Fee earning targets v culture

First, the disclaimer! The danger of any article that sets out how a firm approaches matters relating to targets versus culture is that the reader can assume it is a recommendation of best practice. This is not. It is merely a record of what we have done/do.

We are a boutique firm and all we offer is family law. We are also a relative newcomer. We started trading in April 2016 and have grown quickly. From myself and co-founder Sam Hall in a serviced room in Manchester we now have offices in Manchester, London and Sheffield and a team of 44, 32 of whom are fee earners. Fee income has increased from £0 to £1.2m in our first year of trading, followed by £2.2m, £3.4m and £4.3m in the subsequent years to date.

The relevance of these facts is not as proof that what we do is right. Rather, it is to underline the following peculiarities:

• Firms which have other departments/legal disciplines need to find a way of measuring performance across very different ways of generating fees. We do not have that challenge.
• Family lawyers are a strange breed. Although a broad breed, we are a breed nonetheless and, I would suggest, not necessarily motivated by the same things as those from other legal disciplines. Again, a challenge for the multi-discipline firms.
• Our relative youth (in terms of the years we have been trading) and fast growth has meant we cannot have systems/structures and processes that are set in stone. As a result, change remains at the moment easy – a luxury more established firms do not have.

The final warning I would give is that four years of trading is a jot in time compared to the longevity of many other firms out there. As time passes we may regret some (or all!) of the initiatives and assertions below. For now, however, this is how we approach the topics this article addresses.

Targets – Get rid!

We do not give our lawyers billing targets. Not only do we think they are unnecessary, we believe they can be counter-productive in relation to both culture and productivity in the long term.

It is not difficult to see how targets came about. They are an easy tool to use when creating budgets. Lawyers are often competitive by nature and a target gives them something to aim for. They provide a more standardised way to measure performance across different legal disciplines.

They are, however, based mainly on financial incentivisation – if you bill more, you will get paid more. The assumption is that this will then automatically flow into more revenue (and presumably therefore profits) for the firm.

This is odd because contrary to the way family lawyers are represented in popular culture, money is rarely their primary driver and it certainly isn’t when the real cost of large targets hits home.

Targets create very real problems, only some of which are listed here:

1. They do not encourage people to do their best work. What about the extra moment checking something which may be non-chargeable? And the rush that can be induced knowing that all of your time is being watched and monitored and the potential to not ask for help (because others are too worried about their own targets) can all take their toll on the quality of output.
2. They discourage mentoring, the volunteering of guidance and the natural (and best) informal training that people get when they learn from others. People can be unwilling to help with anything other than work their time can be charged for when they have a target to hit.
3. This job can sometimes be high pressure and, if not careful, have an adverse impact on an individual’s mental health. A target is another pressure that does not need to be there.
4. They can be commercially counter-productive. Targets can lead to a hoarding of work but past a certain point there is an inverse relationship between time recorded and realisation. Time is being lost which could either be passed on to another fee earner to use productively or spent doing something else constructive.
5. They undermine culture and team work. It is scientific fact that at one stage there were many species of “man”. Over time, only homo sapiens were left. It is now commonly accepted by anthropologists that this survival was not due to being the most aggressive, strongest, competitive or greedy. In fact, it was homo sapiens’ ability to learn from, and co-operate with each other. Pitting individuals or teams against each other (one of the side effects of targets whether intentional or not) is contrary to the way people work best together and actually develop.
6. They should make little difference to performance if you are recruiting the best staff. Recruiting lawyers from the best firms or training them yourself should mean a billing target, or lack of it, will have little impact on their motivation and therefore, performance. If the work is there, they will do it. If the work is not there, up to a certain level, it is not their responsibility to fix it. We work in a referrals business. We do not have institutional clients like other firms. As such, responsiveness to clients and focus on trying to do the best job you can for the client is what, ultimately, will lead to the commercial success of the firm. The addition of a target simply distracts from this.

The problem is, however, without targets how can a firm be confident of performance? The answer is by attracting the best staff, minimising staff turnover and building an environment that people want to be part of and contribute to. Put simply, culture.

Culture

When Sam and I decided to strike out on our own we wrote on two Post-It notes what we wanted the firm to be to (i) clients and (ii) the team.

This article is very much about the second of the Post-It notes.

Culture is such an amorphous concept that it is, in our view, impossible to summarise in a statement, sentence or paragraph. Instead, we just wrote a list of what we would have wanted at the firms we had previously worked at.

For the avoidance of doubt, the list below is not designed as a guide, nor does a nice culture necessarily flow from it. It is just a list and people may or may not find it of interest.

