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I read a great interview of an EVP from a major financial institution recently. It had two value points for me. The first was the international economic data he explained. He basically said everything is in place for a major expansion, except nobody seems to be paying attention. Whether that bodes well or ill for law firms is yet to be seen.

The second value point was more pressing for law firms. The final interview question was: What keeps you up a night? The EVP had a succinct and focused answer: Talent. He went on to explain that his senior management team needs to be “best in class.” For him this meant a combination of subject matter expertise, willingness to work hard and the ability to bring in business. Or in other words: Get the business and keep the client happy. He knows these goals will drive his business, both in terms of revenue and profitability.

So where are law firms on such a scorecard?

Traditionally law firms viewed talent as purely subject matter experts. Lawyers would gain a seat at a firm based on law school performance and then rise through the ranks to partner based on their lawyering abilities. So being “best in class” meant you were a high-level subject matter expert willing to work hard.

But that is no longer enough. For starters, keeping clients satisfied is only indirectly measured at firms. When a client goes from being a large one, to a less large one, management does take some notice. But even then, reductions in fees can easily be explained by episodic litigation or any number of other factors seemingly out of the partner’s control.

The ability to bring in business has become a more prominent factor for evaluating law firm partners, but this is still in a transition in terms of being a “best in class” measure. For instance, laterals are evaluated on billings, however the profitability of that revenue is not typically measured.

My 2 cents: Today’s Managing Partners should be “kept up at night” on the talent issue as well. But they should revise and expand their definition of talent at the partner level. In order to do this effectively, they will need to start measuring partners with different metrics.

One of the last things the EVP mentioned was that he knew where he had “best in class talent” and where he didn’t. So he spent his energy on making sure the “best” was happy and was pursuing talent to replace those that don’t make the grade. Another good lesson for law firms.