Are your law firm management practices adequate?
If you answered yes, at least three professors* from Stanford University think you’re kidding yourself.
At least, that’s what one survey conducted by Nicholas Bloom, Raffaella Sadun, and John Van Reenen from Stanford University concluded after an analysis of more than 8,000 companies in 20 countries. Of those surveyed, only 15 percent of U.S. companies and 5 percent foreign countries scored about a 4 on a five-point management practices scale.
Ergo, an overwhelming majority of firms didn’t make the grade.
The problem? 79 percent of organizations reported that they thought their management practices were above average, writes the authors from Stanford for the HBR Blog.
Basically, the average business is in denial about being above average.
Luckily, these same authors and academics believe a mere three focus areas are enough to improve your management technique. The eye-opening fundamentals are:
- Setting targets
- Establishing incentives
- Monitoring performance
Generally, law firms are excellent at establishing incentives. Managing partners remunerate high billable hours with equivalently-sized bonuses. And, for the most part, associates and soon-to-be partners are aware of the rewards for long hours, trial wins, or attracting new clients.
However, law firms are generally week at setting targets outside those three areas. If it’s not billable hours, case success, or new business, law firms aren’t interested. In fact, targets like conducting more efficient project meetings, producing happier employees, or increasing the use of and associate proficiency in technological tools, are often underappreciated.
In reality, setting targets should be a priority within each department and division at a firm—HR targets, accounting targets, equity partner goals, partnership track associate goals, and staff goals, to name a few.
“Ideally, goals should be visible to everyone and should be translated into companywide, group, and individual targets that are tracked frequently,” write the authors from Stanford for the HBR Blog.
The last of the three fundamentals might be the most important.
Monitoring performance does not simply imply an end-of-the-year evaluation. Performance measures should be set, circulated, and evaluated on a regular and frequent basis.
Not only should employees be aware of firm-level and individual-level goals and the associated incentives, but employees should also know far off they are from achieving them personally or as a member of a team.
So, if you don’t know where to start with this process or who to call to inquire about your firm’s progress, you might have a management problem.
Replace your denial with due diligence. Send your managers to leadership seminars or attend management courses.
Consulting companies like the Center for Competitive Management offer audio, live interactive sessions specifically geared toward law firms on how to turn your paralegal staff into a firm profit center, origination credit and cross-selling legal services, flexible work arrangements and the law, and a lawyer’s guide to social media and more.
Before you reach the other four stages of grieving for your management practices, first denial of your deficiencies, then anger over your losses, bargaining with your creditors, depression among your attorneys, and finally acceptance of your failure, seek professional help.
After all, that’s what you’d tell your corporate clients about their need for savvy legal services.
*Nicholas A. Bloom is a professor of economics at Stanford University. Raffaella Sadun is an assistant professor at Harvard Business School. John Van Reenen is the director of the Centre for Economic Performance at the London School of Economics and Political Science.