Law Firm Partner Relations

The of Foundation of a Successful Firm

By John W. Olmstead, MBA, Ph.D, CMC

Every day we hear about law firms promoting associates to partner, bringing in lateral partners, merging with other firms, and splitting up. I have personally been involved in all of these situations. Some of situations are successful and others are not. Getting the right “partner dynamic” – and a positive partner relations culture is the key ingredient and the core basic building block of a successful law firm. It is the foundation for the firm.

This article will discuss partner relations and some of the challenges that can have a negative impact upon a positive partner relations culture.

These are what I call the Basic Building Blocks of Successful Law Firms:

Block One – Partner Relations.

This is the foundation (bedrock) of a successful firm. A successful firm has a healthy partner culture – a good marriage. In such a culture partners share common vision and purpose, respect one another, shoot straight with each other, and have difficult conversations and discussions when needed and deal with issues and problems. In many firms this is not the case and these firms often are characterized by the following:

Such firms are often doomed from the start. Firms that don’t get this foundational building block right will build a firm on a shaky foundation. Before forming a partnership – go slow and get to know the other lawyer or lawyers and insure that the marriage makes sense, that you share similar goals and values, and that you will be compatible, and you will be good partners. Once you have made the commitment – communicate, communicate, communicate and deal with issues in real time. The same holds true for mergers with other law firms and bringing in lateral partners.

Why Do Mergers Fail

There can be a whole list of reasons for failure including poor financial performance, attorney defections, loss of key clients, and leadership and management issues. However, it has been my experience that most failures have been the result of poor cultural fit. The merging firms – after they have moved past conflict checks and excitement about new client potential – jump immediately to an examination of practice economics and the financials. They fail to perform proper due diligence on the people. It is critical that firms insure that cultural due diligence is a key component of the merger assessment process. Philosophies, personalities, and life styles should be generally compatible. The partners should like each other and the deal should make sense.

Do all the due diligence that you can – start with the people – then move through the rest of the process.

Dealing with Difficult – Maverick Partners

I was recently asked the following question by a client:

Our firm has been discussing how to handle one of our partners. We are a 25 attorney firm. One of mid-level partners who is one of our highest fee producers and best business getter’s simply won’t follow firm policy or play by the rules. He won’t turn in time-sheets in a timely manner, he is argumentative with others in the office, and not a team player. He is “me first” while the rest of the partners in the firm are mostly “firm-first”. We are trying to build a team based practice and this one partner is holding up our progress. Do you have any thoughts or suggestions on how we should handle this?

Dealing with “maverick partners” is always a challenge. Of course they seem to always be the heavy hitters and this makes it that much more difficult as often there are major clients and large sums of money at stake – at least in the short term. This can also be major issues and large sums of money at stake in the long term if you don’t deal with the maverick partner as well. In addition you won’t be able to achieve the vision and goals the firm is trying to achieve.

Many firms have had to deal with the problem of a maverick “huge business generator” who just wouldn’t cooperate with firm policies and caused conflict and tension in the firm.  It is an unpleasant task – but in the end – worth the investment. In the end he or she either conforms or leaves the firm. We have been advised by our clients that even though they may have struggled in the short term as the result of the loss of a major fee producer – in the long run the firm was better off and should have done it earlier.

Hiring Lawyers that are Children of Firm Owners or Partners

Many firms have brought children and other family members into the firm and have had excellent results. Others have not. In general I believe that law firms do a better job at this than do other business firms. If a firm has associates in place the situation can become more complicated since associates may feel threatened and uncertain as to their futures when a firm brings in family members. I believe that if a firm lays the proper foundation and goes about it correctly a firm can successfully bring children into the firm. Here are a few ideas:

  1. Recognize that for the family members there will be a family system, the family law firm, and an overlapping of these systems. This can be fertile ground for conflict if clear boundaries between the family role and the firm (business) role are not clear. Establish clear boundaries. Family dynamics and business dynamics seldom mix. The firm’s objective should be to draw the clearest possible distinction between the two and make sure that everyone understands that the firm (business) is the firm and the family is the family.
  2. Children should not be brought into the firm unless they want to be involved and satisfy the firm’s standard hiring criteria for lawyers. I believe that before children join the family law firm it is a good idea for them to work for another firm or organization. When they do join the family firm they can bring with them that experience, a supply of new ideas, a network of contacts, and a number of other benefits acquired.
  3. Make it clear to your children that they must “earn their stripes” and come up through the ranks in the same fashion as other associates in the firm. No special privileges. Make it clear that they must earn the respect of other attorneys and staff in the firm.
  4. Put associates and staff at ease. Make it clear that children are expected to “earn their stripes” and they will not be promoted to partner over other associates on family status alone.
  5. Clearly define the role of all parties.
  6. Monitor your own behavior. Don’t take sides – either between your children if both join the firm or between your children and other employees in the firm.
  7. Be careful with compensation and other rewards. Compensation should be based up performance and results and consistent and competitive with other law firms of similar size and type.
  8. Put in place a succession plan sooner than later with a workable buy-sell agreement.
  9. Communicate, communicate, communicate – your intentions, roles, etc. before and after your children join the firm.

