Carrots & Sticks

Volume 39 Number 4

By

About the Author

Linda Klein is a litigator with Baker Donelson and manages its Georgia offices. She is the immediate past chair of the ABA House of Delegates. 

Law Practice Magazine | July/August 2013 | The Big Ideas Issue

ABOUT 20 YEARS AGO, I noticed our lawyers and staff were getting to work later and later. We were a small, family-oriented firm, but business is business. I heard about a company that put $5 on everyone’s desk at 8 a.m. and removed it at 8:30. For three days in a row, I dutifully put a $5 bill on every employee’s desk at 8 a.m. At 8:30 I walked around and picked up the unclaimed cash. Interestingly, this had little effect on staff behavior. Amazingly, it caused every lawyer to get to work before 8:30 a.m.! Since this experiment was successful, I would periodically repeat it. That there might be a $5 bill waiting for early arrivers was ample motivation.

Over the years, we all find motivators—carrots and sticks—that work for our firms. I always try to look for the carrots first, such as the $5 bill, but I have concluded that carrots (despite the example above) do not have the same impact on lawyer behavior as sticks. Social scientists have determined that carrots work best for most people, but I suspect that lawyers were not part of those studies. Perhaps lawyers are too cynical and skeptical of carrot motivators. Listed below are a few carrots and sticks that have worked to solve some common law firm problems. Please try them and let me know if they work for your firm.

Writing off time. When a bill is written down, that’s money out the door. To improve realization, we started a write-off committee. It is a group of five partners, and any three are a quorum. If a lawyer wants to write off more than $500, the lawyer must tell the committee why it is necessary. Six months after we started this committee, our realization had increased by over 5 percent. That is real money. It is a real stick, too. It requires the billing attorney to reflect on the explanation for the write-off and convince three others why it is fair to the client and the firm.

If a partner wants to write off an associate’s time, the partner needs to get the associate’s signature, proving that the partner explained why the time needed to be written off. This encourages feedback, something studies show associates crave. It discourages unfair write-offs of associate time. While this is a stick for partners, it is also a carrot for associate development.

Billing. Obviously, we need to get the bills out to get the money in. Here is a program that worked very well. It only applies to partners, and it is very simple. Tell your partner, “Until all your bills are out, no draw check.” This is a great motivator.

Time entry. You cannot prepare bills unless all the time is entered and posted. As clients are demanding to know how much in legal fees they have incurred before the bill arrives, prompt time entry is more important than ever. Some clients are demanding extranet access to the time entries on a frequent basis. Also, the increasing use of alternative fee agreements requires near-immediate recording of time to maintain accurate budget to actual reports.

Anything you can do to make time entry easier is important. We have configured our computers to automatically open the timekeeping software every time the computer boots up. This reminds lawyers to finish entering yesterday’s time. Consider software that allows lawyers to enter their time on portable devices remotely, even smartphones.

If a large number of your timekeepers are delinquent in entering their time, fines seem to work the best. Request all time be entered by Monday afternoon of the following week. Then fine the delinquent timekeepers. The fine needs to be meaningful. Warning: Be sure the fine is legal in your jurisdiction. If money cannot be used, try creating a bonus pool in which only those with no time delinquency may participate. Also publicize the names of the delinquent timekeepers by sending an email to everyone listing those who are delinquent. That email creates some peer pressure, particularly where one or two timekeepers are consistently delinquent.

What to do with the fine money? I believe strongly that you spend it on the staff. You can divide it among them as a bonus. I also use it to enhance our year-end holiday party. We have a late lunch at a very nice restaurant and then the staff gets the rest of the day off.

Some lawyers reluctantly pay the fine rather than change their behavior. When this is a problem, I recommend a rule that no partner gets paid until all timekeepers have entered their time for the previous month. This really happened:

Partner 1:       Hey, Partner 2, my time is in, my bills are done, but I can’t get paid because you don’t have your time entered.

Partner 2:       I am so sorry, I will do it immediately.

That exchange only happens once, and the problem is solved.

If you are in a big firm or group, you may be tempted to say that this idea is too harsh because so many people will be affected. You can break your group into smaller teams and enforce the rule among the smaller groups. For example, the team on the 16th floor or the team located in Cincinnati.

Thank-you carrots. Reward good performance. When a staff member, associate or one of your partners provides superior client service, write a personal thank-you note. Firms and legal departments can establish a formal staff recognition program. These programs are typically run by outside vendors. The person making the compliment fills out a simple form online, and an electronic thank you or gift certificate is generated. Do not limit your program to staff, however. Lawyers appreciate a thank you, too!

When the firm has a good year or an anniversary, or wins a prize, gather everyone together to thank them and have a toast or a lunch to celebrate. This way everyone knows they had a role in the good performance.

New employee orientation. When a new person joins the team, sponsor a welcome breakfast. This encourages everyone to meet the new team member and to make him or her feel included. The employees will quickly bring the new person along and help with the assimilation.

Training programs. Employees who believe they cannot learn the job get frustrated. Employees who believe they cannot advance quit. Training allows all employees to learn and gain confidence. It is empowering. Training can be affordable. Much of it is Internet-based these days, so your employees do not need to leave the office. Investing in training and allowing employees to earn training opportunities is a wonderful carrot.

Nonbillable time. Many law firm compensation systems are heavily weighted toward performance in billable hours and billing collections. In small firms especially, firm leaders know that all lawyers must spend time on vital nonbillable functions necessary to ensure that the firm is sustained in the long term. Consider a policy that requires all billable time be recorded promptly, but also requires that every attorney perform a certain number of hours on important non­billable functions every week. The policy should include a provi­sion that in any week when a lawyer does not perform his or her required number of nonbillable hours, only a certain preset maximum number of those weekly billable hours will be credited to the lawyer on firm metrics such as billable hours and collections—even though all of the hours spent by the lawyer on billable work will be billed to the client. Any excess of nonbillable hours will be credited generally to the firm because the firm is truly the one that suffers when lawyers do not perform those nonbillable functions that are strategic to its future.

Pro bono. If you want your lawyers to contribute their time to pro bono activities, be sure to involve your staff in the effort. Find projects for causes about which employees are passionate and where they can use their skills. Staff can conduct pro bono client intake or document assembly. For more thoughts about involving staff in pro bono activities, consult this column in the March/April issue.

While carrots are tastier than sticks, I have concluded that it takes both to run a successful law firm.

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