Freehills Partner Appraisal System: Performance and Equity Presentation

1. Partner Equity – Performance or Parity Presentation for FICPI Australia on Freehills Partner Appraisal System by Brett Connor

2. Freehills Management Structure • Board – 8 directors; 2 external and 6 internal • Executive – CEO; CFO; 4 Practice Group Heads (PGH) • Partners – 200 plus

3. Review Process • Annual Unit Review • submission of unit review document directed to 6 criteria • interview with PGH and CEO – April - May • CEO makes recommendation to the board – June • Board approves unit allocation for the next year • partners advised end of June/ 1 July • 14 day appeal period

4. Objectives of the Appraisal System • team focussed behaviour • coaching and development of people • advancement of the firms strategic client initiative • investment in the future of the firm • sustained performance over a longer term

5. Assessment criteria • contribution to the success of other Partners and staff and the Firm as a whole • client service/satisfaction • staff development/satisfaction • contribution to business development • personal professional development • profitability (including efficiency, financial hygiene and practice management).

6. Contribution to the success of others • Building Capacity - eg assisting partners to develop their practice • Building Collaboration – eg sharing contacts and facilitating introductions • Building credibility – actively taking steps to build market profile/reputation of other partners • Building confidence – supporting, coaching recognising other partners • points system where partners award points to other partners who help them

7. Client service/satisfaction • who are your main clients • what have you done to improve your relationship with the client • any evidence of feedback

8. Staff development/satisfaction • which staff report directly to you • how have you helped each to improve • what have you done to build engagement with the team • have you had any departures and why • results of upward appraisal process

9. Contribution to business development • what new client or new work have you originated • do you have a role in any of the firms client and growth strategies • profiling activities • client surveys

10. Personal professional development • Activities to improve your capabilities and how will that impact your practice, eg • stress management • benefits of coaching • leadership or management • team building/performance • communication skill improvement • work/life balance

11. Profitability • financial hygiene ie WIP days and debtor days • utilisation of staff who report to you • contribution margin ie managed fees less expenses and drawings

12. Policy issues attached to Unit allocation • longer term contribution considered – 3 year view on all criteria • scoring of non financial criteria • need to balance number of units in each practice area against revenue • unit inflation needs to be controlled • loyalty to older partners who have contributed over a long period of time

13. Pros • Pros • partners are remunerated for their contribution to the firm • results based remuneration • rewards results of effort over a period of time • if weighting is not dominated by financials then it encourages teamwork • allows older partners to wind down

14. Cons • Cons • can lead to competition between partners wrt unit levels • large management burden each year • need transparent systems for non financial metrics

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