Thank your lucky stars: Putting your partners at the heart of successful business development

Taylor Wessing’s director of business strategy, Simon Slater, sees service delivery in a different light to many. Rather than focus on the services a firm can deliver to new and existing clients, he suggests that firms should turn the spotlight inwards to ensure their partners are happy and given every opportunity to shine. Only then, he argues, can law firms look forward to a truly productive and profitable business for all.

What is it, above all else, that makes the difference between one professional firm fulfilling its potential and not another? Is it the calibre of people? No. Is it strategy? I don’t think so. Is it leadership? Possibly. Ambition? Partly. However, none of these answers is right in an absolute sense.

After ten years in law-firm management, I am in no doubt that the answer is that insufficient attention is paid to meeting the needs of the owners of the business: the partners themselves. Now this may appear strangely inconsistent with the average earnings of a partner in even a moderately successful firm (often two, three or five times the salary of a senior manager in a client organisation), but I believe it is true for the following reason.

Law firms have become moneymaking machines, a licence to print money, but complacency has crept in and the pressure is on. Competition is really beginning to kick in and partners know that it will only become harder to maintain such levels of profit. So what, they wonder, are their firms doing to help them?

Law firms have been so busy strategising and focusing on playing catch up in terms of delivering a 21st-century client service that many have neglected their own stars. They have forgotten to give them the necessary tools to survive, let alone flourish. Retaining, exploiting and finding new clients, and keeping and poaching new people have, quite rightly, become the twin foci of most firms. However, partners often have no real support mechanism to help them achieve their goals. It is a sink or swim world.

My heart goes out to these partners. They are successful people. Clients like them, they love the work and the financial rewards give them a fabulous lifestyle. But they are wondering how they can keep it all going. So what is it that is really holding these firms back? It is this: firms have forgotten not only how to lead their partners, but also, and more importantly, how to love them. Forgive the reference to Tom “Mr. Wow!” Peters¹, but love is the only word that works here.

At Harvard, they preach that success in professional-service firms is more about looking after your stars than it is about strategy and client service. Having happier stars is the difference, they say, between a good firm and a great one. The brightest, happiest stars never defect. And so, unsurprisingly, their clients tend to remain loyal for longer. Happy stars mean happy associates, which means happy clients and, as study after study has shown, this statistically makes for more profitable business.

There are two fundamental aspects of law-firm management, which represent the key both to meeting the needs of partners and unlocking more of their potential: governance and remuneration.

If a firm pays insufficient attention to either or both of these issues, they will act as brakes on the progress of the business. Investing more time and thought to getting them right will ensure the firm’s development accelerates at a superior rate. Why is it, though, that some firms just don’t see this? One reason is that lawyers do not much like or value management. They like flat and ambiguous structures. Another reason is that because they are fiercely individual, they are reluctant to embrace the concept of the performance and development review, with which any decent remuneration system should be aligned.

In many firms, the approach to governance and management structure is haphazard at best and amateur at worst. Nowhere near enough care and attention is paid to planning how the firm would be best managed or indeed, by whom, to achieve its strategic aims. Succession planning is virtually non-existent and partners are rarely groomed thoroughly enough to assume a leadership role. Consequently, such roles are seen as a poisoned chalice and management is something that is tolerated as a necessary evil.

Worse than this, management is often seen as seeking to denude partners of their right to be consulted over every important (and not so important) decision. As a result, far too much time is consumed dealing with the ad-hoc concerns and grievances of individual partners, with the resultant distraction from delivering good client service and exploiting market opportunities. It is navel gazing on a grand scale. And there is the rub. All of this is entirely avoidable.

One – but by no means the only – solution, once a practice is of a certain size (as few as 30 partners), is to create a partnership council or partnership advisory body, which exists to cater for the needs of partners as a collective body. It becomes the custodian of firm governance, overseeing critical issues such as elections and mergers, and holding the executive board and remuneration committee to account. Deciding to elect such a supervisory board takes courage but, in my experience, pays substantial dividends, speeding up the decision-making process and allowing partners to remain outwardly focused. Ceding authority to a trusted group of partners, though not easy, proves to be a liberating experience for many, following the initial shock.

The second issue, remuneration, is tricky. I have seen firms where the reward system adopted throughout the business acts as a spur to teamwork, high performance and sustained profit improvement. I have also seen those for whom the system, far from acting as an accelerator, puts a brake on long-term growth, or at least on the rate of growth. Such firms still make a lot of money, but think how much more they could make if only they aligned their remuneration system more closely to their culture and strategy.

Merit-based, lock-step, or combination remuneration – it does not much matter which is right for the culture of each firm just as long as the system is designed to reward the all-round contribution of a partner. For this to be the case, a firm’s appraisal (note the existence of the word “prais(e)” in that word) or its mechanism for performance and development reviews must encourage partners to play to all of their strengths for the benefit of the firm. For a start, there should be no such thing as non-chargeable time; there is today’s profit and then there’s tomorrow’s profit. Too many remuneration committees remain fixated on individual billings as the primary measure. In other words, they forget the concept of building teams to deliver superior team-based billings and the need to nurture and nourish the partners and associates of tomorrow. In such an environment, individual revenue generation counts for more than anything else. This is nonsense.

Only the most narrow-minded playground bully believes you should actually eat what you kill. Such partners are probably not best suited to partnership in its truest sense. They do not fully appreciate the meaning of the word. They just want to spread the overheads. I appreciate that this represents one extreme of the spectrum and that there is ample scope within law firms to breed and perpetuate mediocrity at the other. The point is that with the right approach to remuneration and appraisal, and with a system that is transparent and which works in strategic harmony, partners can stop being in competition with one another and start fulfilling more of their individual and collective potential among the real competition.

As a result, they will be more successful, profitable and less inclined to spend so much time venting their angst over who earns what. I call this the whole-cake effect. In the real world, it is so much easier to work together to grow the whole cake for everyone than to focus simply on one’s own slice. It creates a healthier internal market, which associates and other staff appreciate as well. Some enlightened partnerships go one step further and share some of the spoils.

So have I turned the notion of service on its head? Yes. My prognosis is simple: firms would be in much better shape if they turned their attention to listening and responding to the needs of their stars, the partners. Just as client-service excellence has been the mantra over the last decade, partner service should become the byword now. Look after your stars. Lead them, love them and nurture them properly and they will benefit everybody else in the chain: their teams, the clients, the firm and ultimately perhaps even the reputation of the whole legal profession. In essence, we are talking about stewardship and the most successful firms put this first when it comes to defining their corporate purpose.

I have been on record as saying that the most successful law-firm strategy is a people strategy. Think about the term human capital and then think about it in light of the scale of potential human capital invested in a firm with 50 or 100 partners. Then think about the criminal scope for wasting such potential. Believe me, clients would thank you for finding a better way of realising that potential. They want you to give them reasons not to cast a roving eye.

Running a law firm is no different from running any other professional-service firm. It all boils down to just one essential quality – building assets, that is, people and clients. It has always amazed me how such a simple concept becomes so complicated in law firms. I acknowledge that the dynamics at play in legal practices can be complex, but I would urge their leaders to stand firm and stick to the basics.

Start with partners. Understand their shareholder, developmental and motivational needs, serve them well by meeting these needs and success will follow.

Make this investment in recognising partners’ basic human needs and watch your business accelerate.

Reference:

The Pursuit of Wow! by Tom Peters, Vintage Books, 1994

Simon Slater is director of business strategy at Taylor Wessing. He can be contacted at: sslater@taylorwessing.com.