In this podcast, Graham Seldon talks to CEO of Performance Leader, Ray D’Cruz about what drives a high performance law firm. Performance Leader works with professional services firms by providing technology and consulting to help them build vibrant feedback cultures.
In this podcast you will learn:
- What defines a high performance law firm
- What metrics law firms use to measure partner and firm performance
- How continuous feedback affects the marketing and business development agenda
- Why BD and marketing professionals could earn the equivalent (or more) of partners in the law firm of the future
About our guest, Ray D’Cruz
Ray studied law at university and did his articles of clerkship at Herbert Smith Freehills, before moving into the learning and development team. In 2007, he co-founded Performance Leader – a technology company that implements performance and feedback software and helps firms become high performance organisations.
TRANSCRIPT: A Legal High with Ray D’Cruz
Graham Seldon: [00:00:03]
Hello and welcome to A Legal High the podcast that takes a high level view of what’s happening in the law firm sector and the opportunities and challenges facing business development marketing and communications professionals. I’m your host, Graham Seldon, and I’m a Director here at Seldon Rosser. We specialize in recruiting business development and marketing experts for law firms across the Asia-Pacific region.
Graham Seldon: [00:00:32]
In today’s episode I’m joined by Ray D’Cruz CEO of Performance Leader, a software and consulting company that helps law firms build vibrant feedback cultures. Ray is also the host of the Performance Leaders podcast which you can find on iTunes and Spotify. Welcome to the podcast.
Ray D’Cruz: [00:00:51]
Graham Seldon: [00:00:52]
Now you used to be a lawyer and now you lead a technology company. Tell us a bit about yourself and how you got here.
Ray D’Cruz: [00:01:00]
Well, like a lot of lawyers I haven’t ended up a lawyer. I moved into something else after I did my articles of clerkship at Freehills about 20 years ago. I had a fantastic time and experience there. But when an opportunity came up to move into the firm’s learning and development section I grabbed it. I was always interested in the learning and development area and from that moment I think I realised that what I enjoyed doing was creating things, making things and taking risks. And so the learning and development area provided a better opportunity for that than being a lawyer at the time. That’s probably changed a bit now I think I’d probably enjoy the law today with some of its progressive challenges. So about twelve years ago we started Performance Leader – a technology company that implements performance and feedback software and helps firms become high performance organisations.
Graham Seldon: [00:01:54]
So the performance software is internal – it’s focused on the performance of lawyers not client performance.
Ray D’Cruz: [00:02:05]
That’s right but not just confined to lawyers so it covers all people in a professional services firm. I think we recognise that there are many ways to contribute to the end product of a professional services firm and a lot of your listeners will understand that very clearly. So the product is for all or roles within a professional firm.
Graham Seldon: [00:02:27]
Now when we’re briefed on marketing media roles in law firms were often told candidates will be working with high performing partners. What does high performance mean?
Ray D’Cruz: [00:02:44]
Well, it probably means two things. It has an objective meaning and a subjective meaning. So in an objective sense it means performing to a high standard. And that will be a little bit different for every firm. But most firms that we work with put some effort into defining what excellence means for them. There is a bit of debate going on about whether you can define excellence at the moment. I think you can. I think it’s around talking about what you know what works well in a project what doesn’t work, behaviours that help people behaviours that frustrate I think we can codify those things. And so I think excellence is the objective high performance standard in a professional services firm. In a subjective sense, it’s around helping people, teams and firms achieve their potential – whatever that might be.
Graham Seldon: [00:03:34]
And how important do you think measuring performance is? Is it fair? Do they know what they are actually measured on?
Ray D’Cruz: [00:03:42]
Well, it’s important if you want to discriminate in favour of high performance. So, if you want to identify and reward high performers then you need some kind of basis upon which to do it – some kind of fair and objective basis as opposed to ‘I like this person’ or ‘I want to work with this person’. You need something a little bit stronger than that. The sort of metrics that are currently used that have been used for a long time are really personal financial metrics. There’s been a strong movement to broaden that out to look at non-financial metrics to look at behaviours and capabilities. But what we find from our research into this is that most firms still fundamentally default to personal financial billings and and hourly targets when they look at performance.