Getting Law Firm Partners Onboard

Getting your partners on board is always a challenge. The obstacles are almost too numerous to outline. Yet if law firms want to be successful in this turbulent environment they must embrace change and get their partners not only behind new strategies but often they must also be the ones to implement these strategies as well.

Managing lawyers in general is like herding cats. But trying to manage “star partners” is a real challenge. They are the “hitters” upon which a firm’s future often depends. True star partners are:

  1. Building enduring client relationships
  2. Consistently performing up to their full potential
  3. Putting the firm first and implementing strategic imperatives

Star and other partners in the firm must continually balance their roles as producer, manager, and owner. Often, these roles may be in conflict. Also there are personal strategies and agendas as well.

Actually, I don’t think they can be managed – but they can be led. There is a difference. But in order to accomplish this the following need to be well designed, in alignment and balanced:

Strategy

The personalities, emotions and needs of your partners constrain a firm’s ability to design and implement strategy. Keep in mind that firm leadership cannot order the troops forward; instead the troops (partners) must essentially vote with their feet to pursue a new strategic direction. Absent a crisis, partners tend to stay on track and support only modest adjustments to strategy.

Organizational (Structure, Governance, HR Systems)

When organizational characteristics – structure, governance, and HR systems (recruiting, training and mentoring, performance management, and compensation) are aligned with the needs of the partners and the strategy of the firm, they create the conditions under which strategy can be implemented effectively. Collegial partnerships, consensus based governance, and leadership at the pleasure of the partners, rules the day. The cats have the power and the leader serves to a large extent at their pleasure.

  1. Look for ways to build consensus and create buy-in
  2. Involve all partners in major decisions – more than input – but a say
  3. Implement a first-rate partner performance management/review/evaluation system
  4. Review and insure that your compensation system is fostering alignment
  5. Provide as much transparency as possible
  6. Review your organizational structure

Culture

The firm’s culture deals with its underlying core of beliefs and values, which shape the behavior of the firm. Nothing can weave new strategic and organization choices together and hold them in alignment better than culture. A strong culture can also provide enormous help in attracting, retaining and motivating stars. A strong culture is the glue that helps a firm overcome major obstacles, it can help foster major changes in strategy and or organization, and it can be a strong force for unity and coherence.

  1. Work at building and managing the firm’s culture.
  2. Recruiting, compensation, training, mentoring, performance management – should also be deployed to reinforce the firm’s culture.
  3. Guard the firm’s culture and keep in mind the impact that laterals, mergers, etc. might have upon it.

Leadership

As the firm’s leaders you and the other leaders in the firm are serving at the pleasure of your partners. You are probably elected by them. Your positional power is limited – sort of like the President of the United States and the Congress. As a result exceptional leadership skills are needed and each of you must master the skills of building consensus and facilitating decisions so your partners will agree with and support them.

  1. Pick the right priorities
  2. Pick the right fights and fight the right battles
  3. Build support and coalitions through integrity and trust

For a good read on this subject – the book “Aligning the Stars” by Jay W. Lorsch and Thomas Tierney is an excellent resource.

Summary

Law firms that can get the “partner dynamics” right will have a solid foundation upon which they can build a successful law firm. A positive “partner relations culture will play a crucial role in any law firm’s growth strategy.

John W. Olmstead, MBA, Ph.D., CMC, is a Certified Management Consultant and the president of Olmstead & Associates, Legal Management Consultants, based in St. Louis, Missouri. The firm helps law and other professional service firms improve the operations and management of their practices and the lives of their practitioners. The firm, founded in 1984 serves clients across the Globe assisting them with implementing change and improving operational and financial performance, management, leadership, client development and marketing.

John’s assignments have covered the spectrum of management issues. However, in recent years most of his time has been focused on engagements helping firms in areas:

John is the author of a recently published book, The Lawyers Guide of Succession Planning: A Project Management Approach for Successful Transitions and Exits, http://shop.americanbar.org/eBus/Store/ProductDetails.aspx?productId=235511823&term=the%20lawyers%20guide%20to%20succession%20planning, Published by the American Bar Association, John is also the Editor-in-Chief of “The Lawyers Competitive Edge: The Journal of Law Office Economics and Management,” published by Thomson Reuters. He is currently serving as Past Chair, Illinois State Bar Association Standing Committee on Law Office Management and Economics and as a member of the Legal Marketing Association (LMA) Research Committee. John may be contacted via e-mail at

jolmstead@olmsteadassoc.com.  Additional articles and information is available at the firm’s web site:

www.olmsteadassoc.com and blog http://blog.olmsteadassoc.com

© Olmstead & Associates, 2016. All rights reserved.

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