People Management

WORLD CLASS PRACTICE MANAGEMENT CONFERENCE: 29 AND 30 APRIL 2003 “CASE STUDY” PEOPLE ARE OUR BUSINESS – THE IMPORTANCE OF PEOPLE MANAGEMENT IN LEGAL PRACTICE A BRIEF PAPER PREPARED BY MICHAEL HARMER CHAIRMAN AND SENIOR TEAM LEADER HARMERS WORKPLACE LAWYERS

INDEX

1.	INTRODUCTION
2.	WE AS LAWYERS PRACTISE THE LAW – BUT DO WE PRACTISE JUSTICE?
3.	A BRIEF PROFILE OF HARMERS WORKPLACE LAWYERS
4.	A SIMPLE BUSINESS CASE IN FAVOUR OF THE PRACTISE OF “JUSTICE AT WORK”
5.	THE IMPORTANCE OF ALIGNMENT
6.	OUR FIRM’S AIMS AND UNDERLYING PRINCIPLES
7.	SERVING PEOPLE – OUR MAIN FUNCTION
8.	THE FIRM’S CONSULTATIVE DECISION MAKING PROCESS
9.	MANAGEMENT BY COMMITTEE
9.	THE FIRM’S ORGANISATIONAL STRUCTURE AND TEAMWORK EMPHASIS
10.	THE FIRM’S REMUNERATION SYSTEM
11.	THE FIRM’S APPROACH TO PROFESSIONAL WORK
12.	CONCLUSION

1. INTRODUCTION

1.1. It is Friday 11 April 2003, my last day of work prior to a two week break designed to coincide with the Sydney school holidays. In amongst a few other tasks, I have to dictate a paper for the “World Class Practice Management” conference to be conducted by Lexis Nexis on 29 and 30 April 2003 in Sydney. I have been advising people around our firm for some weeks that we are on the conference presenter list in order to demonstrate our contribution to world’s worst practice management – and thus provide an appropriate contrast and counter-demonstration effect during the course of an otherwise excellent line up.

1.2. Two rooms away three masseurs are in the process of a full day of massaging each and every staff member in the Sydney office of our firm. Soothing music pipes throughout the room and herbal tea is served to those awaiting their massage. Around the firm more generally, other than for those attending Court or client meetings, everyone is in casual clothing – most in jeans and not wearing shoes. Those staff enjoy remuneration and benefits that are the forefront of the Australian market – all staff are on profit share; all benefit from full information share concerning the operations of the firm; and all have a say in key decision making in relation to the firm’s future direction.

1.3. I have on my desk a report received yesterday from a “Managing Work/Life Balance” conference on Work/Life Initiatives throughout Australian industry. That report ranks our firm fourth amongst 207 businesses across Australia in the achievement of work/life balance. For the second year running we are the only legal firm listed in the top 25 best practice organisations.

1.4. These introductory comments will perhaps give you the impression that we are a somewhat “weird” legal firm which has made some progress in the fair treatment of its people. At the same time, however, our firm has been one of the fastest growing and most profitable legal practices in this country over the last five years.

1.5. Far from seeing any contrast in our approach to the treatment of people and our success as a business, I rather note that the treatment of people has been, throughout the course of our short history as a firm, a key component of our business plan and a major reason for our success.

1.6. Against the background of those brief introductory comments I note that I consider the topic upon which I am to address – “People are Our Business” – to be true for all businesses which operate within the legal services industry.

1.7. Good people management in legal practice is of vital importance – not only as a sound business practice, but also as an important step in maintaining one’s integrity as a lawyer via the achievement of justice in the conduct of one’s own business.

2. WE AS LAWYERS PRACTISE THE LAW – BUT DO WE PRACTISE JUSTICE?

2.1. We as lawyers carry forward with us into our businesses a high level of training, experience and knowledge of what is involved in Justice – particularly the conduct and processes involved in the achievement of both procedural and substantive fairness.

2.2. We also carry ethical obligations to reflect that knowledge of justice in the conduct of our businesses.

2.3. The Law Society of New South Wales’ “Statement of Ethics” provides, amongst other things, that:-

The law should protect the rights and freedoms of members of the community. The administration of the law should be just.

The lawyer practises law as an officer of the Court. The lawyer’s role is both to uphold the rule of law and serve the community in the administration of justice.