Graham Seldon: [00:04:39]
You’ve been working in this area for quite some time. Do you think there has been a shift from firms focusing on financial performance whereas now they might be focused more on cultural fit and teamwork and things like that? I mean has there been a shift in what firms measure performance on.
Ray D’Cruz: [00:04:59]
Yeah there has. The personal financial element is too important. We’ve seen more and more firms move to looking at team based metrics. We’ve seen firms implementing competency frameworks to try to identify that excellence and then to provide people feedback on that basis.
Ray D’Cruz: [00:05:23]
We’ve got clients particularly at partner level that are looking at client engagement scores or staff engagement scores or looking at client feedback qualitative and quantitative. So, there is a genuine move to try and take a more balanced approach to assessing performance and it’s obviously a good thing because the end product of a high performing firm has got multiple dimensions and the financial side really is just one backward facing metric.
Graham Seldon: [00:05:58]
So there’s been a lot of talk in the media recently about scrapping traditional performance management – so things like the annual review and in favour of more continuous feedback. How does continuous feedback impact the business development and marketing agenda?
Ray D’Cruz: [00:06:14]
I think it’s very positive because it’s a cut above the previous approach or the approach that many firms have, which is the annual review. This approach to performance really struggles to recall contribution and that includes client contribution and there’s still a dearth of firms that actually bring the client voice into the assessment process even though they’ve got client feedback and even though your BD and marketing professionals have some fantastic client data it rarely makes it into the review process which is a real shame. So, I think by moving to more continuous feedback model we reflect more the approach that BD and marketing take. So there’s a nice analogy here where in the people space we’re talking about moving from an annual review to more continuous feedback is a little bit like in the BD and marketing space where you might have a client say ‘look we want to get together every year and have a stocktake on how the relationship looks’. We want to plan ahead but throughout the year we’re going to still be collecting feedback. We’re going to be asking the client how we’re going on projects or on matters.
Ray D’Cruz: [00:07:26]
And so there’s a nice analogy there. I think the two can really be in alignment. We don’t necessarily think you should ditch the annual review. We think it’s an opportunity to consolidate the feedback that we’ve collected through the year so we can actually have these two systems in parallel – a client feedback process that’s going through the year with the pace of consolidation and a people feedback process that’s doing exactly the same.
Graham Seldon: [00:07:52]
One of the reasons I wanted to talk to you was because I think it’s important the marketing and BD people understand the pressures that some of law firms and the lawyers are under. Can you talk to me a little bit about what media marketing people need to understand about fairness success metrics?
Ray D’Cruz: [00:08:21]
Well, I think you’re right in your question that the fee earners are placed under enormous pressure and marketing is placed under enormous pressure because it’s reflected throughout the whole organization. So, in most firms we’re expecting at least fairness to generate a lot of revenue. We’re expecting them to work long hours. They’re in effect penalized when they’re not billing at least made to account for all of the known billing time.
Ray D’Cruz: [00:08:54]
There’s not a lot of time for thinking and planning and reflecting and marketing. A great example is the end of a project and there’s a great opportunity to talk to the client about what worked and what didn’t work and to maybe even think about what we’ve learnt from this particular project that we could apply to other clients. So it’s a great BD question. What did we learn from this project? We could apply to other clients or sectors. We don’t ask that question in most cases. And so the sort of pressure that people are under really I think creates poor practices. It sort of creates a transactional approach to business whereas what we’re being told and what marketing and BD people are supposed to be helping with is a more relationship focus. I mean, a lot of firms do now say that they give partners fairness, you know, sort of some fee relief to do marketing and business development.
Graham Seldon: [00:09:57]
Are we going in the right direction at least, do you think?