The list was:

• No time recording or billing targets.
• Being surrounded by lawyers that we (i) liked and (ii) respected.
• True openness from and communication with the senior management.
• No “them and us” divides that can still exist between fee earners and non-fee earners.
• Attractive remuneration with good benefits.
• Proper support for physical and mental well-being.
• Flexible working.
• A true commitment (as opposed to mere lip service) to social responsibility.

The first of the above is already addressed in detail.

The recruitment of lawyers who people like and respect is more difficult. There are lots of excellent lawyers out there. There are lots of people who have personalities that will be complementary. Finding both is the challenge. As a starting point, our team is made up of individuals who have either worked or trained at a firm ranked highly by the independent legal directories. Our preference, however, is to “grow our own” with paralegals becoming trainees and then solicitors.

Trying to pin down a structure that could guarantee a culture of true openness was and remains a challenge. All we knew was that at firms we had previously been at, decisions were imposed upon us that we had no inkling were even being considered – for example team members being recruited we had not known about, through to changes in structure. We did not expect the entitlement to decide. We did, however, believe that consultation was the minimum an employee can expect to feel part of a true “team”.

As a starting point we arrange on an ongoing basis regular “pizza and fizz” sessions where issues are discussed and we set out what has happened with the firm since meeting previously and what the plans/hopes are moving forwards.

More significantly, we do not recruit a single member of staff without every other member of the firm approving them first. The process for this is simple. If there is a potential candidate we are interested in recruiting, we would ask their permission before informing the firm that we would wish to offer them a job. At that point, Sam and I “pitch” to the firm in respect of why we would like to recruit the individual. Each member of the firm then has an anonymous right of veto and as long as the reason is a strong commercial one then the individual would not be recruited were that veto to be exercised. The veto has been used twice – once for someone very senior and once for someone quite junior. We were true to our word. They were not recruited. This means no surprises, it means no moaning once the person arrives and it ensures the person knows that every single individual in the firm wants them to be there. The main benefit, however, is that it forces senior management to be open with the firm and allows everyone to engage fully in the commercial discussion as to what is best for the firm in terms of the future.

Finally, we also do the “usual” – nights out (groups and whole firm), Friday treats and Diet Coke, and an annual away weekend for every member of staff and their partners to stay at a nice hotel where the full financial performance of the firm is shared together with the plans for the following year.

In our view, however, no culture can be truly “right” when there is still a divide (sadly still so often the case) between fee earners and non-fee earners. Although this is a gap that some may argue can never be fully bridged, we refuse to accept it. We deliberately have open plan offices not due to efficiency but to underline the equal importance of everyone. If the firm is, for example, shortlisted for an award, everyone is invited, not just a handful of partners. The right of veto and information as generally referred to above includes everyone.

Remuneration and good benefits is the easy bit – find out what the market offers and offer more including a decent pension for all (we match contributions up to 10%) and true flexible working (even after Covid!).

The support, and physical and mental wellbeing, were things we knew to be of paramount importance given what we do. The reality of being a family lawyer can sometimes feel like you are being attacked, sometimes even by your own client! Rather than just pay lip service to mental wellbeing, we retain a psychotherapist who is available to our staff at any time. Treatment is completely anonymous and confidential. All the firm receives is an invoice at the end of the month for the time the psychotherapist spends with members of the firm. She was making a valuable contribution to the functioning of the firm even before lockdown. During lockdown she has been essential. This, combined with the firm-funded physiotherapist who attends our office every other week creates an environment which tries to underline that it is the firm’s responsibility not just to train and supervise in respect of legal matters but to ensure staff are mentally and physically well in order to cope with the demands of this sometimes very stressful job.

Finally, and of particular importance to Sam and myself, is wider social responsibility. Not every individual feels that it is important for their firm to be playing a wider role within their community/city. Many, however, feel proud of being part of an organisation which is not only commercially successful but also tries to play such a role. What individuals see straight through, however, is claiming to be socially responsible but, in fact, just arranging the odd collection for charity.

We try and ensure that this is a key part of our firm’s offering. Examples of our contribution include the campaign to save the Family Drug and Alcohol Court’s National Unit, raising £300,000 (including personal contributions of £75,000) doing so. We fund the cost of students from under-privileged backgrounds to study law degrees at Manchester University. We also contribute approximately £10,000 a year to local smaller charities. For the avoidance of doubt, we are not saying firms should do this. But if you do, do it properly. Don’t pay lip service.

The future

Before March of this year, had every firm been told they could all work from home and productivity would actually go up, many would simply have refused to accept it and yet that is what has happened.

Similarly, the suggestion that we can do away with targets and swap it for culture is not so outrageous. Try it, it might just work.