Tough Love - U.S. Style
They say that the Americans are tougher than we are when it comes to business.? I think that it is probably true.?
I met John in the early 90’s, shortly after he had arrived in Toronto to set up a Canadian branch of his large Buffalo law firm.? John was a very senior lawyer by then and he was the managing partner of the Toronto branch office of his firm, and in charge of the firm’s cross-border practice.?
I was new to firm management and not very good at it yet.? (Most of my former partners would agree that I was not very good at managing our law firm at the time.? Some of my former partners would say that I never got much better at it, but they would be wrong.)
I was out for lunch with John one day and I was asking him some questions about his experience managing lawyers.? I started with an easy question.? I asked him “What do you do about lawyers who do not input their time records daily?”? John replied: “Well, Murray, in those circumstances we hold their pay cheques until their dockets are up to date.”
That sounded a bit drastic to my Canadian ears, but it was definitely an idea worth thinking about.
I asked John a follow-up question: “John, what do you do about lawyers who do not bill their work in process every month?”?? John answered: “In those cases Murray, we hold their pay cheques.”
Okay, I was beginning to discern a pattern but being a slow learner, I asked yet another question.?
I queried: “John, what about the situation where you have a lawyer who will not cooperate with management when help is needed to collect their receivables?”? This time John replied more slowly, as if talking to a small child who has not yet figured things out.? He said: “Murray, we hold their paycheques.”
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I took all of this new information to my next partners meeting where once again the conversation turned to lawyers who did not submit their dockets, bill their files, or collect their receivables. This was hardly a new item on the agenda for our partners meetings.? I presented John’s ideas which by then I had adopted as my own.?
The first to respond was my employment law partner who vehemently argued that with respect to the associates we should be dissuaded by certain provisions of the?Employment Standards Act.??She also went on and on about something to do with the common law, but by then I was not paying much attention.? I was sure that we could work around those issues.
I turned my attention to the partners, who were, by the way, the worst offenders.? Certainly, there was nothing stopping us from implementing some new rules for the partners.? Most of the partners did not think much of the idea either, except, strangely enough, for a few who always got their dockets in on time, billed their files monthly, and collected their receivables.? The others were very concerned about any possible delay to receiving their draw cheques and thought that it made no sense to be held be accountable for their behaviour as a condition to receiving their money.
Strangely enough, although John’s firm apparently had an excellent record in persuading lawyers to manage their practices responsibly, our firm continued to struggle with those basic issues for many years.? Ironically, it was always those partners who presented management with its biggest challenges who complained most vociferously about how long it took to distribute our profits.
One of my favourite quotes is from Spiderman.? For those of you who are unfamiliar with the story, Peter Parker failed to intervene to stop a criminal because he did not think that it was his responsibility to do so. The same criminal later murdered his gentle uncle Ben, “and thus did Spiderman learn the fateful truth – with great power comes great responsibility.”
John had no problem letting lawyers know that with the power to practice law and run their practices came the responsibility for complying with basic management principles.? The lawyers in my firm struggled with that concept for many years, and although with the help of professional management things greatly improved over time, some of them were still struggling with the concept when I retired.
Perhaps not all Americans have this figured out better than we have, but John and his firm certainly did.? ?The stereotype for Canadians is that we are ‘too polite.’? Call it ‘polite’ or something less kind, but it just does not make a great deal of business sense to be that nice.
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Small Business Owner at Markowsky Limited Scope Legal Services Inc.
3 个月Murray Gottheil I was thoughtfully thinking about this post. The late reporters have typically never ran a business and have little appreciation for keeping in the black. When you run a business you choose how you wish to run it in the red or in the black. Life experiences teach you if you stay in the red too long you will be out of business or have a heart attack from bill collection agencies. Furthermore, when you run a business you experience first hand how source deductions or GST remittances will be made. Question: does the Government give you a break if you are late filing or paying? Never you pay arrears and penalties. Again, do you want to run your business in the red or black? Perhaps making these ones pay penalties out of their own pockets would get the ball rolling in the right direction but you never know…..
Small Business Owner at Markowsky Limited Scope Legal Services Inc.
3 个月Murray Gottheil I was thoughtfully thinking about this post. The late reporters have typically never ran a business and have little appreciation for keeping in the black. When you run a business you choose how you wish to run it in the red or in the black. Life experiences teach you if you stay in the red too long you will be out of business or have a heart attack from bill collection agencies. Furthermore, when you run a business you experience first hand how source deductions or GST remittances will be made. Question: does the Government give you a break if you are late filing or paying? Never you pay arrears and penalties. Again, do you want to run your business in the red or black? Perhaps making these ones pay penalties out of their own pockets would get the ball rolling in the right direction but you never know…..
Principal Litigation Lawyer at Just-Fides Advocacy
3 个月Very nice article. As in any relationship, there are those who do more and those who do less, and then people argue about who is really doing more and who is doing less.
Managing Partner, Legal Author, Adjunct Law Professor, Business Owner and Community Volunteer
3 个月Charlie Munger said “Show me the incentive and I'll show you the outcome.” Withholding pay is a strong incentive no doubt (although as correctly identified contrary to the esa which is a nicer way to say illegal). There are many, positive and negative, incentives. This discussion reminds me of Minden Gross which I heard paid partners on “billable” but not collected hours, a major flaw if true that may have contributed to their breakup.
Leveraging Over 20 Years of Pharma, Biologic, Device Law practice to help Pharmaceutical, Medical Device, Biologics, and Life Science Clients Navigate US Drug, Biological, and Medical Device Law.
3 个月Murray Gottheil personally when I was paying one third of my revenues to firm overhead and another third to the partner pool (of which if you’re a top performer you never get the full amount back because real estate or some seasonable partners are having a bad year), I would walk and take my clients and my substantial revenues with me if they ever held my paycheck over such nonsense. Another reason I started my own firm.