Bonuses = Toxic Law Firms, Pt. 3: This Is Your Brain on Bonuses

So as I wrote about here and here, Dan Pink shows in his book Drive that carrot-and-stick motivation doesn’t produce better quality work from lawyers and other conceptual thinkers. Yikes.

Egg with face being cracked on frying pan

If-then monetary rewards, like law firm mega-bonuses, create the brain of a drug addict. Just what you went to law school for, to hang with the addicts, right?

Even more horrifying, if you live and die by the quest for money as your sole reward for work, are the findings that the if-then money carrot can (and often does) create incentives for some really bad behavior. You don’t even have to look at research to know this is true, because corporate history is littered with examples:

  • Enron’s lofty revenue goals precipitated a race to meet them by any means available, so employees took numerous ethical and accounting shortcuts;
  • The financial sector’s collapse of 2008, caused by chasing short-term gains and ignoring long-term market weaknesses;
  • Ford’s maniacal focus to produce a car at a specific price point, by a specific time, at a specific weight, led to omitting crucial safety checks, and gave us the Ford Pinto.

If-then financial incentives, like those outsized bonuses, can also create addiction. Seriously. Not to alcohol or drugs, but to the incentive itself. As Pink puts it, “cash rewards and shiny trophies can provide a delicious jolt of pleasure at first, but the feeling soon dissipates—and to keep it alive, the recipient requires ever larger and more frequent doses.”

You know instinctively this is true, if you work in BigLaw. Once you’ve gotten a bonus or two, you start expecting it, and stop appreciating it. The only thing that grabs your attention is an even bigger bonus. The problem, of course, is that to give huge bonuses, firms have to get the money from somewhere. And it ain’t gonna be from the partner’s pockets if they can wring yet more hours out of associates. There is no shortage of associates who will play this game, at least for another year, right?

Bonuses Act Like Crack on Lawyer Brains

Here’s the addiction part, and it’s fascinating. Neuroscientist Brian Knutson scanned the brains of healthy volunteers with a functional MRI, which captures images of bodily structures as they work. (So cool!) When participants knew they had a chance to win some cash, a part of brain called the nucleus accumbens was showered with dopamine.

The fascinating part is that the same physiological process, showering the nucleus accumbens with dopamine, happens in drug addicts. As Pink says, “if we watch how people’s brains respond, promising them monetary rewards and giving them cocaine, nicotine, or amphetamines look disturbingly similar.”

We all know that addicts make crazy short- and long-term decisions. Knutson also showed that with if-then rewards, activating the nucleus accumbens predicts “both risky choices and risk-seeking mistakes.” I love Pink’s take on it:

In short, while that dangled carrot isn’t all bad in all circumstances, in some instances it operates similar to the rock of crack cocaine and can induce behavior similar to that found around the craps table or roulette wheel—not exactly what we hope to achieve when we “motivate” our teammates and coworkers.

So it is actually true that as a lawyer, you are often dealing with crazy, dysfunctional behavior, whether or not your colleague has a drug or drinking problem. If they are motivated chiefly by money, they behave like an addict.

Yeah, just the way we all want to spend our days, right?

So What Can Possibly Replace Bonuses? (Hint: Not Money)

At this point, many of you are probably aghast, and wondering how on earth lawyers can be motivated to work if not for the money. And I’m betting you would laugh hysterically if I suggested that law firms drop their bonus plans, lower their salaries, and instead:

  • Give meaningful, timely and useful feedback;
  • Institute useful training and mentoring;
  • Insist on civility between all lawyers at the firm, as well as in lawyer-staff interactions, and fire those who consistently don’t behave well;
  • give associates actual say in which projects they are assigned;
  • Prohibit calling lawyers into the office on weekends and expecting Crackberry responses except for life-and-death (or maybe jail) emergencies; and most radically
  • Penalize lawyers who bill more than 2,000 hours annually, and also penalize their supervising partners.

Let’s call it A Modest Proposal for Lawyers.

What do you think? What would be the single most useful, instrinsically motivating change that law firms could make?

Jennifer Alvey is a recovering lawyer who took a decade to get over the billable hour mentality once she left law practice. But eventually, sanity won out. Join the Unhappy Lawyers Book Club on Sept. 15, 2011 at 1:30pm ET to discuss Drive and how you can add sanity, aka intrinsic motivation, to your lawyer work and your life. To participate in this free event, dial (209) 647-1000. The access code is 535240# (yes you need to enter the # sign). Or email jalvey@jenniferalvey.com to get on the Unhappy Lawyers Book Club email list.

13 thoughts on “Bonuses = Toxic Law Firms, Pt. 3: This Is Your Brain on Bonuses

  1. Haha! It’s a wish-list that I’ve personally sought to live by. Obviously, there’s no way for a single lowly associate to implement the last proposal. But I’ve practiced all of the other principles (to the extent possible) when managing junior associates and staff.

    At first, I was shocked at the loyalty and high praise I received from the people working under me. Now, it only confirms just how disfunctionally the average BigLaw office is managed. To my mind, I was only providing the most basic level of management that any employee should expect. That any employee needs in order to perform their work.

    Now I’m working at a new and understaffed BigLaw office. Work is too hard to come by. Now, the partners run the deals, and I can no longer work independently or run my own team. Once again, I get to experience first hand the lack of management.