Ray D’Cruz: [00:10:03]
Yes, certainly at senior levels of the organization. I think that’s right. There’s still a challenge at mid-level and junior levels in large professional services firms about just how much marketing and business development the person can actually do and what’s realistic. What they’re empowered to do so I think at a senior level yes. But we’re not necessarily creating a business development culture through the whole organization because it’s still very stratified and and business development expectations largely rest on a small number of people in a typical professional services firm.
Graham Seldon: [00:10:48]
Do you think it’s the case that most law firms regardless of what country they’re in or what sector they focus on have the similar type of performance metrics for their lawyers?
Ray D’Cruz: [00:11:02]
Yeah, for the most part I think firms are setting expectations that are a mixture of metrics. Hard metrics are being broadened out. As we’ve said earlier, they’re setting expectations around objectives – specific client objectives or sector objectives – and they’re setting these behavioural or competency benchmarks and so that’s a three pronged approach to setting performance standards is fairly standard, certainly in Australia in the UK where we where we do most of our work.
Graham Seldon: [00:11:36]
So, what would your advice be to a business development manager in a law firm that had a sophisticated performance management system like yours? For instance, what are the lawyers expected to be doing on a daily basis that BD people should be aware of in terms of helping lawyers reach that performance standards?
Ray D’Cruz: [00:11:57]
Well, I guess there’s the business as usual stuff and BD and marketing can be looking at ways in which it can support and positively impact the business as usual stuff. So, that’s the client delivery. The client experience – those sorts of things – but then there’s probably also the more creative innovation type agenda that firms need to have and you know it’s not necessarily clear what time and space we create for that sort of activity that is innovation.
Graham Seldon: [00:12:38]
You mentioned innovation. I’m interrupting you because I’m curious. There’s a whole industry in and around innovation in the legal sector. Like a whole industry they’re even given awards for innovation.
Ray D’Cruz: [00:13:06]
It’s not necessarily a metric in an objective sense but we’ve got an increasing number of firms that ask people to talk about their innovation work to tell stories about what they’ve achieved in this area over the last six or 12 months. That’s becoming a lot more common because I think the Managing Partner, particularly at partner level, wants to be able to collect these stories and to understand what’s actually going on so it’s more qualitative than quantitative but it is definitely happening.
Graham Seldon: [00:13:38]
Lawyers seem to be under a lot more pressure now than they were maybe 10 – 20 years ago in terms of increased competition from globalization, the fact that they’re supposed to not just be lawyers but great innovators and great technologists and great marketers and all the rest of it. We hear a lot in the media about stress and mental health issues affecting the legal industry. Do you think metrics like your performance management systems help or do they hinder practitioners in terms of the pressure that they’re under?
Ray D’Cruz: [00:14:17]
I don’t think the metrics or the systems really are the primary source of the anxiety or at least I think we need to recognize that some people enjoy that level of challenge and focus. It works for them and some people don’t. So we need to have a person centred approach really understanding that people are different. Some things that motivate others will cause anxiety in others. And so what we say to our clients is that the key to this is the relationship. Now that might sound strange coming from a technology firm but I think we’re realistic about the technology. It’s an enabler. That’s all it is. But what has to underline it is really a strong feedback culture based on these two standards that we’re talking about is a trusting relationship between the manager and the employee or the partner and the lawyer because with that trust and care we can be honest with each other. We can have these high standards. We can hold each other to account because we’re doing it from a position of care.
Graham Seldon: [00:15:39]
We did a previous podcast with Genevieve Burnett. She’s written a book which is about bridging the gap between fee earners and fee burners it’s had quite a bit of controversy already. It’s about the feudal hierarchy that exists or has existed within law firms and I’m keen to get your input, having been a lawyer and now working in technology. Does the heart the feudal hierarchy exist in the legal industry? Does that play a part in how performance management systems or how lawyers are measured on performance? Does it play a part of that sort of cultural hierarchy?
