The economic downturn that began in 2008 has had a profound and wide-ranging impact on the legal profession. As law firms have struggled to adapt to this “new normal,” they have begun to question and change the traditional ways they have been organized and operated. The old pyramidal model of associate leverage, “up or out” talent management, and “tenured” partnership positions is losing favor. De-equitization and alternatives to the partnership track are becoming increasingly common; and with them, new challenges for law firms in how they manage and motivate their lawyers and staff.
Law firms have traditionally relied on two main factors to motivate their employees: increases in compensation and the possibility of promotion. Given current economic realities, neither of these motivators will likely be as readily available and useful as they once were.
The recently released Georgetown Law Center for the Study of the Legal Profession “2013 Report on the State of the Legal Market” notes that since 2008, firms have gone through several rounds of layoffs and have also begun to move toward more flexible staffing models, expanding their use of non-partner track associates, staff attorneys, and contract lawyers. It predicts that to contain costs, “firms will probably be relatively smaller in terms of the number of partners and traditional partner-track associates and relatively larger in terms of the number of other lawyers and non-lawyer professionals.” As a result, the possibility of becoming an equity partner and sharing in firm profits will become increasingly remote.
So as money and prestige become less available, and contract and non-partnership track attorneys become more commonplace, what should firms consider to motivate their people and keep them engaged and satisfied? What will be the keys to high morale and productivity in the “new normal”?
The traditional methods firms have relied on to boost morale and happiness—raises, bonuses, holiday parties, fun retreats, pizza lunches, gift certificates, etc. —can be useful ways to acknowledge and reward employees’ contributions, but their effects are often short-term and counterproductive. Over time, attorneys and staff may begin to expect these perks and even feel entitled to them. If they don’t receive them, they may become resentful, unhappy, or worried—“What is the message that the firm is trying to send me by no longer providing these goodies? Was it something I did or said? Does a shorter retreat mean we’re going broke?” By relying too heavily on these kinds of tangible rewards, well-meaning managing partners and executive committees can foster unrealistic employee expectations and tie themselves (and their firms) in knots. When hard and slow times occur, as they certainly have in the last few years, necessary cutbacks in these perks can erode employee enthusiasm and happiness.
A more sustainable approach is needed and available. To maintain high levels of engagement, productivity, and morale, law firms should pay attention to both the motivations of individual contributors and the culture of the entire firm. Recent behavioral economic studies have challenged much of our conventional wisdom about what motivates people. These studies have shown that traditional carrot and stick motivators (i.e., external rewards and punishments) work best when people are engaged in routine, simple tasks. For complex, conceptual, and analytical tasks (that make up much of lawyering), these same kinds of external motivators may actually weaken performance, hinder innovation and creativity, and encourage short-term thinking.
The billable hour is an example of this. Lawyers’ rewards are in large part based on the number of hours they bill: more billable time generally results in greater rewards (assuming time is not written off or alternative fee systems are not being used). This focus on external motivators discourages lawyers from finding faster and cheaper ways of completing tasks and solving problems. With increased competition in the legal market, firms with faster and cheaper solutions will find it easier to attract and retain clients. In some cases, compensation systems solely based on billable hours may even encourage lawyers to inflate hours, pad bills, and engage in other unethical behaviors.
With knowledge workers like lawyers, a far more effective approach is to shift the emphasis away from external rewards to intrinsic motivators. Firms need to create an environment where lawyers—particularly those not on a partnership track—will find greater inherent satisfaction in their work. Summarizing several recent behavioral studies, Daniel Pink in his book Drive identifies three elements that contribute to workers’ sense of satisfaction: autonomy, mastery, and purpose. Autonomy is fostered when workers have greater say-so over what they do, when they do it, who they do it with, and how they do it. Mastery—a sense of working hard and continually getting better at something that matters—fosters a sense of engagement, professionalism, and pride in one’s work. Purpose appeals to workers’ desire to make a contribution and be part of something larger and more important.
These individual elements of motivation are promoted when firms make a commitment to create a high-morale culture. To assure that firm-wide morale is positive and resilient, law firm leaders should:
• Articulate a compelling vision for the firm.
• Make employee development a priority.
• Provide timely and constructive feedback.
When a firm’s vision is clearly communicated, lawyers will have a greater sense of purpose as they find it easier to understand how their work contributes to larger, strategic, and long-term goals. Making employee development a priority not only sends the message that everyone is valued, but also fosters a greater sense of autonomy as lawyers take a more active role in the growth and direction of their careers. Hard work alone does not result in mastery—timely and constructive feedback is also essential for the mastery of new skills and domain expertise.
Firms that pay attention to motivation and morale will have a competitive advantage in the new normal of higher competition, tighter cost controls, and flexible staffing arrangements. Engaged and motivated lawyers are good for productivity and morale. They care less about external rewards, which allows their firms to avoid the trap of ever-more-expensive external rewards. Best of all, the three elements of intrinsic motivation— autonomy, mastery, and purpose—work equally well with lawyers both on and off the partnership track.
[This post also appeared as the June 2013 leadership blog post of Threshold Advisors.]
