Law firms face considerable risk to their financial viability if baby boomers partners continue to put off retirement, according to a performance management expert
Speaking at a LexisNexis conference on practice management today (24 May), Joel Barolsky, principal of Beaton Research & Consulting, said that older partners are increasingly reluctant to give up the partnership and move into retirement, thus creating a "constipated pyramid" of equity.
According to Barolsky, too many firms are allowing these partners - who hold significant equity in the firm - to remain at work for too long. The result, he explained, is a dearth of young talent rising through the ranks, meaning that when the partners do eventually move on, firm profits are significantly diluted.
Barolsky added that many firms are spending too much time and money managing the small percentage of partners who are either underperforming and need to be managed, or those who are performing so well that they need to be persuaded to stay at the firm and have their "egos stroked".
He said firms would be more profitable if they gave more attention to the bulk of partners who perform solidly, but who could be encouraged to perform even better.
Another major issue for law firms, said Barolsky, is the management of partners who perform extremely well on the financial side of things, but who fail to meet the behavioural standards of the firm.
"If people don't abide by your firm standards, what are they? Wallpaper?" asked Barolsky, who said he deals with many firms which are not willing to have "the difficult conversations" about poor behaviour with such effective fee-earners.
"This is a perennial issue," he said, adding that some firms are resorting to engaging external coaches to deal with problem personalities. This, he said, is "bearing fruit" in many firms adopting the strategy.
"It's about acting, doing something, intervening," he said. "There is a moral imperative that the partners know what is expected in terms of performance and behaviour."