Do You have Underperformers at Your Firm?

April 15, 2014

Law firms must be managed like any business in a way that ensures profitability. That includes being sure everyone is living up to expectations.

If you believe an attorney at your firm is underperforming, what should you do about it?

What does underperforming mean?

It’s helpful to have defined measures of performance that are communicated in advance to attorneys at different levels of the organization.

Underperformance may be preventable if the firm places emphasis on training employees on core values of the firm.

It’s not uncommon for law firm partners or management to think that expectations are clear and have been communicated while, in actuality, other partners and associates don’t understand those expectations.

Expectations should be designated with reference to a tangible measurement.

To encourage certain behaviors, those standards and performances should be measured, monitored and communicated to the firm. This should be done not just through general guidelines, but through specific goals and performance evaluations with individual lawyers. Behaviors that the firm wants to encourage should be rewarded, and those that don’t measure up should have potential consequences.

Underperformance may be preventable if the firm places emphasis on training employees on core values of the firm. Studies show that organizations that emphasize core values experience better performance.

How is performance measured?

One management issue that must be addressed is whether performance will be measured by a set standard or by comparison to the performance of others.

Is the standard that is set one that, theoretically, all can meet? Or, by definition, are the attorneys who bill the fewest hours automatically classified as underperforming? Are attorneys competing against each other or against a set standard?

Assuming set standards are used, what should be measured? Billable hours and fees are not the only measures of performance. Does the firm take into consideration other contributions, such as new business generated, management duties and other ways in which an attorney may contribute to the overall success of the firm?

Some attorneys develop connections and friends that are invaluable assets but don’t show up on a financial statement for the business. Others may have specialized knowledge of an industry or area of law that gives the firm an advantage when servicing a particular clientele.

What are other explanations for underperformance?

Not all underperformance is necessarily what it appears. For example, sometimes attorneys offer discounted rates to certain clients or write down the charge made to reflect the attorney’s perception of the value of the services. This, in effect, undervalues the services. The attorney is performing, just not billing correctly.

If performance is measured by receipts rather than billing, cases in which the client can’t pay, lack of timely billing, or failing to follow up on collection can skew the measurement.

The structure of the law firm can create obstacles to performance. For example, a survey of mid-sized firms showed that in some firms, partners who are compensated based on production may tend to hoard work, resulting in less delegation to associates.

How can you help the underperformer?

Assuming that objective performance measures have been set and are not being met, underperformers first need to know where they are deficient – the sooner the better.

Regular monitoring – and communication of the monitoring results – gives the underperformer earlier notice and more opportunity to correct the situation.

If the attorney has taken steps to improve, but has been unsuccessful, steps that were taken can be discussed.

Mentoring or counseling allows someone with experience to provide specific practical suggestions on how performance can be improved.

Another aspect to consider is whether the type of work being handled by the attorney suits his or her skills and interests. A particular attorney might be a lackluster commercial litigation attorney but a dynamite divorce attorney.

Spotting underperformance early is essential. During dry periods when workloads are slow, performing attorneys may have a tendency to focus on and resent the underperformers, creating strife within the firm.

The goal should be to work closely with underperformers to transform them into good performers. Such an approach can both reduce the costs and disruption of turnover and create a positive work environment.