Trial Briefs

Some Thoughts On Incomprehensible Bone-headedness

November 15, 2023   |   Erik Mazzone

Practice Management: Your Problem Could Be a Murky Incentive Structure

I love movies. “Top Gun: Maverick” was the first movie I saw in the movie theater, sans mask, after the … let’s call it the “late unpleasantness” so we don’t get bogged down in some insane culture war. (Sidebar: The “late unpleasantness” is a line from “Ronin,” a terrifically underrated spy movie starring Robert De Niro, written by David Mamet and J.D. Zeik, and directed by John Frankenheimer. If you have never seen it, do yourself a favor and check it out.)

Back to “Maverick.” It was absolutely glorious being back in a theater to watch a movie, and, while I legitimately think “Maverick” was a terrific movie, there is a small possibility that I love it out of proportion because I was so excited to see a movie in an actual theater again. There’s a scene — I don’t think this is much of a spoiler — where Maverick (Tom Cruise) is yelling at his reluctant protege, Rooster (Miles Teller), and shouts, “What were you thinking?” Rooster shouts back, “You told me not to think!” It’s a great scene, one of my favorites. Come to think of it, you should really watch “Maverick,” too, if you haven’t seen it yet.

That back and forth between Maverick and Rooster also has something to say about successful management. If you have ever managed at least one person in your firm, you have undoubtedly had a moment where you, like Mav, wanted to scream, “What were you thinking?” Everybody who has managed people has been in that spot at some time or another, usually when you’ve encountered behavior that is just incomprehensible in its bone-headedness. You’re flummoxed and annoyed and disheartened all at once about the possibility of ever having a well-run firm. It’s dispiriting. I’ve managed teams a few times in my career, and while I generally found those to be challenging and rewarding jobs, I’ve had more than a few of those “what were you thinking” moments.

There’s a strong tendency to personalize the issue, to analyze the situation as a performance failure of the employee. It’s simple and easy to assess the problem as, “If I had a better associate, this would not have happened.” And to be sure, there are times when that seems like the case, but there’s another possible explanation that bears some thought and introspection on your part as a manager and leader. This other possibility is that your employee is behaving competently and rationally according to the incentive structures in the firm, and the reason you didn’t get the result you wanted is because it’s those incentive structures that drove the behavior of the employee rather than any personal performance failure on their part.

If you’re not getting the performance you want from your team, there are two primary places to look: 1) Have you recruited well? Do you have the right people on the team? And 2) are the firm’s incentives set up to foster and reward the behaviors and values you want from your team?
Let’s assume for the duration of this article that you have recruited well and you have the right people on the bus, as Good to Great author Jim Collins might have said. We’ll focus instead on the incentives side of the equation.

What Are Incentives?

When I refer to incentives, I am talking about the set of policies and procedures that govern the way a firm operates. Compensation is the most obvious and visible one of these incentive structures, but there are others as well, around billing practices, paid time off, internal contributions to firm welfare and so on.

To share an example, I worked at an organization once that eliminated sick days in favor of PTO days that were undifferentiated between sick days and vacation days. The point of that policy was to stop employees from pretending to be sick when they were out of vacation days and wanted a day off. The unintended consequence of that policy, however, was that employees would drag themselves into the office when they were clearly sick so as not to waste a PTO day on being home sick.

That’s an incentive that was meant to solve a problem and created a different one

Evaluate Your Incentives

Even if you have never formally articulated the incentives in your firm, they exist and are felt as surely as gravity.

Take some time over the coming weeks and look at the behaviors — good and bad — that your team exhibits. You’re going to reverse engineer these behaviors into figuring out what your firm incentives are.

Here’s how to do it: For the next 30 days, record — somewhere private — every significant great and terrible behavior by a team member. If you rated each employee behavior on a scale of one to 10, with one being awful and 10 being amazing, you’re going to record the things that would rate a one, two, nine or 10. Just the best of the best and the worst of the worst. Otherwise, this exercise will take way too much of your time.

At the end of the month, you will take your notes, and categorize the behaviors into groups. The groups should make sense for your firm priorities, but a few suggestions to get you started might be business generation, client service, teamwork, work product and effort. What you’re trying to do here is to look for patterns or themes, like the associate attorneys in the firm frequently prioritize getting staffed on newly assigned cases over completing work on their existing files.
As you work this process, remember:

1) Don’t blame the individual performance of an employee.
2) Assume that the behavior on the part of the employees is rational.

Whether and to what extent individual performance contributed to the problem (or the success) is immaterial for this evaluation. You’re looking for the hidden and express incentive structures that created the behavior.

Once your analysis is complete, summarize your incentives into declarative statements with your best assessment of the incentive driving the behavior: “My team members prioritize taking on new matters rather than working existing files because the firm bills its clients in prepaid, fixed fees and associate compensation is paid out when matters are assigned, not when it is completed.”

People working in law firms tend to be smart, interested, rational actors much of the time.much of the time. They typically do not spend their time running around doing irrational things to cause chaos. If they are doing something usually it’s because they believe on some level it benefits them to do it and is the right thing to do. Or, as a friend of mine succinctly put it once, “Nobody is setting out each morning to ruin your day.”

Creating Incentive Structure

Once you have completed your analysis of the existing incentive structure, it’s time to start building the incentive structure for your firm that drives more of the behaviors you want and fewer of the ones you don’t want.

The incentive structure isn’t going to do all the work of management for you. But it will make your job as a manager and leader easier or harder, depending on how well those incentives align with your firm’s values. Think of your firm as a boat, the incentives as the current and the management as the rowing. If you are rowing with the current, it will take a lot less energy than if you are rowing against it. But if you stop rowing altogether, you will just end up wherever the current takes you.

As you build out your incentive structure, start with the behaviors you want to see more of. The behaviors you want should be particular to your firm and practice area. There’s not a right and wrong here, just behaviors that are well-aligned to your firm values and ones that are poorly aligned. A few common incentive categories to think about to get you started: generating referrals, pro-bono work, non-billable contributions to the firm, mentoring newer employees and community involvement.

Wrap Up

A final word on incentives. A lot of small firms find that their incentive structure is primarily or completely unarticulated and left to the employees to discover and interpret for themselves. When my wife and I were young lawyers, she worked for a firm that produced a document titled, “Firm Name’s List of Non-Policies,” which was meant — I think — to be a cheeky take on articulating some policies while trying to maintain a less formal management architecture by saying they were something other than policies. For a young associate, it was clear as mud.

Incentives work best if they are clear, transparent, express and equally applied. You want to take the guess work out of it for your team and see if that helps them perform better.
At the very least, maybe you won’t find yourself silently screaming, “What were you thinking?” quite so frequently.