Ray D’Cruz: [00:16:29]
You’ve got a strategic H.R. approach that says we want a unified firm. So you know we’re not going to set up one system for our lawyers and another system for everyone else. We’re actually going to take a consistent view because we’re trying to create a whole organization not a series of silos. So I think provided we’ve got the right H.R. approach it doesn’t need to be the case but there’s no doubt that those horizontal silos as well as the vertical ones the practice group bands or the sector ones are stopping firms from you know from being high performance firms. Or, really high performance firms wouldn’t be distinguishing between lawyers and non-lawyers. They should just be looking at the client problem, the complex client problem, then they’d be saying ‘Who do we have in this organization that can help solve this?’ And it wouldn’t matter whether you’re a lawyer or you’re not a lawyer. Yeah I mean do you see that makeup changing in law firms. We’re seeing a lot more capability coming into the business that is not legal. So we have good examples of law firms who are selling technology products for instance. And therefore, if you’ve got technology professionals coming into the business today they still fall under the same type of performance metrics.
Graham Seldon: [00:17:57]
Does your business have to change to keep up with the fact that law firms are changing?
Ray D’Cruz: [00:18:02]
Yeah well yes it does and I think it comes back to those roles and defining what excellence means in terms of contribution for each of those roles. And so the legal technologist clearly has an incredibly important role to play over the next five to 10 years in law firms. I look at a legal technologist who could potentially help create an algorithm that predicts a client need. I think that’s incredibly powerful because you know we’re paying people in law firms an enormous amount of money because they predict client needs. And what if we actually have technology that is able to look at a certain industry or sector in and essentially map a process based on anticipated needs? That person who creates that is enormously valuable to that firm. Does that firm have the flexibility in terms of its reward structure to properly reward that person or will a firm that is more flexibly minded be able to come along and grab that person simply because they’re willing to accept the fact that that person might contribute more than a partner?
Graham Seldon: [00:19:12]
Well, what you’re describing is the role of a good business development person because a good business development person is mapping trends in the market. You’re looking at future opportunities to create services for clients and to win work from clients before they even know that they need that type of service. Yeah. So do you see a time when business development professionals and marketing professionals will be measured on performance and may be in a situation where they could be highly rewarded financially and highly rewarded career wise for being in business development?
Ray D’Cruz: [00:19:45]
Absolutely. I think that’s got to be part of what the future of these firms looks like. I mean the idea that if you’ve got a partnership of 100. The implicit assessment that those hundred partners will contribute more each is just ridiculous when you think about it given the capacity of a lot of business development marketing people or technologists or knowledge managers or great facilitators. We’ve seen examples of non lawyers in firms who are just great facilitators who are trusted with client relationships and who build client relationships they’re better at discovering the underlying needs of the client than some of the lawyers. All right. They just need to be rewarded properly for it.
Graham Seldon: [00:20:35]
Yeah. A reward comes in different ways it’s not always financial. But from a career path perspective I think we are starting to see opportunities for non lawyers to actually do very well in the hierarchy of law firm and to contribute a lot more to business. I mean the barrier was always that you couldn’t be a partner in a law firm if you weren’t a lawyer. But I think the way law firm structures are changing that may change itself in the future or even you couldn’t be a partner if you weren’t a fee earning lawyer.
Ray D’Cruz: [00:21:08]
Yeah we’ve got a lot of lawyers in these firms that are not in fee earning roles but that are contributing an enormous amount. Yeah I think there will be time also when we’ll have business development people who are fee earners and there are business development people now who are fee earners and it’s just that the fee earning metrics is quite skewed because they don’t deliver the legal work to unite in order to do the invoice for that for that legal work. But they create the opportunity for that legal work to be done. And I think the Big Four accounting firms have always been ahead of the pack and in professional services in terms of rewarding salespeople where they can actually say we can see that you’ve helped bring this business in. Can you see a time when perhaps in the legal industry business development people might become more sales focused and they might be rewarded financially and also hierarchically in the business for the amount of business they bring in to the firm.
