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THE MAGAZINE      September 2002
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Time to Deal with Problem Partners

William C. Cobb

Some of your partners may be lone rangers. Others may work only for their self-interests. Sure, they may be bringing in the bucks today. But how productive are they in terms of the firm’s future? Firms that seek to establish a strong competitive position in their markets have to understand collaborative performance and use the principles to deal with problem partners.

 

The ever-changing market in which law firms now operate requires leaders to make tough decisions about who should be an owner and what roles the owners must perform. Rather than focusing on short-term performance, or the lack thereof, great leaders focus on what partners have contributed and will contribute toward the long term. They measure contribution in terms of collaboration, not revenues. They base decisions on a strong foundation of trust and accountability. They do more than talk about non-productive partners. They deal with long-term non-contributors.

Great leaders understand the three key success factors for recognizing and dealing with partner problems: a collaborative foundation for building the firm; a framework for identifying developing problems with partners; and a game plan for ensuring the firm covers all bases in solving the problems.

An Unshakable Foundation for Decision Making

It is difficult, if not impossible, to identify problem partners when a law firm lacks the essential foundation stone: collaboration. A true partnership is supposed to be a collaborative effort—a group of people who are bound together by a common vision and accountable to one another for accomplishing that vision. With collaboration as the foundation stone, lawyers and staff can trust each another to perform the critical tasks needed to make the firm strong.

On top of this foundation, the firm can lay the learning stone. It can become a learning organization in which people are encouraged to be innovative and take risks to improve the practice’s effectiveness. People know that when they make mistakes, they will not be rewarded with punishment. Instead, they will receive coaching and encouragement. As they see the firm support efforts to improve the quality of their practices and their lives, they become more enthusiastic about their work. That, in turn, reduces turnover and gets people more focused on meeting client needs.

From that point forward, the other stones for building a great firm go into place. Clients see the enthusiasm in the firm and the consequent benefits produced for them. They become more loyal and begin to treat the firm as a partner, not simply a services vendor. Finally, greater financial rewards result. And there are fewer problems in getting new work and collecting fees, because clients feel that every member of their law firm cares about their needs.

Contrast this with a firm that uses financial rewards and partner profits for its foundation stone. It is building from the top down—and every stone underneath will be crushed by the weight of distrust and greed. The firm will disintegrate through a lack of trust and become an eat-what-you-kill culture. Then it will be impossible to deal with partner problems, and the firm will never move forward and achieve long-term success.

What Forces Leaders’ Hands?

The second key in successfully dealing with problem partners is the ability to identify developing problems. This is best accomplished in firms that successfully evolve through a series of events.

As a firm grows—adding clients, employees and partners—the issues involved in running the firm grow exponentially. To address the increasing and more complex demands, the firm must establish a strategic framework. Without a guiding vision and core values that support it, decisions cannot be made and leaders cannot lead.

Moving forward, then, means that new skills must be brought to bear on the new issues within the parameters of the firm’s mission. Partners as owners must assume broader roles. They must accept new responsibilities as client relationship partners, practice group leaders, project managers, mentors and innovators in delivering legal services. Each of these roles requires skills in planning, organizing, staffing, delegating, coaching and constructively evaluating.

To ensure these skills work synergistically, the firm needs a governance structure—a structure that lays out partners’ roles and covers who will be accountable for specific tasks and how performance will be measured and rewarded. Of paramount importance, firm leaders must fully communicate the expectations, to ensure important decisions and tasks are handled automatically by those who’ve been made accountable. Knowing who is responsible for critical tasks that move the firm forward, leaders can more easily recognize when partners do not perform as expected.

Objectively dealing with problem partners is only possible when firm leaders have an agreed-on, common vision and core values that can be used to demonstrate where a partner is not making a contribution. To avoid anarchy, leadership must get the right people on the bus and put them in the right seats. Leadership must deal with partner problems as they occur, in the context of the firm’s mission. Failure to do so is a clear signal to productive partners that leadership has abdicated.

A Checklist for Handling Problem Partners: Five Steps

Finally, here is the last key for dealing with non-contributing partners—a to-do list for problem solving.

Step 1: Put the Foundation Stone in Place. If it has established all the elements of a collaborative culture, your firm can consistently communicate the criteria for evaluating partner contributions throughout the year.

Step 2: Document the Firm’s Mission. You need a mechanism that communicates the firm’s vision, core values and mission. Put the mission in writing, as a limiting set of statements with appropriate explanations. Include the following:

• The markets or types of clients that the firm will serve

• The selected services that the firm will offer

• The geographic region where the firm will deliver the services

• The competitive position sought relative to others trying to serve the same markets

• The profitability the firm expects to achieve as a return on its investments in clients and services

Step 3: Reinforce the Concept of Long-Term Contribution. So that every partner and associate understands what the firm means by long term, leaders must regularly communicate the evaluation standards as they relate to the firm’s guiding vision and core values. Reinforce these throughout the year and emphasize them during the quarterly evaluation process. If you send out partner profitability statements every month but only raise the issue of accountability once a year, you send a message that practically forces lawyers toward an eat-what-you-kill culture. Moreover, without a full firmwide understanding of what’s expected of the lawyers, leadership will never be able to tackle the tough people decisions.

Step 4: Identify Problem Partner Candidates. Leadership can base the initial assessment on the performance reviews of the past five years. The reviews will not produce an "absolute" list of problem partners but, rather, a starting point for formulating the best transition path, given the firm’s culture and values. After developing the list of candidates for "problem status," you can segregate those candidates into ones that must be dealt with sometime in the next six months; sometime in the next year; and sometime in the next three years.

Step 5: Create Transition Steps. Now comes the trickiest part. Leadership must deliver a menu of options to each of the candidates. You can begin by establishing a salaried tier for firm partners. All candidates on the problem list have an opportunity to move to the new tier in the coming year. Toward the end of that year and during the evaluation process, candidates on the six-month list who have not corrected their performance problems will be told that they will move into the salaried tier in the second year.

At the end of the second year, the candidates on the one-year list who have not yet moved to the salaried tier will be told they will move to it in the third year.

Finally, at the end of the third year, all partners on the original list who have not met performance requirements will be told they will move to the salaried tier in the fourth year.

Until firm leaders are convinced that the right mix of partners and salaried partners exists, they should revise the candidate list every year, putting new candidates on the three-year program and taking off those who have changed problem behaviors.

Throughout each of these steps, great leaders will keep their eyes on the prize—long-term success for the entire firm. They will base their decisions on a strong foundation of trust and accountability, with the focus on investing in the future.

William C. Cobb (cobbwc@msn.com) is President of Cobb Consulting, based in Houston, TX. A national consultant in strategic issues affecting professional service organizations and their competitive positions, he can be reached at (713) 227-2300.