    The truth is, the promise of bonuses and ever larger salary never appealed to me. I pursued BigLaw for entirely different reasons. Maybe that has provided clarity necessary to see the disfunction of the BigLaw/Billable Hour model. From the beginning, it was blindingly obvious to me.

    But the culture is too well entrenched in the BigLaw firms. I don’t think they are capable of change. They will continue as before, until the legal market can no longer support them. Innovation will come from smaller, innovative start-up firms or legal service providers. If you’re in BigLaw, the important thing is to realize this, and just get out. You can’t change it.

    Apologies for the length of my post.

      • I wanted to work abroad, in a certain area of the world I liked. I wanted a ‘respectable’ career. And like so many other budding lawyers, I didn’t know what other career path to pursue to reach those goals. As far as law firm practice went, BigLaw was the most promising means of practicing law overseas.

        Even a first-year’s salary at BigLaw was more than I ever imagined making. And once my student loans were paid off, I never felt much need for a higher salary.

        Does this show a certain lack of ambition? Perhaps. But I’d say that my ambition is simply not money-focused. At least, not single-mindedly focused. I never turned down any salary increase!

        In any case, law school and BigLaw have allowed me to reach my goals. Now that I’ve climbed that mountain, I could stay on it for the rest of my life. But I’ve found life on this peak to be unpleasant and unsatisfying. So it’s time to move on.

    • Well, change happens for the unwilling when they’re out of any options that are more palatable. I do think that day is coming soon, because the big corporate clients are in open revolt about excessive legal fees. When the next big economic game changer comes along (like when the interwebz exploded in the late 1990s), law firms will hemorrhage associates just when they need them most. I’ll be waiting with my bucket of popcorn . . .

      • I though corporate clients always complained about legal fees. However, since BigLaw is a Good Brand and Full of Prestige and Power, what choice do the poor Global Corporations have? Plus BigLaw can obtain an Army of Underemployed Document Reviewers to staff their cases on an Economically Efficient Basis.

        The next “big economic game changer” is the large scale rollout of the information tech wave and the initial rollout of the biotech wave. But we have to get through the next 10 years (?) of global debt mess first.

        Of course, that’s running headlong into the decline of cheap energy sources, which is probably going to result in the reversal of globalization and ultimately a reversal the currently situated industrial/post-industrial economy.

        Fun!

      • I agree with Jenny. The big global clients ARE in open revolt about excessive legal fees. From what I’ve seen, the BigLaw firms are accepting smaller fees, and writing off a lot of billable hours that they just can’t collect from the clients. It’s not sustainable. I think the Powers-That-Be expect this state of affairs to be temporary. Once the economy recovers, they can go back to stratospheric billing rates and hours.

        But I think the game has changed. The “Good Brand and Prestige” of BigLaw has kept them insulated so far. But clients are fighting with the firms for reduced fees. Once a few major, path-leader clients switch to alternate providers that charge lower costs as part of their business, the stampede away from BigLaw will begin.

        Once that happens, the big firms will need to lower their billing rates in order to survive. Some firms may do so (and take the hit to their prestige). Others may hold on until they are broken.

        So again, why am I slaving away, chained in front of a computer sixteen hours a day? The money’s good. But it’s not going to last, one way or another. So make your plans to get out. And once the plans are set, jump.

  2. Polybius says:

    ” The big global clients ARE in open revolt about excessive legal fees. From what I’ve seen, the BigLaw firms are accepting smaller fees, and writing off a lot of billable hours that they just can’t collect from the clients. It’s not sustainable. I think the Powers-That-Be expect this state of affairs to be temporary. Once the economy recovers, they can go back to stratospheric billing rates and hours.”

    I don’t think the economy is going to “recover” until the debt is washed from the system. The Powers-That-Be are myopic. Always have been I guess.

    Aren’t you overseas? That may give you a different perspective.

    I like being in front of a computer when the U.S. stock markets are open. That way I can watch the recession and bear market in real time.

    I’m doing TV law (rather than Big Law) right now. Although my practice is currently dependent on massive ongoing federal debt orgination.

    I wonder if Alvey changed the title of this blog from “Leaving the Law” to “Finding What you are Meant to Do” or “Leaving the Law – And Learning to Live Well” or something, it would attract more commenteers.

    Kind of like that “:Lawyers with Depression” blog (which Alvey guest blogged on once). It’s title is so….down. No commenteers!

  3. Glad I clicked through to the previous posts from today’s post – I missed this last week.
    I wrote a paper in law school about why law firms will die if they continue with this compensation model. I identified similar leverage points, and similar suggestions for change.
    Maybe if we all keep saying it, it will happen?
    Or maybe we just need to start a whole bunch of new firms and practice what we preach.
    (You can read the whole article in J. Kim Wright’s book Lawyers as Peacemakers)

    • @Gretchen: You know, the only people that these ideas are rocket science to are lawyers. Just goes to show that intellectual gifts don’t equal people skills. You can have both in the same person, but it’s not common.

  4. Pingback: The Bones of (Legal Career) Change « Leaving the Law

  5. Pingback: Instrinsic Motivation for Lawyers: All in One Place « Leaving the Law

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