In today’s competitive environment, law firms are in a difficult predicament when it comes to retaining top talent and managing underperforming partners. To tackle these issues, firms must foster a culture that rewards their talent and incentivizes staff to want to become a partner at their firm. This culture must also include a collaborative approach that works with their professionals to set clear standards and address performance issues.

Retaining top talent

Competition to retain rising stars within the legal industry has increased in recent years. The road to becoming a partner in a law firm is becoming longer. According to Leopard Solutions, a legal industry consultancy firm, associates over the past few years now take an average of nine years to become partners at their firm. Leopard Solutions tracked both equity and nonequity partnership promotions at approximately 1,000 U.S. law firms to collect this data. As competition grows to attract and keep young professionals, firms should look to shorten this timeline to incentivize younger talent to remain with the firm.

A recent trend, not new but increasing in popularity, being utilized to retain and attract talent is a hybrid partnership status. A hybrid partnership is where a partner’s income is split between some form of equity and a fixed salary. The American Lawyer stated that, “The goals behind the creation of a hybrid partner category are to ease the transition into equity partnerships, allowing partners to grow the share of their income from equity, and to maximize the metric of profits per equity partner…” This trend can be used to elevate younger partners earlier than firms have done in the past, giving them a form of equity earlier on in their careers and motivating them to stay with the firm.

The move to elevate/hire new partners early so they have skin in the game sooner than later is not only an attractive approach for the younger generation of partners but for the firm as well. Being able to retain top talent alleviates succession planning issues that will inevitably come in time. Creating a pipeline of young talent, as well as updating partnership and compensation agreements, are vital parts of planning for succession and the survival of the firm.

Possible causes of underperforming partners

Sharon Meit Abrahams, president of Legal Talent Advisors, LLC, identified three main culprits for possible underperformance in ALA’s Legal Management and noted that, “People are unique. There is no one-size-fits-all approach.” The three main causes are situational, practice, and age-related issues.

Situational issues consist of a change to a partner’s standard operating procedure. These issues occur when a partner does not have a plan in place to address the identified issues and can lead to them falling behind.

Practice issues present themselves when a partner realizes they are not practicing in the area they wanted, are unhappy with where they stand in their firm, or no longer feel they are a vital part of the team. Abrahams mentions these partners may face issues such as, “failure to reinvent skills, failure to progress, burnout, and complacency.”

Age related issues are trickier to navigate as you must tread lightly so as not to make discriminatory comments or actions. These are not easy conversations to have but these issues tend to come about due to stretched out retirements, during client relationship transitions, and when partners preserve their ego.

One way to address these three issues is through proper coaching. Abrahams states, “Without the firm’s support, training and guidance, partners who are suffering from any of the above might not know how to proceed,” firms should, “gather information from the offending attorney’s colleagues, direct reports and, if appropriate, clients. Prepare financial data and a list of resources for the firm leader to refer to if necessary.” The underperforming partner should be approached by leadership with this information to make them aware of these issues and start working on solutions and goals to get them back on track. If coaching does not work, then a tougher approach needs to be taken.

Set standards for all partners

A multi-tiered structure includes equity partners and non-equity partners. According to The American Lawyer, only 25 of the AM Law 200 firms retain a single-tier partnership. In order to be named an equity partner, and to remain as such, a partner must meet clear, written criteria that addresses issues such as billable hours, mentorship, and new business development. These criteria should be delineated in a written statement of firm-wide core values that the partners agree to promote and embody, which is the first step in addressing the issue of underperforming partners.

In the competitive legal landscape, firms should look to embrace decreasing the time they take to promote internal talent to partner as well as looking into innovative models, such as hybrid partnerships, which have proven effective in retaining top talent and fortifying succession planning. Addressing underperforming partners is also crucial for the firm’s continued success.

Situational, practice, and age-related issues are key culprits of underperformance, emphasizing the need for tailored solutions. Establishing clear criteria for partners to retain equity, rooted in firm-wide core values, is essential. Although the prospect of partner relegation is challenging, it may be necessary in some cases. Law firms must proactively navigate internal challenges to ensure long-term growth and prosperity.

If you would like to learn more about how your law firm can attract and retain top talent and encourage high performance from its partners, please contact Citrin Cooperman’s Law Firms Industry Practice or Chris Imperiale.