A blog by Joel Barolsky of Barolsky Advisors

How law firms can avoid 2021 burnout

In Articles, Commentary on 5 February 2021 at 3:51 pm

The full text of my opinion piece first published in the Australian Financial Review on 4 February 2021.

‘Exhausted.’

That’s how many managing partners described their firm in the last quarter of 2020. The reasons given for this sense of collective fatigue ranged from heavy workloads, endless screen time, social disconnection and pandemic-induced stresses. 

A key 2021 objective in many law firms is to build business resilience and to avoid burnout. Resilient organisations can ride out uncertainty instead of being overpowered by it.

The sense of exhaustion is mostly an indicator of sustained depleted energy. To cope better, firms must get better at understanding and managing energy levels.

Many law firms are rushing toward a flexible hybrid workforce with people working two or three days from home. While this makes sense, a potential trap is having a binary view that that sees work at the office as an energy drainer and home life an energy restorer. The opposite may also be true – activities at home like juggling parenting and family duties may deplete energy, where work-based tasks such as solving a complex client problem may be energising.

Related to this idea, the commute to and from work could be viewed as a restorative activity. If this time is merely replaced with demanding home or client work, the energy bank account stays overdrawn.

Taking a holistic view, working in a hybrid model might be wonderful for a few, but a net energy drain for many. If this is the case in your firm, then you’re on the road (again) to exhaustion.

There are two practical steps that law firms can take to manage energy levels better.

#1 Track the ebb and flow

‘What gets measured gets managed’, is an oft-cited quote from leadership guru Peter Drucker.

 Following his advice, law firms would benefit from developing better indicators or sensors around energy levels. This might range from a few scripted queries in regular staff check-ins to new questions in employee engagement and pulse surveys.

Tel Aviv-based McKinsey partner Gila Vadnai-Tolub defines four types of energy worth measuring: physical, mental, emotional and spiritual.

  • Physical energy defines how tired we feel and how well we feel in our bodies.
  • Mental energy is what we get from analytical and thinking tasks. Long periods of focused concentration are often mentally tiring. We each have mental tasks that seem to drain us or lift us.  
  • Emotional energy derives from connecting with others—from giving and receiving appreciation, or helping a friend or colleague discuss their troubles. In turn, negative emotions such as fear, frustration or anger drain energy and cripple performance. 
  • Spiritual energy is what we get from doing something meaningful to us, something that speaks to our inner core or sense of purpose. We each have experienced working hard and becoming physically and mentally tired, but somehow, we gain the energy to continue because it has fundamental meaning. 

Tracking energy levels over time can help to identify the ‘normal’ range within which energy ebbs and flows in your firm. It can signal the period just before people start running on empty.

Tracking also enables individuals to learn something of their own natural energy rhythms learning to readjust before fatigue sets in. 

#2 Build in replenishment

Elite athletes alternate between high-energy periods of performing and training with resourcing and recovery activities.

Time off on weekends, public holidays and annual leave is often as far as some law firms go in helping their people re-energise.

In recent years, many firms have expanded their health and wellness programs to address this issue. Things like paid gym memberships, cycling clubs, yoga, pilates, guided meditation classes, counselling and nutrition education are becoming more common. The biggest challenge is often to encourage those who are most in need to take advantage of the support that’s offered. 

With the rollout of the hybrid operating model, I suggest firms will need to redouble their efforts to find workable solutions. This will most likely involve conversations with each person to fully understand how they expend and restore energy over a typical day, week, month, and year. Together a tailored program can be developed to keep people productive, energised and, most importantly, resilient.

Partners or owners: the law firm divide

In Articles, Commentary on 14 December 2020 at 9:40 am

The full text of my opinion piece first published in the Australian Financial Review on 11 December 2020.

One of the most striking statistics from The Australian Financial Review Law Partnership Survey is the wide variation in the ratio of equity to non-equity partners across Australia’s top 50 law firms.

In some firms, like Colin Biggers & Paisley and McCabe Curwood, only 20 per cent of partners have an equity stake.

At the other end of the spectrum, nine firms report that 100 per cent of their partners have equity. However, partners in these firms are often not on an equal footing. Newly minted partners in these firms can earn as little as 25 per cent of a full share. In other firms, individual partner earnings are based more on an assessment of their annual contribution instead of the level of their shareholding.

Further analysis of the survey data suggests there is no discernible factor that determines the equity ratio. Variations can occur within and across tiers, service range and practice area.

The role of non-equity partner was first introduced as a form of trial period to assess whether a candidate should be made an equity partner. The “partner” title would allow the candidate to command the respect of clients, peers and staff necessary to build a successful practice and prove their worth. Being extra cautious in the final step to equity was prudent given the complexities in dealing with bad choices or established equity partners leaving.

In a similar vein, firms used the non-equity partner role as an entry point for new lateral hires on their way to equity partnership.

Over the past decade, the non-equity partner role has evolved into a de facto career position in some firms with the candidate having little chance of being offered an equity stake.

A large non-equity partner cohort can improve profitability – by lifting leverage and average billing rates – help share some risks and distribute the management load.

Challenges

While there are these benefits, a tightly held partnership does come with potential challenges:

  • An “us and them” schism emerging between the two classes of partner;
  • Flight risk of those non-equities who feel they can get a better deal elsewhere;
  • A lack of drive among non-equities who feel their careers have capped out;
  • A perception of inequity when the firm records super-normal profits that accrue only to a select few;
  • A cynicism that the non-equity role allows the firm to achieve its partner diversity targets without the need to share power;
  • A narrower base of internal funders and underwriters;
  • Duplication of partner communications and meetings; and,
  • A smaller pool of partners to select from for senior leadership roles.

A widely held partnership, on the other hand, faces the risk of being too conservative and too slow to promote top talent. A burgeoning bottleneck at the senior associate level can set the scene for a feeding frenzy for aggressive competitors.

To create a sustainable business and a positive culture, it is critical to make all partners, regardless of stake, feel and behave like business owners. They should be guardians of the firm’s assets and values, while embracing the agreed principles and disciplines of partnership.

Financial gain or pain

With senior equity partners, the money does a fair bit of the talking. The prospect of immediate financial gain or pain can help facilitate a proprietorial mindset.

For those with a little or no equity, their voice is often a bit softer, the risk is a bit higher and the task is that much harder.

The determining factor is the quality of leadership.

It means working with each partner to align firm and individual purpose, communicate what’s expected, provide the requisite support, give and get feedback – and hold them to account.

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