The Cost of inefficient Partner Meetings

Partner meetings are a vital part of partnership governance. However, if not conducted in an efficient manner, they are not only a potential waste of your time, but also very costly. A discussion about a t-shirt’s color can easily cost a firm several thousand dollars.

Image: Christina Morillo/Pexels

The Color of the Running Team’s T-Shirt

A while ago I had a discussion with the managing partner of a large Swiss law firm. During our discussion he made a comment to the effect of: “Imagine you are sitting in a room with 40 partners, each of whom is usually billing several hundred Swiss francs per hour. And you’re sitting there discussing the color of the shirt that the firm’s running team will be wearing at the upcoming city run.” Another managing partner I talked to once mentioned that some of the most difficult discussions they have in their firm are about flower bouquets and Christmas cards, because everyone has an opinion on those. And a third managing partner once told me that he thinks many of the discussions and debates occur for the sole purpose of debating, because it’s simply what lawyers do and what they’re good at.

Don’t get me wrong, I will not argue that debates and discussions are not important and necessary – sometimes even about minor things, especially if it serves a higher purpose (bonding, team spirit, regulation of participants’ energy levels etc.). What this article is intended for is simply to raise awareness about “opportunity costs”, as will be laid out in the next section.

Time is Money

The managing partner I quoted in the previous section regarding the discussion about the running team’s shirt’s color added to the above quote: “You can calculate for yourself how much that cost us”. Of course, it does not cost anyone anything in terms of cold hard cash, however, said managing partner is aware of the opportunity costs of inefficient meetings or unnecessary discussions and debates.

Opportunity costs refer to the loss of potential gain of another opportunity, which is lost due to the chosen opportunity. In our t-shirt example the chosen opportunity refers to the time spent discussing the color of the running team’s shirt. And while some might argue that this decision deserves some debate, most will probably second my argument that there are basically only two choices: a) a color that is good for running (because it cools your body or because sweat stains are less visible) or b), and this is maybe the even more logical choice, the color that matches the law firm’s corporate identity and brand.

Let’s add some numbers and assume that 40 partners were present at said meeting, the average standard rate is 500 $/h, partners can bill about 50% of their working time and the discussion lasted about 30 minutes. This would amount to opportunity costs of 5’000 $ (= 40 x 500 $/h x 50% x 0.5 h), which is enough to buy every runner on the team not only a shirt, but rather an entire set of top-notch fitness gear incl. running shoes – expenses most partners would probably not be willing to bear. Other opportunity costs, albeit non-financial and therefore more difficult to accurately portray, include a longer lunch break you could have enjoyed, getting home earlier to spend more time with the kids or to finally try that Peleton bike that you thought was a good investment during the lockdowns.

How to avoid Opportunity Costs?

The most straight-forward way to avoid the opportunity costs of unnecessary discussions in partner meetings is to avoid a discussion at all. By defining who has the authority to decide which matters, these decision costs can be minimized. If such definitions are not possible, e.g. in a small and strongly consensus-driven law firm, the job of reducing opportunity costs lies upon the person preparing the meetings. Without going into the importance and possibilities of agenda-setting in this article, I want to present three options of how the t-shirt discussion could have been avoided or minimized:

- Few/two options instead of an open question: “I’m happy to inform you that 12 of our lawyers and staff members will represent our law firm at this year’s city run. Do you think they should rather wear a blue or green shirt? Let’s make this quick by a simple show of hands.”

- Rhetoric question: “I’m happy to inform you that 12 of our lawyers and staff members will represent our law firm at this year’s city run. I think it would be a good move to sponsor some blue shirts corresponding with our corporate identity. Does everyone agree with me?”

- Decide and ask for forgiveness (if necessary) instead of asking for permission: “I’m happy to inform you that 12 of our lawyers and staff members will represent our law firm at this year’s city run. Endorsing this great initiative and to adequately support our colleagues, we decided to provide them with t-shirts in our corporate colors.”

With these simple but effective strategies you can make sure that less fruitful discussions in partner meetings are kept to a minimum. But opportunity costs obviously not only arise in partner meetings but rather occur when- and wherever decisions are made. However, while the costs of most decisions are inherently uncertain, the opportunity costs of unnecessary discussions can be easily calculated. And if you are an equity partner, these costs directly and negatively impact the amount of money you will be taking home at the end of the year. Your time is valuable, make it count.