Around the offices of Horwood Marcus & Berk, it used to be pretty easy to tell when it was that time.  Slowly but surely, the Chicago firm’s associates would make their way down to the accounting office where, posted on the wall for all the firm to see, were tallies of their billable hours for the previous month.
               Then, as if on cue, the whispering, the insults and the finger-pointing would begin.  The firm had always prided itself on being a refuge for big-firm lawyers from the demands of relentless billing, yet its young lawyers viewed the postings as placing a premium on just that.  And they reacted by blaming one another for hogging work and by justifying their own low billable hours through criticism of their practice groups or clients.  The practice, partner Jordan Goodman concedes, “created a lot of ill will.”
               So the firm put an end to the posting.  What was supposed to be motivating associates to work harder and happier was instead sinking morale. 
               Internal competition is nothing new in law firms.  In fact, lawyers and experts alike call internal competition a necessary management tool that fuels growth and profitability.  Indeed, sophisticated accounting software now allows law firm management to keep score on everything from lawyers’ billable hours to practice group profitability.
               And firms often find willing participants among their ranks.  Lawyers are by nature smart, driven and entrepreneurial people, and competition can be an inevitable consequence when there types work together in a profession where value boils down to cold, hard numbers.  From the obvious, such as billing reports, to the more oblique – unofficial contests to stay the latest, arrive the earliest or pull the most all-nighters- competition on some level has always been business as usual.
               But whether internal competition is a good or bad thing creates almost as much of a divide as the dissemination of partnership points at year-end.  It’s clear that while a little competition can be a good thing, too much of it is not.  Where one draws the line, however, is anyone’s guess. 
               “What a lot of people do not realize is that some [competition] is a good thing because it can inspire people who are not performing to do better.  But it can be carried to extremes where it becomes counterproductive and works against the whole,” says law firm consultant Ward Bower of Altman Weil Inc. in Newtown Square, Pa. 
               Law firms, because of the way they compensate and advance lawyers, are in an especially tricky and precarious situation when it comes to internal competition.  Firms that value nothing but hours and business origination create incentives for lawyers to think of themselves first and the client last.  Firms that do not, by the same token, may find themselves losing their edge in the marketplace.  Or worse.

Striking the Right Balance

               Although posting billing totals failed to appropriately motivate their associates, the Horwood Marcus partners haven’t abandoned the concept of internal competition as a motivator. 
                In fact, the firm hasn’t tried to scale back its attempts at working the internal competition angle when it comes to encouraging partners to bring in new business.
                The firm unabashedly-and understandably-values new business, and the currency used to express appreciation for rainmakers in the origination credit. But doling the credits out, Goodman admits, is not always easy.
                That’s because the credits can be split when, for example, one lawyer is responsible for origination but another is assigned to the matter.  When a split is possible, Goodman says, firm partners have upfront conversations to determine how credits will be worked out.  Usually this approach solves the problem, but not always.  “There are those who do not want to share, but then find themselves having a hard time getting support,” he says.  “But we allow it to exist.”
                Goodman says the firm decided to let individual partners hash out origination credits up front to curtail the end-of-the-year disputes that happened among partners previously.  Even though some of the splits end up unresolved, Goodman says the system has worked well enough for the lawyers that the partner are happy with the way it works out for all of them. 
                At Godwin Gruber in Dallas, internal competition is alive and well at both the associate and partner levels.   Executive committee member Michael Hurst says the firm actively encourages competition among its lawyers. 
               The firm holds an annual intrafirm mock trial competition for associates where the winners are rewarded financially and with an engraved plaque bearing their names that’s added to the walls of the firms’ mock courtroom.  When it comes to rewarding rainmaking, partners and associates alike get bonuses for bringing in new business. 
               The firm also has a two-tier partnership and equity status is not sacred.  Lawyers can go from tier to tier in any given year based on their performance, Hurst says.
               Hurst, speaking for himself, says he believes that some level of competition inside the firm is healthy.  “I do believe it makes attorneys work harder and bring in more business.  If attorneys are not motivated by their peers, they are probably not the kind of attorneys that I want to work with.”
               The firm even has taken the Horwood Marcus posting approach and kicked it up a notch:  It distributes monthly statistical information on billing and business origination about every lawyer and paralegal in the firm to every lawyer and paralegal in the firm.