If I had a nickel for every attorney who has complained to me about their firm's reward structure, well ... I'd have a lot of nickels. Compensation schemes in many law firms, particularly for partners, have the reputation of being opaque, discretionary and - unfortunately - political.
With the challenges facing the legal industry these days, perhaps the time is at hand for rethinking how law firms measure and reward performance. It is in that spirit that I share a link to an interesting post on law firm performance measurement from UK blog An Inside Take from the Outside written by James Dunning. (Hat tip to my friend and fellow blogger Terrie Wheeler for the link.)
Dunning advocates a more forward-looking performance measurement approach which considers non-financial metrics such as some of the ideas shared below ...
•Website visitors (a good indicator of your firm’s profile)
•Google/technorati rankings
•Meetings held with clients (actual and potentiaL) (sounds tricky I know but it really is a surprisingly powerful indicator)
•Number of days sick leave taken
•Number of leavers
•Number of joiners
•Number of final bills issued
•Number of new matters opened
•Training and development (by the way, if its dipping you’ve stopped investing in your future)
... in addition to the some of the "old faithful" financial indicators...
•Work in progress
•Bad debt write-offs
•IT spend (is it under control? being used effectively?)
•Spend against budget by category
Makes me wonder how many law firms are using this kind of balanced approach to measuring and managing performance. How many are tracking and communicating the kind of metrics that would allow all firm employees - partners, non-partner associates and even support staff - to understand and appreciate the environment, obstacles and opportunities that the firm faces? How many are taking advantage of broad-based incentives or recognition to raise awareness of and reinforce progress against critical measures?
Relatedly, the American Bar Association published a great article a few years back about compensating law firm partners which calls for aligning compensation with two critical realities: a clear understanding about the type of firm that is being built, and the firm's core values. Pairing that approach with a key set of metrics might produce something pretty powerful.
What do my attorney friends and readers think?
Image: Creative Commons Photo "Lawyer Time" by Mike Licht
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