Graham Seldon: [00:22:02]
You’d like to think that that if a person is helping fulfil the strategy in a serious way that they’re going to be properly rewarded for it regardless of their background.
Graham Seldon: [00:22:14]
Yeah. Let’s talk about culture. So say you’ve spent a lot of time talking to law firms. Your business is very successful here in Australia but also in London. I understand and you’ve done a lot of work with London professional services firms not just law firms. And are you able to, in a nutshell, tell us what makes a great high performing culture just from your interaction with the business. Can you walk into a business and go ‘I already know that this is a high performing business’?
Ray D’Cruz: [00:22:42]
It’s a great question and some people will say – Look you can you can tell the moment you walk into a reception you know what kind of organization it is. It’s a little bit difficult for us because we’re not on the client end of the work so we can’t make that assessment. But we we certainly can observe you know how people work together. And it comes back to this hierarchy issue when we see a firm that we really feel is a high performing firm with the silos out there although the walls aren’t there there’s this overwhelming sense of trust in each other’s capabilities. So you know the the lawyers, the managing partner are trusting the H.R. director. That’s the litmus test for us about whether we’re going to have a good relationship with that firm – whether that trust exists. So I can only talk in a narrow sense but I’m sure that you could extrapolate that out thinking about the changes that have happened in the legal industry in the last 20 years since you set up your business and future thinking.
Graham Seldon: [00:23:55]
Now what are your predictions for what’s happening in the legal industry?
Ray D’Cruz: [00:24:00]
Well I think it’s an exciting time to be part of the industry and to go back to my opening comment about being a lawyer, I think given that you know I’ve ended up in this role because I enjoy technology I enjoy being creative. I think if you’re a young lawyer coming into the profession now or a BD professional or anyone really coming into a firm those opportunities are there now to be creative and to be technology focused. It’s an exciting time. I recently did a presentation with one of our mutual friends, Joel Barolsky, at the Managing Partners Forum and our topic was the firm of 2030. Our conclusion was that the firm of 2030 will be a profoundly human place, which might sound at odds with all of the technology discussion. But our view was that with corporate clients really taking control of the supply chain like they’ve never done before (and this is something all of you or your listeners will empathize with or understand). Though the role of a premium law firm is being more and more narrowly defined and it’s being really put into a box that says complex problem solving premium law firm equals complex problem solving. And so in our view, complex problem solving is really enabled by these really intensely human capabilities: creativity, critical thinking, wisdom and insight. So, we see a future that isn’t necessarily dominated by technology but augmented by technology provided firms can get really good at the human capabilities and one one managing partner in their conference said well this is this is actually really positive because we already think we are pretty good. We already are human places but we just need to get a lot better at it.
Ray D’Cruz: [00:26:02]
And so it’s quite a positive way of looking at it but it does mean that these firms are going to need to get a lot better at teaming and teaming in an agile sense in the way that consulting firms do it. They’re going to need to develop accelerated learning cultures again in the way that consulting firms do because we’re going to come together on a job we’re going to need to come up to speed really quickly we’re going to be a multidisciplinary team we might even be calling on people not just internally but externally. We might be calling on alumni. So the teams will be more diverse in appearance, diverse in mindset because we’re trying to solve complex problems and we know diverse teams are better able to do that. And so we’ll have accelerated learning cultures and so it’s quite an exciting future I think for people who like the idea of working with clients and solving complex problems.
Graham Seldon: [00:26:59]
And you think everybody needs lawyers and now there’s a lot been written about about how robots will take over the future of law firms but actually what you’re saying is humans will take over the future of law firms if we allow ourselves but we all look forward to that.
Graham Seldon: [00:27:16]
Thank you so much for coming in. It’s been really interesting to find out more about your business and about the need for performance metrics in law firms. Thanks for joining us on A Legal High.
Ray D’Cruz: [00:27:25]