Underperformance – is expulsion the only option?

In a recent article (Striking Out), I explored some of the reasons why partners underperform and briefly examined how to deal with such issues. In this piece (first published in Edge International Communique), I consider seven ways of addressing underperformance issues – other than the ultimate sanction of expulsion.

Underperformance – the Options

Getting rid of underperformers may be the obvious choice but it is not the only option. It seems that the issue and management of underperformers have altered in recent years. A few years ago, most well managed firms identified the clear misfits, shirkers and serial underperformers in their firms and managed them out. What has happened in many cases since then has been that firms have had to face one or more of five issues. First, as competitive pressures have increased, firms have had to restructure their partnerships in order to remain competitive and – where they have recognised that the firm has become over-partnered – slimming down the partnership became necessary. The second issue has often been that in some firms there are no obvious individual incidents of underperformance, but that performance across teams and firms has become lacklustre – in these firms and teams, there are very few star partners, and the remaining partners as a group are all performing poorly or below law firm industry benchmarks. Third, firms have also found that the removal of the bottom ten percent of partners gradually placed a number of the next tier of partners into the bottom performing tier of remaining partners in their firms on a relative basis. Fourth, a number of firms have reported to us that some partners have found it difficult to change gear at the same speed as their firms as their firms have developed into higher tiers of work and acquired more sophisticated clients. Finally, the recession has led to a number of areas of law become either temporarily or permanently contracted or out of favour. In all five of these scenarios, affected partners can often count themselves unfortunate to be under performance scrutiny. One managing partner told us on a non-attributable basis that there have been times “when we recognised that there was a simple business need to remove senior cost from the firm and therefore the agonising decision was made to remove a number of partners. It was then a question of setting criteria to decide which partners were to go and apply them. The partners who had to leave were in a sense faultless and were in the wrong place at the wrong time.”
In the light of these five main issues, some firms are now approaching their options much more sensitively than before, whilst other firms – having cut the first tranche of obvious underperformers – are now taking a harder performance line with the remaining partners. As an example, 40% of respondents to the Edge International 2011 Survey made it clear that they regularly consider de-equitising or redeploying partners.

My recent Ark report “Tackling Partner Underperformance in Law Firms” highlighted seven options for dealing with underperformers in addition to expulsion.
1. Reinvigorating moderate performers. Many firms take the view that personal career planning for partners can with the firm’s support help moderate partners to re-focus their levels of ambition and to improve their contribution
2. Incremental performance improvement across teams and offices. Some firms have teams in which there are no underperforming partners as such but where there are too few stars driving the team forward and too many partners who are working with comfort zones. In such firms, the important first step is to agree and communicate expected standards of performance and a route map to achieve some minimum performance benchmarks
3. Addressing weak performance areas by partner development, training and re-training. This is particularly suitable for partners who are strong in some of the critical areas of performance and below average in others, as it is often possible to address particular areas of weakness.
4. Rehabilitation of temporary strugglers who have experienced a temporary ‘blip’ in performance.
5. De-Equitising Partners. De-equitisation can be particularly useful for partners in their final years who are starting to feel the strain of increased performance management pressures and might want to avoid the risk of a partner cull.
6. Facilitating Partner moves. One firm told us “We have sometimes talked to other firms that we know who are downstream of us and who could do with an improved skill set. This has enabled us to make an introduction of a partner to another firm where they might prove to be happier”.
7. Voluntary and negotiated departures. It is noteworthy that in the Edge International 2011 Survey, half of the departures of underperforming partners occurred after negotiations.
8. Expulsion. Formal expulsion from the firm is the ‘nuclear option’ and seems to be rarely exercised. The Edge International 2011 Survey showed that in only 5% of cases was it necessary to obtain a formal resolution of the partnership.