“You’ve got your work cut out for you” by Hans-Peter Gauster on Unsplash

“There are only two ways for a manager to improve the output of an employee: motivation and training.”

— Ben Horowitz, The Hard Thing About Hard Things (2014) at 110.

Several years ago, I had the good fortune of having dinner with David Burgess, the Publishing Director of The Legal 500, a global research company that compiles detailed rankings of law firms based on jurisdiction and practice area.

Because David’s research team interviews hundreds of thousands of corporate clients each year, I asked David, “Is there some aspect of client service that virtually all law firms struggle to get right?’

David Burgess

David pondered the question for a few seconds and replied, “Teamwork.  The clients want their outside lawyers to work together as a team—for the right hand to consistently know what the left hand is doing.  There are a few pockets of effective collaboration out there, but no firm consistently gets it right firmwide.”  David’s comments echoed the sentiments of law firm COOs and Executive Directors I have worked with. By a wide margin, their biggest strategic challenge is getting their lawyers to work together as a team.

Why is teamwork such a challenge for lawyers and law firms?   I’ve been asking myself this question for nearly a decade.  In keeping with the above quote from Ben Horowitz, I’ll break my answer into two parts.  In today’s post (188), I’ll focus on motivation.  Next Sunday, in Part II (190), I discuss training.

Part I. Motivation

Let’s start with the obvious point—motivation is partially a function of money.

Indeed, one of the most hallowed articles in all of management science is Steven Kerr’s 1975 classic, “On the folly of rewarding for A, while hoping for B,” 9 Acad. Mgmt. Exec. 7 (1995) (republication of “management classic” on the occasion of its 20th anniversary).  Kerr’s core point is that virtually everyone underestimates the power of incentives, thus causing large gaps between goals and results.

I doubt any reader believes that lawyers, as a group, are less responsive to incentives than other types of professionals. Further, accountants, investment bankers, and management consultants have a much better track record of collaboration and teamwork.  Yet, if we conclude that poor collaboration among lawyers is the result of bad compensation systems, it begs the question, “what’s the underlying flaw?”

Here is my answer:  we fixate on the measurement of individuals, tinkering with it endlessly, and largely ignore the measurement of teams. If rewards are meted out based on the performance of teams, collaboration and creativity will ensue, particularly if combined with appropriate investments in training.

This is a bold claim, which I will support with an example from a renowned professional service firm.  But first, it’s worth acknowledging that three years ago, the Magic Circle firm Linklaters reached a similar conclusion when it announced that was moving away from partner-based metrics in favor of a team-based approach. See Matthew Field, ‘Giving the partnership back’: Linklaters to ditch individual partner metrics to target team performance, Legal Business, Apr. 19, 2017.

The typical law firm partner’s response to the Linklater initiative is to step back and observe—over a period of several years—whether Linklaters eats everyone’s lunch. And if does not, then the experiment is a fail.

For two reasons, I believe this is a mistake. First, compensation is a very important component part of lawyer and workforce motivation, but so is coaching, feedback, sound strategy, and clarity of goals.  Per Horowitz, this is one of the many “hard things about hard things.”  Second, if Linklaters eats anyone’s lunch, it will be because they understood leadership and management principles at a very deep level and applied them to specific high-value market segments available to them. This is 2020, after all, with a maturing global legal market producing real winners and real losers. Cf. Post 082 (discussing progression from regional fiefdoms to fierce global competition playing out in the London market). To be in the winner category, partner-owners have to think at a deeper level.

Now consider the following story about another professional service firm that found a way to motivate partners to work together as a team, which I’ll later contrast with the observations (and exasperations) of two leading law firm consultants, David Maister and Heidi Gardner.

A. Going “joint” at Goldman Sachs

During the early post-war period, virtually all professional services firms were organized as general partnerships.  In most cases, a handful of senior partners were responsible for generating business.

In the 1950s and early 1960s, the biggest rainmaker at Goldman Sachs was Sidney Weinberg (aka “Mr. Wall Street”), who was a master at gaining the trust and confidence of many of the nation’s most prominent business and political leaders.  Yet, the next generation of leadership at Goldman took a different and more scalable approach to business generation.

As told by Charles Ellis in his magnificent book, The Partnership: The Making of Goldman Sachs (2008), the new method was discovered by accident when two salesmen in the securities division proposed a pooling and 50/50 split of commissions.  They reasoned that they would be “more productive if they could combine their efforts—with one man always in the office to take customer’s orders, while the other was always out prospecting for new business” (p. 118).

Their boss, Robert Menschel, who would later rise to prominence in senior leadership, protested vigorously, “Conflicts will abound. You’ll never work it out. The details will lead to arguments that will ruin you.” Nonetheless, after being tried as an experiment, the team-based approach worked so well that more and more pairs of salesmen decided to go “joint.”  Then pairs grew into larger teams of professionals willing to pool their efforts.

