Saturday, 26 February 2011

If you aren't in on Saturday, don't bother showing up on Sunday

When he was CEO of Goldman Sachs, Hank Paulson reportedly had a notice sitting on his desk that read "If you aren't in on Saturday, don't bother showing up on Sunday". Very droll. The message was intended, no doubt, to make the point that it would take 24/7 commitment to keep up with his legendary work rate. If you'd been one of his team, maybe you'd have signed the Faustian pact. By that point, Paulson had amassed a personal fortune estimated at $600M. If you'd already made it onto his staff, presumably you'd be sitting on a paltry $100M. If you worked hard and got lucky, you too could hope to get the top job.

For those who aren't familiar with it, "tournament theory" makes predictions about what happens when there is very sharp differentiation in reward inside an organization. The best writing on this is by Tim Harford, the FT's Undercover Economist (http://bit.ly/nGfNq). In a nutshell, the theory says that businesses find it very difficult to measure and reward competence. As a proxy, they set up a tournament, where marginal differences in performance lead to extremely different outcomes in reward. The classic example given is of two gladiators. Both go into the ring but, during the ensuing combat, one will die and one will come out alive. The difference in outcome is very stark. The reasoning goes that your boss is overpaid not to motivate him/her but to motivate you to try to get promoted. The theory is supposed to explain some of the more extreme behaviour you see in business life.


What could possibly be a better example of tournament theory in the workplace than the banks? The extreme differentials in pay and bonuses seem to be exactly the kind of environment where tournament behaviour will thrive. Judging by some of the more lurid employment tribunal claims, perhaps it does. However, before moving on, we ought to record that Paulson's work rate benefited all of us when he became one of the key players in preventing the world from sliding into the abyss in October 2008, the month when the ATMs nearly shut and the much-promised "cashless economy" briefly came to mean all of us growing potatoes in our back gardens.


I don't personally find tournament theory wholly convincing, because I'm unpersuaded (at least consciously) that money is this central as a motivator. However, when you put it together with theories on how people compete for status, I suspect there is some truth in it.


If you've read this far, you're probably thinking "where's he going with this?" The question I've set out to explore is "why is overwork so endemic amongst lawyers?" When I trailed this topic two weeks ago, I admitted that I didn't have any easy answers. That said, the simplest point to make is that, for law firms, the hourly billing system rewards effort rather than results. Clearly, time-based billing systems are one major cause of overwork amongst out-house lawyers. If you work harder, you bring in more money, so you overwork. It's so obvious, it's barely worth saying. However, it's not a sufficient explanation.


Tournament theory also plays a part. In many law firms, the reward differential between those at the top of the equity and the associates is steep enough to support the theory. The associates think they have to work like hell to make partner, although they're wrong about this. Partners in law firms don't make up people who work hard. They make up people they think will help make them rich. The way to make partner isn't to slave away, it's to look like you're going to outclass all the current partners. 


But tournament theory isn't a complete explanation of overwork among lawyers either. It fails to explain overwork by partners who've already made it to the top. It also fails to explain overwork by in-house lawyers, which is very widespread. Several of the in-house Tweagles I follow seem to work regularly at the weekends. I confess I sometimes do too.


So what's the answer? Is it that many in-house lawyers trained in law firms and overwork has become their new normal? For some that might be true. Or is it something endemic in our nature? Is this a self-selecting problem for the profession? Does becoming a lawyer attract a particular kind of personality? Perhaps. 
In an interesting and timely post this week, Paul Gilbert published an article called "Do not be the tenant of your problem, but the architect of your solution" (http://bit.ly/fHvdwA). A core thesis of Paul's post is that this is a problem of mentality. Collectively, we've allowed ourselves to believe that being busy is more important than getting results. 

I think Paul is probably right that mentality is a major part of it, although I suspect it's a function of "all of the above" and some factors which aren't covered here. If so, as a profession we've slipped into the mistake of the law firm associates who think that working hard and being busy is the route to being partner. That's a pretty serious blunder for a large group of smart people to make.


I find it painful to agree with this conclusion, even in part, because it conflicts with a particular prejudice of mine. I'm suspicious of people who claim that achievement can be effortless. This is something of a cult in England (and I mean England not Britain). You might call it the cult of amateurism. This is the mindset which believes that some clever chaps in Cambridge split the atom with a biscuit tin and a few pieces of string or that David Gower never had to practice cricket, just turn up at the crease. It might sound romantic, but this is dangerous nonsense. In his book Outliers, Malcolm Gladwell argues that to be good at anything, you have to spend more than 10,000 hours doing it (http://bit.ly/7r8WB). That sounds a little too neat, but he's headed in the right direction. Like it or not, the future really does belong to the professionals not the amateurs.


So, where does that leave us? To be good at anything, you have to work hard. But it's results, not hard work that count. In broad terms, our profession has got confused about this fact. Perhaps the smart associates have the right answer: work like hell, get good at lawyering and then swan around making it look effortless. Just one word of caution. While you're putting in the required 10,000 hours, don't get confused and start believing that hard work is an end in itself.

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Following my elevator pitch on Legal's role, I'm heading in a similar direction next time. The topic will be "Name the behaviour - what makes a lawyer successful in-house?"

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