Aligning Stars: Why should we always talk about money?

One of the hardest jobs of partners in charge of management and leadership roles is to deal with the “stars”. The legal profession is framed in a way that, even in collective environments like law firms, the individuals are always at the forefront of the results, successes … and concerns. So teams are important, collaboration is a concept of growing interest and attention (especially in light of the increasing complexity of legal work), and becoming an institution is an objective of any important firm in the region, but specific individuals still seem to make the real difference when you have to evaluate a firm´s performance.

It is a proven truth that firms need to have a critical number of remarkable individuals to be considered a leading firm. So regardless how burdensome it might be to deal with “prima donnas”, you certainly need them if you want to occupy the first slots in your market. But once you acknowledge that situation, you also find that most firms do not follow adequate strategies to deal with them. In most cases, firms just enhance the individualistic traits of stars, through their culture and systems, feeding their already impressive egos and keeping them away from the firm´s vision and goals. In case of conflict, these stars tend to decide for their individual interests.

This is a problematic scenario because firms become unstable. Stars would stay in the firm as long as their individual interest is adequately covered. Having a client portfolio and an established reputation, they can walk away any day and start again somewhere else. This is not always the best solution for them, the firm or the client, but “prima donnas” are heavily influenced by their egos and might go through significant efforts to feed it. So in order to avoid these stampedes, partners are willing to accept and endure some behaviors from stars that are clearly against common sense and firm´s values. This creates a bad environment and loss of cohesion that, in turn, affects productivity and focus in the business.

I have to say that some of the best firms in the region have been able to avoid this trap –and this is one of the reasons they are among the best firms- and put some limits to this situation, by following a variety of strategies that neutralizes, at least in part, this problem. One of them is dealing with the economic element from a broader perspective. Since most lawyers lack leadership skills (and partners are lawyers) they often use the simple tool of compensation, giving stars the biggest portion of the pie. Stardom is generally defined in connection with client generation, so compensation is heavily influenced by that factor, giving lesser attention -if at all- to other important components of firm´s´ value. In her recent article in the January-February 2017 of Harvard Business Review (“Getting Yours Stars to Collaborate”), Professor Heidi Gardner gives a series of recommendations in that respect, and among them she recommends not to treat compensation as a magic bullet. Compensation needs to be a part of a performance system designed to achieve the firm´s´ strategic goals. Many of those goals will inevitably require some sort of collaboration among partners and compensation needs to address those goals and required behaviors.

When you compensate partners just for the clients -and money- they bring in, you are keeping them away from the firm´s strategy. By doing that, stars will not feel motivated or identified by that strategy, but rather by their goal of making more money. Remember that power is a very strong incentive in all organizations. Some firms transfer that power to their vision, so that is what partners -including stars- feel inclined to fulfil. When you lack that vision, or your systems and culture do not support them, then money is what keeps people together. That might work for a while, but only until the next crisis. When you don´t have a clear vision and strategy that you can align your compensation system to, your compensation system becomes the strategy. That would keep your stars at ease but only for a while, and certainly not aligned with the firm´s objectives.

Stars are sometimes jerks, because they use their influence and power just to work for themselves. But of course there a lot of superb lawyers that have individualistic inclinations mostly due to lack of strategy and leadership within their own firms. Some partners in charge of management blame their stars for these attitudes, but they don´t help very much in solving the problem, especially in offering a project that is motivating for these stars with high needs and expectations. The only intelligent way of dealing with this complex issue is by having a clear vision and strategy, communicating it well to all lawyers, and making the stars part of that vision and strategy, so that they can feel it part of their project.