In fulfilling this role, lawyers should:-
….

• treat people with respect
• act fairly, honestly and diligently in all dealings
• pursue an ideal of service that transcends self interest
• work with their colleagues to uphold the integrity of the profession and honourable standards and principles
• be trustworthy
• maintain and defend the rights and liberty of the individual.

2.4. Given their training, background and experience, lawyers in their conduct of their legal businesses, assisted by their staff, should in fact be leading examples of the implementation of the principles of justice in the conduct of business. That should particularly be the case in the way in which they treat the people who are part and parcel of that business. Indeed, it could be strongly argued that to be a lawyer and not to manifest justice in one own’s backyard, in terms of the treatment of one’s staff at work, would be to squarely place oneself in the midst of abject hypocrisy.

2.5. Of course, the achievement of justice at work is not always possible – but it should be the honourable objective of all legal firms.

2.6. Unfortunately, I have over the years had the experience of acting both for and against many legal firms in disputes at partner, employee and consultant levels. In the course of my work for over twenty years, I have acted in employment issues across all aspects of Australian industry. Against this background I observe that it has not been my experience that legal firms are at the forefront of the achievement of fairness and justice in their treatment of their people at work. Indeed, the conduct which one witnesses amongst certain of the supposedly leading law firms in this country is often so far removed from notions of justice that it defies comprehension.

2.7. Such anecdotal observations should not of course detract from the many excellent achievements made by legal firms in the conduct of what are no doubt extremely demanding businesses. I think however that if those attending the conference were honest with themselves, and considered their own experience and perception of the standing of lawyers as employers within the community, they may not necessarily consider that standing to be at the high end of the market.

2.8. This is all the more unfortunate when one considers that, certainly in my experience, there is a high level correlation between the fairness of treatment of people at work and the achievement of the more general business objectives of a legal practice.

2.9. I observe from the brochure on this conference that my presentation is intended to be a “case study”. Accordingly I had best cease raving more generally about the issue of sound people management and tell you a little bit more about our attempt to achieve reasonable people management practises within the legal firm, Harmers Workplace Lawyers.

3. A BRIEF PROFILE OF HARMERS WORKPLACE LAWYERS

3.1. Harmers Workplace Lawyers commenced as a legal firm in Sydney on 28 November 1996 with five legal practitioners and two support staff.

3.2. The firm operates a specialist legal business providing legal services in the areas of industrial relations, employment, occupational health and safety, human rights and equal opportunity, change management and legal risk management.

3.3. The firm was ranked a first tier firm in its area of specialty in only its second year of operation by the Asia Pacific Legal 500 survey.

3.4. The firm was again one of five firms nominated for the Australian Law Award in this area of expertise this year.

3.5. At the time of dictating this particular paper the firm consists of some 84 staff and has offices in Sydney, Melbourne and Brisbane.

3.6. The firm has eight equity partners and four salaried partners.

3.7. The firm currently has 49 fee earners – including some of the most experienced in this field of expertise in the country.

3.8. Our firm’s staff composition is 70% female and 30% male.

3.9. Of the five female practitioners who have operated as equity partners in our firm, four have done so on a part-time basis (ranging from 2 to 4 days per week) whilst maintaining their family responsibilities. There are an extensive range of flexible work practices across our firm.

3.10. The firm has received an award from the Queensland Law Society as an employer of choice, based on our national employment practices and has also received an award for excellence in human resource management from the Australian Institute of Management.

3.11. As previously mentioned, the firm has for each of the last two years been ranked fourth across all Australian businesses surveyed as part of the “Managing Work/Life Balance” survey.

3.12. The firm has developed a unique culture and reputation for the treatment of its people. At the same time, the firm’s revenue and profit has grown steadily – with both revenue and profit growing during the course of the last financial year by approximately 40%.

3.13. In comparative terms, by reference to the BRW published survey of the top 20 firms across the country, our firm would rank number 6 in the country in terms of profit per partner and number 1 in the country in terms of growth in revenue and profitability over the last financial year.

3.14. The firm has an extensive client base ranging from blue chip corporate clients (including 15 of the 100 largest employers in the country); high profile individual clients (including the CEOs of many of Australia’s leading companies); all the way through to an extensive pro-bono series of clients, with the firm allocating 5% of its budgeted revenue each year to probono work.

