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The recent Ark-group KM conference left me with a new thought on why law firms have rewarded hours to the exclusion of so many other worthwhile metrics. This new thought is a new dimension on the challenge. The old arguments stand, however, taken from another angle:

Partners think like workers, not owners.

This new thought came when someone raised the point that associates are not motivated to complete work within a defined amount of time.  Say what? This is akin to a factory worker taking more time than allocated for a task and being rewarded for that. The factory worker doesn’t get to chose. They are a worker. They perform the tasks they are assigned under the constraints they are given. Another person, a.k.a. Management, represents the owners’ interest in extracting profit. They define the tasks and constraints in such a way to drive profits. Workers are motivated to work hard and receive compensation for working hard. However, they perform their work within the well-defined constraints.

Law firms should expect associates to work hard. But management should be defining the tasks and constraints such that profit is maximized. Why isn’t this happening?

Partners think like workers, not owners.

The business model is built on that mindset. Compensation for owners actually rewards worker behavior. We know this reward system drives billable hour behavior, which reflects a worker view. The current partner mindset is: I will be paid more if I work (bill) harder.

Logically, an owner wants to be paid more too. But their rewards typically come from doing more with less. They may be hard workers in terms of the hours they put in, but they are not the ones making the widgets. They work hard on driving growth and profit. They are not rewarded for hours but instead on the performance of this business. So the problem stems from the fact that although partnerships are rewarded on the performance of the business, individual partners are not.

Previously I have noted the owner/worker challenge when defining profit for law firms. This owner/worker factor is also obviously creating a problem for driving profitable behaviors. We can’t expect partners to behave like owners when they are treated like workers.

As firms hopefully, finally tackle the compensation challenge, they will want to drive a shift in the mindset so that law firm owners start thinking like owners. Law firms – if you want to prosper, start rewarding owner behavior among your partners instead of worker behavior. Otherwise:

Partners will continue to think like workers, not owners.

  • That makes perfect sense. However, the one important distinction is that partners are in fact the "owners", so they have the liberty to decide how rigorous their work schedule and intensity is. That's one of the biggest perks of being a partner. That and the fat paycheck 🙂