October 17, 2005
Under-Producing Law Firm Partners
Generally there are two sources of under-producing partners:
1. Marginally producing associates promoted because of tenure;
2. Partners who experience a life change that substantially reduces their energy, desire or capacity.
The quick answer regarding source #1 is don’t do it. The firm has an obligation to the marginal associate and to the current and future partners of the firm to counsel the marginal associate out. These individuals have the opportunity for a successful and productive career in other environments. Keep them too long and you deny them that opportunity. By doing so, the firm takes on a responsibility that it should not shoulder. If you miss the “counsel out” window by failing to face such situations early on, the firm will gradually own the problem for the duration. That is what leads to the eventual promotion. That inappropriate promotion will lead to dissatisfaction and even defections among the firm’s future best talent. If the firm has already let it happen, you must deal with it the same way you deal with the second source of under-performers.
Life takes a toll on many. In the professional world our energy is highest and our experience lowest in our youngest professional years. We are at our best and most confident in our early forties. The next two decades are treacherous waters. This is where, for a variety of reasons, some will run out of steam. Others seem to acquire new skills and capabilities that can keep them as admired and contributing mentors and ambassadors well into their senior years.
The under-producing partner can suffer from a number of causes:
_ Alcohol or drugs, including prescribed drugs
_ Physical illness or declining general health
_ Declining mental capacity
_ Depression
_ A life change in terms of family or circumstances
_ Diminished desire for the rewards of career
_ Advancing age changes the ability to contribute
_ Etc.
In the course of my career I can say from observation that few fully competent professionals and executives remain competent in their previous role past 60. In a July 2005 article, the Chicago Lawyer reported that few big firm lawyers work past 60. Those that do stay on after 60 appear to have successfully changed their role and how they contribute positively to their firms. Thus, the best way to head off the problem is the planned role change. Beginning in the late forties to early fifties, the firm should be moving partners away from practicing and toward management, rainmaking, etc.—with corresponding changes in their compensation plans.
Most consultants say the answer is not to let the unproductive situation develop. Have clear expectations of partner performance and when the bells first began to go off counseling from the managing partner or executive committee chairman must begin. The law firm can’t assume the role of psychologist, physician, priest, or brain surgeon. What it can do is approach the developing problem in a straight forward business-like fashion. It involves three steps:
1. An agreement with the partner that there is a problem;
2. Agreement on a plan to correct the problem and a target date doing so;
3. Agree on the consequences if the problem is not corrected by the target date.
If you can not get agreement that there is a problem, then the problem has no hope of resolution. Therefore the partner relationship should be terminated. In short, there is no use continuing with the status quo—it is not going to get better and more likely it will get worse. If there is an agreement as to the problem, then the firm should hold the partner accountable for following the plan. If the plan isn’t followed or the problem isn’t corrected (or the agreed-upon progress achieved), then the firm should terminate the relationship. However, the three steps hopefully will lead to a more friendly resolution—an agreement under which the partner retires or moves on to other pursuits or begins an agreed-upon path to those ends.
The above assumes that the firm’s partnership agreement provides for the termination and/or retirement of partners. Ideally it addresses the issue of performance standards and termination for below standard performance. If not, then the first step dealing with current or future non-productive partners is to change the partnership agreement. While you are at it, consider a compulsory retirement age. You could, at the same time, create a non-equity partner position with negotiated salary for seniors who have the ability and desire to stay on in roles that continue to contribute valuably to the firm. Ideally our champions will know when to leave the arena on their own.
P.S. The common name for the above three steps is “The Three Step Termination” because that is the usual outcome. Nevertheless, the under-performer deserves the chance to change. Some do. Most don’t. That is the hard reality.
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Filed under Partner Agreements by Tom Collins