professional culture that promotes and rewards teamwork.

Norman Clark

How do you lead people in a law firm from an employee mentality to a performance mentality?

In my experience, the only way to do this is through goal achievement and teamwork.

Of course, groups don’t develop into high-performance teams unless they have a shared sense of purpose, which is why communicating the firm’s business strategy – at all levels – is so vital to getting results.

This is more than just setting goals.  Goals don’t work unless they are SMART: Specific, Measurable, Agreed, Realistic and Time-based.

Very simply, this is how I see it. I am using lawyers as an example; however, the same concept can be applied as effectively to staff and management.

The bottom-line question is this: What are the performance expectations and how will they be measured?

People will do what they are paid to do.  Period.

Some law firms look only at productivity for lawyers, i.e., “How much money do we expect each lawyer to bring in?” This is, at best, only a one-dimensional view of productivity in law firms, and, like most one-dimensional views, can be highly misleading. This approach, while simple, is also very short-sighted when used as the only indicator of performance. Productivity is more than working hard.

Other law firms add the origination of new clients and new instructions to the equation, i.e., “What do we expect each lawyer to generate in new business? Winning new work can also help to generate a sense of firm identity and team work, which is usually more productive than relying on one or two “rain makers.”

Another important performance factor is client satisfaction, i.e., “What feedback does each lawyer get from clients?” Of course, without a systematic way of collecting information, such as the Walker Clark Client Service Monitor, a firm must rely on anecdotal feedback, which often is incomplete and inconsistent with respect to the specific elements of client service that it addresses.

The lack of a consistent, systematic approach to client feedback is the principal reason why many law firms avoid using client satisfaction as a significant evaluative factor for lawyer performance. Not surprisingly, this also explains why many firms are surprised when they lose clients.

Sophisticated, progressive law firms set goals that are directed at institutionalizing the cultural values and professional behaviors that differentiate the firm in the market. When all lawyers and staff have goals that focus attention on matters such as quality improvement, effective meeting management, or teamwork, that has a powerful firm-wide impact over a short period of time. Clients notice it.

So the question for every lawyer in the firm is this:

What do you need so that you can perform better and earn more money?

This is what is at the heart of a performance mentality. It moves the individual from merely working for a paycheck to working to make more money through improved professional performance.

This is where the compact between the lawyer and the firm comes in. Improving individual performance in a law firm is more than management telling people to work harder.

If the law firm wants lawyers to achieve their full potential, it needs to be prepared to do at least these three things:

• First, provide at least monthly, if not weekly, feedback on a individual basis. This should include performance measurements, feedback from management, and coaching for improved future performance.
• Second, deliver the resources and training needed to meet performance expectations. Adequate support for individual performance also includes adequate work space, efficient technology, information, and the development of professional and business skills. Without them, most lawyers quickly — and accurately, under the circumstances — discredit performance goals as meaningless.
• Third, demonstrate strategic leadership and communicate the firm’s strategy. Everyone in the firm should know where the firm is headed and how their individual actions aid or undermine achievement of the the firm’s goals.

If you can place that kind of performance management system into operation in your law firm, the momentum and results that it produces will be beyond your expectations.

Many law firm partners like to talk about creating “a sense of ownership” in the firm on the part of associates and staff. This is empty rhetoric unless you have:

• A marketing strategy that is communicated to and understood by everyone in the firm
• A performance management system that links measurable performance with financial rewards
• Leaders who pay attention to what is happening inside the firm, get involved with the people and the work, and generate genuine enthusiasm about a shared future

Lisa M. Walker Johnson

Our co-founding partner, Lisa Walker Johnson, has just written an important and timely article on depression and its related risk of suicide in law firms.  This article will be published later this summer in the International Bar Association’s Law Firm Management, but its messages need to be understood now.

• Clinical depression is a real disease, just like hypertension or diabetes.  It is not “poor attitude” or a character defect.
• Depression can have serious health consequences, including suicide.
• Everyone is at risk of depression.  Lawyers are particularly vulnerable because of the high stakes, high speed nature of our practices, which often leave us running with very low levels of emotional reserves.
• There are practical steps that law firms can take to manage the human and business risks of depression more effectively.

To download a pre-publication copy of Lisa’s article, click here.

Norman Clark

Legal Week reported yesterday (1 February 2009) that some leading London firms are sacking partners in order to protect profitability.   In his posting “City lawyers braced for widespread partner cuts,” Jeremy Hodges summarizes the results of a Legal Week poll taken of London partners recently:

City partners are preparing for a gruesome year, with half of all partners believing that firms are carrying too much deadwood at senior level and 97% expecting to see partnerships downsized.

The purge of partners who are perceived to be unprofitable has already begun.  Addleshaw Goddard announced recently that they were planning to reduce their partnership by approximately 10%. That would be approximately 17 or 18 partners.  (Ironically, in the previous three years, Addleshaw’s has been rated by the Sunday Times (London) as one of the 100 best companies to work for.)

As profitability becomes a more critical issue for most law firms this year, partners who are perceived to be “unprofitable” or “unproductive” will become big, attractive targets for cost-cutting. This prospect raises many risks and questions, because whenever a firm sacks a partner, it is also cutting off a long-term revenue stream, supported by expertise and, in most instances, established client relationships.

For example:

• Are there better, but perhaps more subtle, ways to manage costs?  Our firm’s experience with profitability issues, using diagnostic methods such as our Core Systems Diagnostic, suggests that there usually are bigger, longer-lasting cost reduction and property opportunities in the firm’s internal operations.  Many of these can be achieved without a single layoff.
• Has the firm made a serious effort to identify and correct the causes of underperformance?  This involves more than targets backed by threats.  The return on this investment is usually much better than the net financial gain from firing an unproductive partner. Our firm’s Performance Recovery program is an example of this alternative.  Efforts such as Performance Recovery do not always mean that the partner will remain with the firm. But they do ensure that both the firm and the partner will be making a reasoned, fully-informed decision, one way or the other.
• Do weaknesses in the firm’s partner compensation system contribute to substandard partner performance?  In other words, does partner remuneration adequately incentivize the business behaviors and performance that the firm needs? 
• What will be the lasting impacts on the professional culture of the partnership?  Will the “survivors” view the cuts as something that, although unpleasant, were undertaken only when all other alternatives were ruled out?  Or will it create a culture of fear, with the remaining partners wondering “Will I be next?”

None of these questions are intended to second-guess the difficult decision that Addleshaw Goddard (which has a reputation as a very well-managed law firm) or any other law firm has made. By asking these questions now, a law firm can sometimes discover alternatives to firing a partner and can better manage partner performance issues in the future.

Norman Clark