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Passion, People and Principles

Performance Appraisals

post # 315 — February 22, 2007 — a Managing post

Here’s a question about performance appraisals:

We are in the midst of generating year- end reviews for our associate (ie non-partner) lawyers. We have moved away from a standardized report and have been coaching all year. The report we will give them will merely be a re-cap of all the coaching sessions for the year. We will of course be addressing monetary rewards and we are in a heated debate about one issue. Should we address the billing amounts of each lawyer at this review? Should one be congratulated over the others for doing more individual billable hours? Isn’t there a risk that we will set up an unhealthy competition and seem to encourage less teamwork?

I have a few responses:

  1. If you have been coaching all year, why do you need a year-end review?
  2. If there is a need for something year-end, shouldn’t it be less of a “review” and focus almost entirely on looking ahead as to what each person can and should be doing to enhance their career? What’s the point of looking back?
  3. In a law firm, aren’t the number of billable hours determined by what the partners assign to the juniors? If so, what do high personal billable hours reflect? Popularity among the partners? A more dependable person? Someone too dumb to hide out when they are already busy? I’d discuss the personal billable hours and try to understand them, but I would stay away from using them as a performance metric.


Ed Kless said:

A few things here:

I agree with David about points 1 & 2. The focus should be looking forward. In addition, I believe that any performance review should be separated in time and space from the salary adjust me. If the purpose of the review/preview is to coach performance, you need to take the money out of it. The coaching opportunity will be overshadowed by the adjustment in salary.

At my firm, we did the annual assessement (coaching sessions throughout the year as well) in June and adjusted salaries in December. This way people did not associate the “review/preview” with money. In addition, they could modify their behavior.

On billable hours, I think you need to not only not talk about them, but eliminate them! I agree with David, that they are a poor indicator of performance. Think about it. Someone who can do the same quality work in three hours when it takes some else six is penalized – FOR BEING SMART.

My Verasage colleague, Chris Marston, has written extenisvely about this topic. See Time-Based Accounting is Behavior Modifying to the Deteriment of Profits.

Chris, I know you are a reader of this blog so, please chime in!

posted on February 22, 2007

Wally Bock said:

Years ago I studied top performing supervisors in police departments. There, because of civil service, there is a mandatory performance reveiw process. We found two interesting things about our top performers compared to their peers.

First, as you might expect, they were the ones who were constantly coaching throughout the year. There were no surprises at official performance evaluation time.

Second, they used the official evaluation time differently than their peers. They took three times more time for the interviews and, as David and Ed have suggested, they used the time to talk about future issues, especially the personal/professional development of their people.

posted on February 22, 2007

Christopher Marston, Esq said:

Thanks Ed. I definately have an opinion on it, and I think the person who posed the question already knows the answer. He wrote: Isn’t there a risk that we will set up an unhealthy competition and seem to encourage less teamwork? The question implies the answer! This Partner already knows that it will. . . . I wrote a blog on a similar topic in November:

Kids With Candy Bags and Financial Transparency

Think for a moment about the psychology behind what you are doing. What are you doing? You are putting one attorney’s numbers next to everyone elses. NOW, What are your actions saying to that person? You are saying that you value higher numbers. that is EXACTLY how the attorney will understand what you are doing. Is that true about your firm? If so, then your firm is sending the right message about what you value and is doing so at the expense of a positive culture, teamwork, and every other good thing that can come of developing a good employee. If your firm is smart, they know that there are 7 ways to Sunday to win the beatuy contest, many of which are unprofitable for the firm, inconsistent with what the firm wants to happen, or simply unethical altogether. Do you really value billable hours? Really? I would like to challenge the thought process of your partnership and argue that they really value PROFITS, and that your firm really doesn’t have a good way to calculate profit so they are using a lame indicator such as “6-minute increments of time” to measure profitability. As the leader of a firm that does not bill by the hour, I can tell you first hand that the most value-added activities I can do for the client are not one’s that a traditional firm would deem “billable”, nor are they actvities that would make any sense to the General Counsel if I had to justify that 6-minute increment on a bill they received 3 months later based on a timesheet.

If you MUST discuss the billable hours with them, it is more important to understand the numbers than to compare them. You have created a system that is ripe for abuse, padding, and all sorts of other probems. Don’t create a system that cheats the best people you have in favor of your worse ones!

Should we address the billing amounts of each lawyer at this review? Should one be congratulated over the others for doing more individual billable hours?

posted on February 23, 2007

Mark Gould said:

A couple of comments about billable hours.

Whilst it is arguable that the legal profession (and others) should move away from the six-minute unit, for now it remains a real measure of performance with a direct return to the business. If the firm has set targets for time recording (whether chargeable or not), then surely those should be considered in the performance review. The discussion could cover the reasons why an associate has been unable to meet the target set, as well as looking at over-performance. (The latter could conceal a range of problems for the individual or the firm.)

My second point refers to David’s comment about partners being responsible for assigning work. In many firms (in the UK at least) associates take some responsibility for work generation, so they should not be reliant on partners’ favouritism. Also, a firm with excess capacity such that partners’ favouritism can skew the range of utilisation levels across a practice group probably has other problems. Utilisation may vary between practice groups (for good structural reasons), but I think firms should aim for a degree of consistency (or explicable inconsistency) between associates in the same group.

posted on February 27, 2007