Inspired by these results, Menschel dismantled the firm’s longstanding “eat-what-you-kill” approach and “worked out a teamwork-motivating system of compensation for institutional sales” with the entire sales partnership agreeing to pool all commissions into one pot that would be divided at the end of the year on a percentage basis, with Menschel retaining discretion over a one-third share to reward those who did the most for the sales partnership. According to Menschel, the net effect was that “everyone focused on one thing: total gross credits.”  Shortly thereafter, the principles of going “joint” were used to revamp compensation in the high-net-worth group led by Richard Menschel, Robert’s brother. As the successes continued, “[p]ooling commissions in partnerships became an increasingly important part of the Goldman Sachs way.”

In part, this compensation system worked so well because the higher team-based productivity enabled higher pay for all.  But the team-based approach also caused attrition rates at Goldman to plummet to only 5% per year. Although some argued that the 20% industry average was optimal, the superior continuity of client relationships proved to be far more lucrative than younger, cheaper talent (p. 119).

In summary, over 50 years ago, Goldman Sachs said goodbye to the “eat what you kill” compensation model.  It was replaced by team-based compensation in which 30 to 40 professionals shared a single common profit pool. Although different professionals are bound to contribute in different ways, under the team-based approach the free-rider is destined to be exposed and shunned.  This self-regulating feature means that firm leadership has fewer personnel headaches and has more time to focus on other strategic priorities.

In contrast, in Law Land (a wonderful term coined by Bruce MacEwen), “eat what you kill” remains the state of the art, making it tough sledding for the law firm consultants. Below are two of the very best sharing their insights on getting lawyers to collaborate and work together as a team.

B. Lawyers are different

David Maister

Perhaps the most renowned law firm consultant of all-time is David Maister, who parlayed a stint on the Harvard Business School faculty into a lucrative career consulting with professional service firms.

Prior to his retirement in 2009, Maister published a swansong collection of essays, which he titled Strategy and the Fat Smoker (2008). The book’s subtitle drove home the core message: “doing what’s obvious but not easy.”

Chapter 17 is entirely devoted to lawyers and has a memorable and humbling opening line: “After spending 25 years saying that all professions are similar and can learn from each other, I’m now ready to make a concession: Law firms are different.”  The main effect of this difference is that lawyers struggle to work effectively in groups, thus raising the question of whether they can be managed at all.

According to Maister, four facets of lawyer training and practice inhibit lawyers’ ability to collaborate: (1) problems with trust; (2) difficulties with ideology, values, and principles; (3) professional detachment; and (4) unusual approaches to decision making. “If firms cannot overcome these inherent tendencies,” Maister writes, “they may not be able to deliver on the goals and strategies they say they pursue” (p. 230).

Regarding trust (factor #1), Maister concludes that most law firms are “low-trust environments,” illustrating his point through the following exchange:

Recently, I was advising a firm on its compensation system. They didn’t like my recommendations. Finally, one of the partners said, “David, all your recommendations are based on the assumption that we trust each other and trust our executive or compensation committees. We don’t. Give us a system that doesn’t require us to trust each other!”

A former managing partner with whom I have discussed this says, “It’s not that I don’t trust my partners. They’re good people, mostly. It’s that I don’t want to have to trust them. Why give up any degree of control over your own affairs if you don’t have to?” (p. 232).

Regarding the other three factors, Maister observes that lawyers are reluctant to enforce rules, at least within their own group (#2 values and ideology); are uncomfortable with emotional investments in people and organizations (#3 professional detachment); and, out of professional pride, overinvest in group decision making (#4 unusual approaches to decision making), which leads to fewer actual decisions without any corresponding gain in quality.

As we read Maister’s observations, which were written at the end of a long and successful consulting career, it’s tempting to conclude that lawyer DNA is fundamentally incompatible with teamwork and collaboration. Yet, surprisingly and to his credit, if the issue is framed as one of nature versus nurture, Maister remains very much in the nurture camp.

Part of the problem is very damaging operant conditioning early in one’s career. Maister quotes one of his clients, “Most partners were recognized and rewarded for being the smartest person in the class or the most accomplished. They have rarely experienced or understood the power of succeeding as part of a larger group or team. [Thus,] their focus tends to be selfish and self-serving, even narcissistic” (p. 234).  This perspective leaves open the possibility that formative experiences early in young lawyers’ careers could shape their attitudes and openness toward teamwork.

At Indiana Law, much of my focus as a teacher has been to stage a preemptive intervention for pernicious incentive structures.  I’ve done this by designing classroom experiences in which student self-interest (a high grade) requires effective collaboration within a group. Further, through trial and error, I’ve developed tools, training, and classroom formats that support team-based goals.  See Part II.C (190) (discussing use of Belbin).

