Our corporate team led by our equity partner Ondřej Florián has written a series of interesting articles employee stock ownership plans (ESOPs). Now let me share with you our hands-on experience in this area, having built the team of Central Europe’s largest law firm.
When a few fellow lawyers and I founded the law firm 22 years ago, our ambitions were high. Today, after more than two decades of steady – and mostly double-digit – growth, with 330 lawyers and tax advisors, a huge number of great clients, and with the continued and successful cooperation with the largest law firms around the world, I can say that we have achieved something truly exceptional.
How did we do that? There are several reasons, but let me focus on one of them, which I believe is one of the most important: our great team and their motivation. Indeed, without the team and, of course, our great clients, we wouldn’t have succeeded.
Motivated team as a crucial aspect of success
Right at the beginning, we realised that in the industry we’re working in, motivation and retention of people are essential. A great team of people is a critical asset for any law firm, or any consulting group in general.
If you want to build something that lasts, you also need to build long-term relationships and partnerships with key people, who nurture the firm’s relationship with key clients, but also within the team. If senior colleagues had often come and gone, it would have been very difficult to focus on other crucial aspects of success.
When creating our management plan, we didn’t try to reinvent the wheel. Instead, we used our experience from international law firms and discussions with our clients. Likewise, our clients are inspired by our solution when developing their own ESOPs and adjusting them accordingly. The reason is that they know our solution is tried and tested, having worked for a long time even for our most ambitious colleagues.
Our ESOP plan at HAVEL & PARTNERS
It would take dozens of pages, perhaps a smaller book, to introduce our comprehensive employee stock ownership plan. We are happy to discuss its specific parameters directly with our clients to show which details work and why.
In a nutshell, these are the main principles on which our plan is based.
1) We work with our people very early on
We primarily work with our clients on a long-term basis, and we also value long-lasting relationships with our colleagues. Each of them – even paralegals, who have yet a long way to be admitted to a full-fledged employee stock ownership plan – is presented with a career path, a gross timetable, and the job description for each role to know right away what they need to do to satisfy their ambitions.
At a certain seniority stage and in return for meeting various pre-defined criteria, we offer our colleagues, and sometimes even newcomers from another law firm or business, a share in our company with a financial outlook for the next five years. After that, we regularly adjust the parameters on an annual basis, taking into account numerous criteria that have one common denominator = the value of the given manager (lawyer, tax advisor, etc.) for the HAVEL & PARTNERS Group.
2) Communication is essential
When providing legal services, communication with the client is vital. Similarly, this applies to discussions about the motivation and future of each of our colleagues. They need to receive clear and transparent information about the whole employee stock ownership plan, including specific rewards and options of increasing them.
3) Strength in diversity
We firmly believe that there is no perfect archetype of a lawyer or tax advisor. With different strengths or weaknesses, everyone is unique. At the same time, each of us can be a huge asset to the law firm. We have excellent experts in specific areas of legal practice whose publications and academic work have an indispensable value to the firm. At the same time, we have great lawyers and tax advisors who are more dedicated to the business, generating new clients and assignments (as our experts do when publishing and lecturing).
It’s a major challenge for the law firm’s management to evaluate our colleagues’ individual, sometimes hard-to-measure contributions, but it’s a small price to pay for having such a strong and diverse team.
Implications of the employee stock ownership plan
Aside from some administration involved, the implications are only positive, often replicating the benefits in other companies.
It is interesting to see that in some cases, the mentality of our lawyers and tax advisers changes. Once they get a stake in the group, they are already working on their own company, often with tremendous commitment. When dissatisfied, they don’t think about leaving in the first place, but about what steps they should take to improve our group.
With this mindset, everyone tends to embrace the HAVEL & PARTNERS brand as their own, being closer to it than in previous roles. “PARTNERS” is indeed them and their work.
Finally, because of the employee stock ownership plan, the cooperation across our business units have intensified, an implication that is, in our view, enormously important. It’s clear to everyone that one unit’s success benefits every shareholder of the firm. This prevents one business unit trying to uselessly “poach” the client from another unit but enhances instead the team’s effort to convince the client that our law firm is the best choice.
Conclusion
Are you still hesitating whether you should introduce an employee stock ownership plan? Let me invite you to a meeting where I or one of my colleagues will present our plan to you and think together about what would work in your company. Until now, we haven’t seen a management plan that, if set up properly, has not paid off for the company and its founders.