4. A SIMPLE BUSINESS CASE IN FAVOUR OF THE PRACTISE OF “JUSTICE AT WORK”

4.1. Expressed in simple terms, the firm has a reasonably straightforward business plan.

4.2. The firm is a service provider in the legal services industry. The product that we take forward to that industry is made up by the people which we have available to us to provide the relevant service.

4.3. By attracting and retaining an excellent service team, we are able to carry a better product forward into the marketplace. That better product in turn is able to generate more revenue and thus provide a reasonable level of return on our investment in our people.

4.4. To the extent that we compete with other legal firms in the legal services industry for the calibre of the people that make up our legal product, we can obtain a head start in the market if we have developed a unique culture in which people can work. This represents a premium over and above the pure remuneration and benefits otherwise available for attraction and retention in the market.

4.5. The generation of a high level of morale amongst participants in a legal firm inevitably comes across to that legal firm’s clients. It will be conveyed in the manner in which members of that firm service their clients and it will be observed by clients of that firm when they visit the place of work.

4.6. Our firm is built around reasonably low overheads. We made a decision at an early stage to invest in people rather than premises. Our firm’s investment of our standard fee dollar in our staff is at a percentage far in excess of that reported by way of FMRC benchmark. We do not have any opulent marble in our reception area – we do however have a great team of people who profess in staff surveys to possess a high level of commitment to the pursuits of the firm and its underlying principles.

4.7. I have received favourable comments on many occasions from clients relating to the informal atmosphere generated by our firm and the friendliness conveyed by our staff. I have also received comments from practitioners joining our firm from many of the leading law firms across the country, who have noted the significant change in culture on walking through our door and the relief which they have experienced in practising in such an environment.

4.8. People are our business. People should be the business of every legal firm in this country. Fair people treatment can provide a definite competitive market advantage for legal firms. Such at least has been my experience in the conduct of a legal practice to date.

5. THE IMPORTANCE OF ALIGNMENT

5.1. In my view, the task of managing a business is not all that different to the task of self-management.

5.2. There are considerable benefits in the determination of one’s objectives; the alignment of one’s thoughts, words and conduct with the achievement of those objectives; the undertaking of training and discipline in order to assist in the maintenance of that behaviour most conducive to the achievement of those objectives; and the creation of an environment most conducive to the maintenance of that behaviour. This applies equally as far as I am concerned to the management of your business and to your self-management as an individual person.

5.3. Legal firms can often face criticism for being too internally focused. That is certainly a criticism which could be levelled at our firm. I genuinely believe however that it is important to work carefully on one’s internal structures, systems and processes – particularly the achievement of fairness in the treatment of one’s own people. Just as an individual will ultimately externally manifest their internal thought processes – particularly when under pressure – so will a legal firm externally manifest to its clients and the community the degree of quality or otherwise involved in its internal achievement of justice amongst its staff.

5.4. As a firm, we manage ourselves by reference to a set of principles. This provides us with a set of criteria to apply to decision making in relation to the structures, systems and processes involved in our firm. Our principles are based upon fairness and our aim is to achieve alignment between those principles and the structures, systems and processes which we put in place in relation to our delivery of legal service.

5.5. Alignment is important at two levels. At the level of the individual it is important that a member of staff be able to undertake their work in a manner, supported by their firm, which does not involve any excessive tension with the manner in which that individual staff member would otherwise like to treat people in the community or in turn to be treated by others around them. At the level of the business, it is important that the structures, processes and systems put in place should be aligned to the achievement of the business’ objectives and its underlying principles.

5.6. Principled leadership will only be undermined by mis-alignment.

5.7. A simple practical example of this notion of alignment applies to the remuneration system put in place in a legal firm. If one adopts the simple management principle that “what gets rewarded gets done”, you can see that it is extremely important that the conduct which is rewarded by a remuneration system is consistent with the objectives and principles of the firm.

5.8. If a legal firm wants to have a culture built upon optimal service of clients; a high level of teamwork in the servicing of clients; the sharing of work where possible; and the achievement of appropriate work/life balance between its participants – it is necessary to put in place a remuneration system which works towards and reinforces that mode of conduct.