What’s been the result?  The vast majority of these aspiring lawyers love being part of a high-performing team, as they learn more, produce amazing quality work, get it done more efficiently, and connect with classmates who are often very different than themselves. Thus, like Maister, I have a difficult time signing on to foolish nature-based explanations of lawyer behavior. See also Post 052 (Jae Um skewering all theories that begin with the phrase “Because lawyers … “).

In addition to the lack of a positive reference point for teamwork and collaboration, Maister notes that the structure of the legal services market (circa 2009) wasn’t punishing selfish, myopic behavior within law firms. The first time I read the following passage, I thought it was a humorous throwaway line,  yet later I realized that Maister was making a very serious point:

If lawyers deal with each other so poorly, why do they do so well financially? My answer is only partly humorous: The greatest advantage lawyers have is that they compete only with other lawyers. If everyone else does things equally poorly, and clients and recruits find little variation between firms, even the most egregious behavior will not lead to a competitive disadvantage. (p. 240).

Obviously, Maisters’ analysis leaves open the possibility that the market will eventually shift.  Indeed, writing in 2008, Maister predicts that competitive pressures will eventually force “firms to act as firms—delivering seamless service, practice areas that have depth (and not just a collection of individualistic stars), and true, cross-boundary teamwork” (p. 241).

C. Collaborate with others, by yourself

Heidi Gardner

It’s impossible to discuss the topic of lawyers and collaboration without delving into the outstanding work of Heidi Gardner, Distinguished Fellow & Lecturer at Harvard Law School, and the only researcher who has studied the topic with empirical rigor.

Here, I rely upon Gardner’s work to make a fairly subtle but important point: From an individual lawyer perspective, collaboration is a very effective tool to build a large and lucrative practice.  Lawyers who specialize and export surplus work to more capable and/or lower-cost peers end up attracting more internal and external clients who fit their highest-valued skill set. Further—and this is the most crucial point—these benefits exist independent of a firm’s compensation system.

Regarding the connection between collaboration and higher revenues and profits, the graphic below comes from Gardner book, SMART Collaboration (2016):

The key takeaway is that firm revenue—an essential precursor to profit—moves up dramatically when client work involves more than one practice group. This is because the most complex and lucrative client engagements require multiple specialized inputs.  To enable this, however, a partner has to bring one or more other partners into the client relationship.

This raises the question, “What are the incentives facing the individual lawyer?”

On the one hand, the relationship partner may feel vulnerable or exposed, either because the other partners may drop the ball (“competence trust”) or, alternatively, they make such a favorable impression that the original partner is squeezed out of the communication loop (“interpersonal trust”). On the other hand, building the most expert and cost-efficient team is the road to more satisfied clients, more future referrals, and a larger profit pool to benefit both the lawyer and the firm.

The chart below summarizes how partners eventually make their way through what Gardner calls the “pain barrier.”

Gardner’s research data provide ample evidence that partners who collaborate within and across practice areas eventually end up with more work that is higher value. Obviously, this has positive financial implications for both the partner and the firm.  Yet, surprisingly, very little of Gardner’s thesis turns on how a firm compensates its partners.

Gardner acknowledges that compensation systems play “a large part in shaping partners’ behavior, and probably explains why some firms are, on average, more collaborative than others” (p. 156). Yet, she also makes the point, backed up by data, that compensation systems fail to explain the wide variation in collaboration that exists within a firm. Indeed, among partners who are identical based on practice area, office location, years out of law school, inbound and outbound referral patterns can vary by 8 to 10x.

Presumably, one of the main goals of a compensation system is to drive everyone toward the same valuable behavior.  See Kerr, “On the folly of rewarding A, and hoping for B,” supra.  Yet, on this topic, Gardner treads lightly, cautioning law firm leaders:

{C]hanging the compensation system is one of the hardest, most fraught-with-peril decisions a professional service firm can make.  No matter what steps get taken, there are always perceived winners and losers. So make deep surgical changes only when essential, and as a last resort. (p. 169).

Gardner’s advice brings us back to David Burgess and his comment that no law firms earn high marks across the board for teamwork.  Perhaps this is because it is more palatable for firm managers to sell the benefits of collaboration to individual partners rather than take on the much heavier lift of mandating higher standards for everyone.


The market shift that Maister predicted may not be far off.   As law firms use Gardner-like methods to effectively re-institutionalize clients, law firm leaders are gaining a stronger hand to play against partners who want to maintain siloed, portable practices. Eventually, this leverage will be used to build better incentive structures to support a more team-based approach to lawyering. The experience of Goldman Sachs circa 1965 suggests that a better way is, in fact, possible.  Further, there is no reason to believe that lawyers would not enjoy working in a team-based environment, particularly if it comes with higher pay and higher status.

In Part II (190), I’ll discuss the crucial role of training to drive effective teamwork.