Has your law firm got a performance management problem?

Looking to improve productivity and profitability in your law firm? Make sure to register for our webinar How law firms can embrace HR technology to support profitable growth on October 20th with guest speaker María Jesús González-Espejo, a legal technology consultant at the Law Consultancy Network.

Have law firms got a performance management problem? Catherine Wilson, who is an Employment Partner at W Legal with a 25 year career in law, examines the issues law firms have with managing performance and how your law firm can better support underperformers.

As of November 2019, there were 146,418 practicing solicitors in the UK. Of these, 22% worked in private and public sector in-house departments but the vast majority, some 108,756 solicitors, worked in one of 8,051 small to medium sized (SME) firms, while 2,284 operate as sole practitioners.

When you take into account the large number of non-legally qualified staff also working within these firms, covering all aspects of support, it will be clear that performance management is no easy task and that many employers may consider that they have a performance management problem in their firm.

The pandemic may have exacerbated this situation but, taking a longer view, this is no recent development - and here I declare a significant interest, having spent the last 25 years working as a partner in a number of large and medium size firms.

Law firms and performance management

Law firms and performance management

A bit of legal background: underperformance or lack of capability is one of the potentially fair reasons for dismissal (I’ve already written for the myhrtoolkit blog on capability dismissals). Having a fair reason is not in itself sufficient. Any employer, law firm or otherwise, has to show that they had adopted a fair process before reaching the decision to dismiss.

Of course, in practice very few cases will ever reach the Employment Tribunal and this blog post focuses on how small and medium law firms can implement and embed effective performance management processes within their own businesses.

Going beyond the data to manage performance

It is a truism that just because something can be measured, it does not mean that it should be measured, or indeed that the figures produced are meaningful. Nowhere is this more apparent than in law firms, where we tend to live by our statistics. The chargeable time recorded, the bills rendered and of course paid. From experience, this sort of raw data forms the basis for most, if not all, performance reviews and appraisals in law firms.

At best, the data however only tells half of the story. The emphasis on personal fee earning and recovery can detract from team performance and the essential contribution from non-fee earning staff – all of whom are key to the overall success of the practice. At worst, it can reward bad behaviour and encourage the growth of workplace silos and “office sharks”.

This is not to say that raw data is unimportant. Potentially, a failure to record hours leads to no fees, which leads to no bills, and ultimately to no income! From a management perspective, the data provides hard evidence of trends, the lawyer’s workload and the overall health of the business. Effective performance management, however, is far more wide-ranging than this.

What does good performance management look like for law firms?

What does good performance management look like for law firms

The typical performance management cycle involves planning, monitoring, developing ratings, and reward. It will be clear that good performance management involves regular reviews and not just an annual event. When done well, both regular appraisal and feedback can be hugely motivating for employees and beneficial to all parties.

Appraisal or performance reviews, however, can be problematic for law firms. A common problem is often incorrect design, in that the performance management system adopted does not fit the needs and culture of the firm. Integration and, in particular, timings can be problematic with, say, annual performance reviews at the start of the firm’s financial year (often May/April) but salary reviews taking place in September and promotions in January.

A lack of leadership commitment, born out of the historic poor experience of senior lawyers, can also breed a cynical worldliness about the whole performance process.

A successful performance management process

To work effectively, a performance management process needs to be on going, simple and focused two-way conversation. A successful review should focus upon an honest conversation based on feedback and specific examples. Telling an employee that they are performing well when their performance is unsatisfactory is helping no one and, to be frank, a waste of time.

Key actions arising from the discussions should be summarised briefly in a short form, or by email if easier. Less is definitely more in this context, as the appraisal form is not an end itself – can anyone really focus on improving more than two or three points over a few months?

Monitor, engage and develop your employees whilst driving productivity with a robust performance management software solution.

performance management software

Crucially, the law firm should consider the adoption of a formal written performance management policy which is discussed with staff and readily available for reference. A couple of sentences in a disciplinary policy is a poor substitute for this.

What steps can firms take to tackle underperformance?

What steps can the firm take to tackle under performance

Unfortunately, performance reviews are not always successful and from time to time law firms, like other employers, will have to tackle underperformance directly. This is most likely to occur during the initial period of employment or after several years following a change of personal circumstances or external factors such as increased automation, change in business ownership, a merger etc.

When new starters are underperforming

In the case of the short server, underperformance may be caused by a range of factors. The job role and content may have been poorly described or misunderstood by either or both parties. Previous experience may have been over stated. A training need may have been identified.

The induction of new employees over the pandemic period has thrown up particular issues in this regard, with new starters working from home and often feeling isolated and “at sea”. The introduction of a probationary period in this context, and if necessary, the extension of the initial period, may resolve issues and may prevent problems at a later date. The probationary period is only meaningful if the employee is actively managed; short service should not be an excuse for abandonment. Lawyers remain comparatively expensive commodities and recruitment can be time consuming and costly.

Infallibility is not, however, a gift given to law firms (or indeed any other employers!) and unfortunately a decision to terminate at the end of the probationary period may be an effective solution for all parties. Effective performance management during the probationary period is not only the right thing to do, but it should also protect the employer against those limited number of claims brought by short servers in connection with the early termination of employment, such as those based on discrimination and allegations of whistleblowing.

Free HR resources sign up banner

Underperformance in legacy employees

In the case of a long serving employee, greater care needs to be taken to ensure a fair process is adopted. The appraisal or performance review is the starting point. Again, candour is an essential feature of this process. If concerns remain unaddressed, the employer may wish to consider the introduction of a formal Performance Improvement Plan. This is known as a PIP and will include specific, measurable, time-limited objectives.

Regular monitoring and feedback are also key elements of any PIP. The intention is to ensure sustained and improved performance. A job move may also retain historic knowledge, while better meeting the firm’s commercial and professional objectives. Unfortunately, in some situations, termination may again be the only effective option. Any dismissal would be on notice or a payment in lieu of notice. As a last resort, it may be possible to go down the protected conversation route and try to enter into a settlement agreement as an alternative.

Read more from the myhrtoolkit blog

Performance management and appraisals: an employment law perspective

The 7 best HR cost-cutting strategies for small businesses

Picture of Catherine Wilson

Written by Catherine Wilson

Catherine is an expert employment lawyer and HR problem solver. She works as an Employment Partner at W Legal Limited and also runs her own employment law and HR consultancy, training, and writing business, McBrownie Ltd.

Free Data Migration
free data migration
Unlimited Free Support
unlimited free support
3 month MOT
3 month MOT