5.9. If a legal firm puts in place a remuneration system by way of ill-managed meritocracy which rewards people for fee generation; hoarding of clients; lack of sharing; and provides those rewards regardless of the quality of the relevant practitioner’s treatment of people – then that is the culture with which that legal firm will be rewarded. How many legal firms do in fact have in place the latter culture as a result of the structures, processes and systems which they have put in place? This exhibits a lack of alignment.

6. OUR FIRM’S AIMS AND UNDERLYING PRINCIPLES

6.1. Our firm’s aims and underlying principles are summarised in the firm’s “Audit Business Model”.

6.2. The firm’s audit business model document involves an attempt by our firm to embody in one document in concise terms certain of the key objectives of the firm. An Internal Audit Committee, which consists of a cross-section of staff at all levels of the firm, utilises this document to audit the firm against its purported objectives. That committee plays a vital role in making suggestions to our full firm on ways in which we can improve our attempt to achieve our objectives.

6.3. The first page of the audit business model document is an attempt to embody, on one page, our firm in a nutshell. We maintain that the firm consists of four key components:-

6.3.1. firm leadership;

6.3.2. our main function or operations – serving people – in this regard we externally service our clients and the community, and internally service each and every other member of staff within our team;

6.3.3. support systems – of the kind that you would find in most legal firms; and

6.3.4. ongoing audit, review and improvement – we often say that the only constant in our firm is change. Indeed given our growth over the last six and a half years one can readily see that we have faced considerable change. We encourage the notion however that we should have no attachment to any particular structures, systems or processes – rather our attachment should be to the firm’s principles and we should be prepared to alter all structures, systems and processes as many times as is necessary to ensure the achievement of those principles.

6.4. I will briefly take you to the first two components of our Firm Audit Business Model. The firm leadership component sets out our aims and underlying principles. Those aims and underlying principles have been confirmed each year by all members of our staff in our Business Planning Day.

6.5. It is significant to note that our aims are threefold. Apart from the obvious aim of wanting to be the best law firm in Australia in our areas of expertise, we have the aim of actually undertaking worthwhile work by providing a valuable service facilitating fair treatment in the workplace, and the further aim of treating our own people fairly via model people management practices. Our underlying principles thereafter reflect that broad objective to achieve model people management practice. Of course we will never actually achieve it – but so long as we all generally work towards it in our decision making processes we will get a long way along that path.

6.6. In terms of our business operations, the reference within our underlying principles to the notions of profit share, information share and consultative decision making are important. We took the view from day one that all members of the firm should be on full profit share. Given that all members of the firm would be on profit share, we considered that they should have a full say in the conduct of the firm in order to be able to influence that profit share level. Accordingly we have adopted a consultative decision making model.

6.7. In order for people to properly participate in a consultative process, it is necessary however for them to have full information concerning the firm. Accordingly we have adopted a full information share approach whereby all members of the firm receive regular briefings on the firm’s financial performance; all members of the firm are aware of what everyone else earns; all members of the firm have access to information concerning key decisions to be made by the firm other than in relation to a few key areas.

7. SERVING PEOPLE – OUR MAIN FUNCTION

7.1. I have previously referred to our main operations – serving people – externally our clients and the community, and internally our staff. Contained in the firm’s Audit Business Model document is a list of the elements which our staff have suggested should be addressed in our attempts to service internally the members of our Team. The notional staff member has been dissected into their physical, intellectual, emotional, volitional and spiritual components. This provides a checklist approach for initiatives which we are attempting to implement in order to ensure fair treatment of our staff.

8. THE FIRM’S CONSULTATIVE DECISION MAKING PROCESS

8.1. The limited confines on this paper do not allow me to elaborate on the extensive processes which we have in place as part of our approach to consultation. The firm also has a consultation checklist, consultation principles and decision making check list.

8.2. Again, in business terms, our approach to consultation has considerable merit. There is simply no way known that eight equity partners could ever come up with the same quality ideas as 80 to 90 people who are provided with the opportunity to address relevant issues in an environment in which they are free to contribute. Indeed it takes considerable stress and management responsibility away from those partners, who should perhaps be focusing upon the undertaking of their legal work, if the decision making process is spread across such a large number of participants in the firm.

8.3. The adoption of a consultative approach to management is important in achieving fair people treatment. A Full Bench of the Australian Industrial Relations Commission at one time pointed out that even the most caring manager, with the best of intentions in the world, cannot know exactly how a range of individuals will be affected by the implementation of a particular decision without first asking each and every one of those individuals for their views.

8.4. Change management reflecting the principles developed by arbitral Tribunals around the country is an important part of fair people treatment. This does involve notice of proposed change, appropriate levels of consultation, steps to avert or mitigate adverse impact, and implementation on a fair basis.

8.5. The main decision making body within the firm is a meeting of the full firm which occurs by video conference once every fortnight. The firm structures its service delivery in teams. Team meetings, which are conducted weekly, provide a micro-level consultative process by reference to a set agenda which is structured to address the key management imperatives of the firm. This involves a tighter environment for the addressing of these issues by all members of staff.

8.6. Team leaders from each of the teams are invited to meet once a month in order to provide additional input to the strategic direction of the firm. In addition there are committees, which consist of staff members from across the firm, who meet on a regular basis to contribute ideas to assist the firm in relevant areas of management.

8.7. The team leaders’ meetings and committee meetings report into the full firm meeting. That full firm meeting has necessarily evolved into an information dissemination session, with limited practical scope for significant discussion other than on a few issues. Rather discussion and feedback from staff now occurs around the firm in team and committee meetings or via staff surveys conducted either by voicemail or email.

8.8. The firm utilises an extensive array of information output and input processes. Every member of the firm receives an update on daily news across the firm by voicemail each day. Any important issues are disseminated by either voicemail or email across the firm with an emphasis on telegraphing matters from which feedback is sought from staff.

8.9. The entire firm meets in Sydney one day each year for a “Business Planning Day” during which staff exchange views on the key elements of our business plan.

8.10. Whilst our decision making processes might appear quite inefficient, we do not find it necessary on many occasions to make urgent decisions – the firm is like a ship set in a steady direction with our principles being our aim. We do not find it necessary to tack on a rapid basis and take considerable care in generating the maximum number of ideas prior to making any important decisions.

8.11. The equity partners in the firm have ceded their powers under the partnership agreement to this consultative process. They solely maintain certain reserve powers in relation to the appointment or removal of equity or salaried partners and team leaders. Their role is particularly limited although still important in the overall scheme of the firm.

9. MANAGEMENT BY COMMITTEE?

9.1. Participants in each of our committees are encouraged to take the firm to the forefront of best practice in the relevant area of management which they are addressing. By way of example, the firm’s Environmental Committee, some time ago, suggested to the full firm that it adopt a principle of being a net benefactor to, rather than a net detractor from, the environment. This principle received endorsement from the full firm at our Business Planning Day for the relevant year.

9.2. The Environmental Committee thereafter arranged for the firm to participate as the only private sector employer in a pilot study with the State government on the issue of environmental issues in an office environment. That participation led to myself being invited, in conjunction with the relevant State Minister, to open a State Government website on the issue of best practice in environmental conduct in the office context.

9.3. The firm participated in an audit of its environmental practices by a number of interested environmental groups as part of the pilot study. That audit indicated that our firm, albeit a relatively small firm, utilised some 144 trees per annum in excess of that which we otherwise recycled in terms of our paper usage. That is a frightening statistic if one was to extrapolate it across the entire Australian economy.

9.4. The firm’s Environmental Committee thereafter undertook a number of tree planting projects to ensure that we planted more trees than we utilised each year. The firm is currently exploring means of investing more directly in tree planting in order to ensure that we put back into the environment many times more than what we take out. It seems only a just part of business practise that one should take one’s profit without detracting from the general community in terms of impact on the environment. I wonder what would be the impact if this particular aspect of our approach to business, brought into place as a result of our consultative processes, were to be implemented by a large number of businesses around the country?

10. THE FIRM’S ORGANISATIONAL STRUCTURE AND TEAMWORK EMPHASIS

10.1. As previously mentioned the firm is divided into teams. I have already addressed our decision making processes. There are four main administrative teams; Administration which includes the Business and Administration Managers, HR, Library, Secretarial Supervisor and supporting administration assistants followed by smaller teams: Accounts, IT and Word Processing. Our legal teams are firstly split into team leader units. A unit is made up of Senior, Mid and Junior Solicitors with an assigned secretary. Each unit belongs to a super team. Most super teams contain three or four units. We do unfortunately allocate to each team the responsibility of coming up with its own name. It is for this reason that you will find within our organisational charts references to “Team Chardy”, “Charlies Angels”, “Team Martini”, “Team Sunshine” (suffice to say our Brisbane office), “Team Kaos” and “Team Serene”.

11. THE FIRM’S REMUNERATION SYSTEM

11.1. I could present an extensive paper alone on our firm’s remuneration system – indeed the documentation surrounding it is quite extensive. Our firm has received an award for our remuneration system which is designed to achieve the alignment which I referred to earlier between the firm’s objectives and the culture attributes which the firm desires to reward and implement.

11.2. In simple terms, our firm’s remuneration system is built upon a survey of remuneration levels across first tier firms in the country for both professional and support staff. We take that market level and thereafter add 15% and indicate that our staff members will receive a remuneration level 15% above market if the firm operates at its budgeted profit level for that particular year. The relevant firm member receives a guaranteed level of profit share each quarter and, thereafter, a fluctuating component of profit share depending upon the firm’s performance against its budgeted profit.

11.3. Our firm remuneration system is built upon a classification structure which we have designed internally and which again lists various attributes which we consider to be of importance to the achievement of the firm’s culture. Progression up that particular classification structure is built upon a transparent process involving regular performance appraisals and 360o reviews. Our staff members are invited to express their own views on where they stand against the relevant criteria and a consultative process is utilised with a view to achieving consensus. In the absence of consensus there are a series of appeal mechanisms designed to ensure fairness throughout the course of the process.

11.4. Remuneration levels within the firm are aligned to charge out rates to the external market and to periods of notice required to be given by either the firm or the individual member of staff for purposes of termination of engagement. This reflects the fact that as a staff member becomes more valuable, they will be harder to replace if lost to the firm and also will find it harder to transition to alternative employment if for any reason the firm considers that the engagement should conclude.

11.5. Our firm’s budgeted revenue is based upon what we call a “fair teamwork effort” by our legal practitioners. This involves averaging 30 charge hours per week throughout the year. This is a reasonably modest expectation by industry standards.

12. THE FIRM’S APPROACH TO PROFESSIONAL WORK

12.1. The firm’s aims include the provision of a valuable service facilitating fair treatment in the workplace. Unlike many legal practices in the area of industrial relations, our firm acts for both sides of the fence. This provides great perspective to our practitioners when acting for corporate clients, employees or employee representative organisations.

12.2. In all of our matters we encourage our practitioners to have a high level of respect for the integrity of the employment relationship and the potential long term nature of industrial relationships.

12.3. As part of the process, we encourage our practitioners to advise on an array of options available to clients in addressing disputes in this area. The most often recommended option will normally be the pursuit of a fair process – whether we are advising the employer or the employee. The Tribunals throughout Australia are capable of redressing unfair conduct on the part of employers or employees. In this regard the encouragement of a fair approach by clients is a sound aspect of preventive law.

12.4. The fact that the firm through its advice can assist in facilitating fair outcomes in an employment context is one worthwhile pursuit engaged in by the firm. This assists in achieving alignment in that many of the practitioners who come to our firm have particular commitments to the protection of human rights and the achievement of fairness in the workplace.

12.5. This approach to practising in our area of law is also a key aspect of what I call “completing the flow” of just business. We undertake worthwhile pursuits in our actual practise of the law by enhancing the workplace environment in Australia; we undertake that work in an environment which is itself worthwhile in terms of our own level of morale and workplace practices; as a result we generate very worthwhile returns from our team; and can in turn reinvest that revenue in worthwhile pursuit. I like to think that this is a holistic approach to the practise of the law and certainly one which appears to meet with the support of staff within our firm.

13. CONCLUSION

13.1. Obviously in a paper such as this, one can only scratch the surface of a legal firm. Our policies, procedures and benefits as currently documented run into many hundreds of pages. Hopefully however I have through this paper given you a flavour of our underlying philosophy and the approach which we take to people management.

13.2. In moving forward with the management of your own legal firms, and your attempts to achieve best practice, I genuinely hope that you can discover the high level of correlation between the fair treatment of your staff and the achievement of your business objectives as an operator in the Australian legal services industry. That is “just business”.

Michael Harmer
Harmers Workplace Lawyers
9 April 2003