A Firm's Future Depends on Selection of Partners to Serve As Managers

Democracy has such a nice ring to it. But when it becomes the dominant management structure in a law firm ' especially a large law firm ' the freedom gained may well be freedom to watch the firm become slow to respond to problems and opportunities, with resulting hits to the bottom line.

A total democracy in many firms has been exemplified by virtually every non-routine administrative matter, many which could be considered routine, having to be brought before a partners' meeting. The result very well may be delayed decisions, uninformed partners voting on matters on which others should do their own homework and decision-making, and partnership meetings weighed down with trivia. Everybody's business becomes nobody's problem.

Better managed firms assign and recognize administrative responsibility and accountability. They select attorneys with available time, management skill and motivation to carry out these responsibilities. This article describes some approaches for selecting partners to manage administrative and substantive areas of the practice.

Management of legal specialties and management of financial and administrative matters develop as a firm grows in size. Organizational policies need to be communicated to, and accepted by, the lawyer. Accountability to the firm needs to be understood by the individual. If not, the firm can develop an inability to function effectively. And such resultant ineffectiveness can yield to lessened esprit de corps, and ultimately create reduced economic circumstances.

Larger firms frequently develop a representative government for administrative matters.

Major Management Functions

The management committee is entrusted with the responsibility of general management of the firm. As a firm continues to grow, it is important that this committee have confidence in the ability of the organization of the firm to follow its policies and to manage profitability, client matters, human resources and technology.

Among the management committee's major organizational concerns are: lawyer direction of administration; financial and professional personnel management; specialty and client management; forward planning and appraisal of results; and partnership affairs.

It is an important function of the partnership to ensure a good management committee and of the management committee to ensure competent managers. In some situations, the talent for the principal management posts may be on the management committee. If so, and these people are selected, they should have time available and the will to accomplish the best possible results in their assignment.

Some management activities are likely to require significant time commitments of certain partners. An attempt is made in Chart 1, below, to estimate the management hours per year that may be consumed by those who head certain functions.

[IMGCAP(1)]

Other management function positions that may also have substantial time commitments include the hiring partner, or a partner selected to assist or share the burden of managing a large specialty group.

It is possible for a managing partner to handle a combined responsibility for finance, professional personnel and administration. However, all of the talents required for top-level thinking in these areas may not be possessed by a single individual. Thus, as an example, it is likely that a human-resources-oriented individual may wisely select a partner to assist in finance.

It is also sound management policy for firms with growth expectations to ensure a competent and appropriately compensated staff in support of their lawyer management. The staff should be of sufficient intelligence; schooling; training; and experience to complement and supplement lawyer management.

Management Committee Duties

The management committee should meet periodically at a regular time. It should maintain an overview of the major organizational areas of the firm ' whether of specialty groups or their subdivisions, client teams, branch offices, administration and others.

The management committee should approve the appointment of chairpersons of major committees or the designee for a major administrative post or project. When beyond the power of those appointed, and those occasions should be rare, the management committee should settle administrative differences between those involved.

The management committee should exercise overall policy guidance for the firm and decide on major issues concerning client acceptance and client responsibility that cannot be resolved by those directly concerned.

It should review the monthly financial and economic reports, and provide an annual and continuing review of budget, strategic planning and major administrative activities.

The management committee should decide on conflicts of interest, directors' positions, ethics questions and matters of professional liability that cannot be otherwise resolved. It should review recommendations on partnership admission and advancement toward percentage partnership.

Further, it should review the costs of the entire compensation package for employed lawyers and non-lawyers.

The committee should prepare or review income distribution recommendations for the firm. It should maintain the partnership agreement and matters pertaining to the withdrawal, retirement, death or disability of a partner. It should designate “partners-in-charge” of branch offices, and plan and manage directly or indirectly all other functions and activities relating to the firm.

Key Manager Qualifications

The management organization supporting the legal effort should be effectively managed to enhance the efforts of attorneys in providing services for clients in a cost-effective manner. Management posts must be covered by those best qualified to handle these duties with relative ease and optimum results. Management responsibilities should be recognized as an extra commitment undertaken by some lawyers, usually in addition to their legal work.

Attorneys who are gifted managers as well as talented lawyers are in a position to perform a unique service. Conversely, attorneys who are not talented in administration for key management aspects of the firm can be a disservice and impede progress.

Those selected must also be willing to serve in the assigned management capacity, and be in a position to manage their time and availability so that the expected performance is provided. Those lawyers or non-lawyers selected for management positions are expected to engender the respect of all partners and associates. Their support of the firm's management is essential.

Managing Partner Qualifications

Should the firm decide to establish the position of managing partner, the qualifications include:

• Leadership ability;
• Business sense and a good sense of timing;
• Breadth of experience and view;
• Creativity;
• Ability to plan and organize;
• Background in law firm management, economics, finance and accounting;
• Ability to be a good and judicious delegator;
• Capacity to review results;
• Ability to identify with the entity concept for a law firm;
• Ability to interpret or develop policy; and
• Ability to handle crisis.

Committee

If an assignment can be handled by an individual rather than a committee, then this course should be followed. Other than the management committee, the respective committee chairpersons should select their own committee members. In larger firms, members of a committee are normally chosen from lawyers who are not members of the management committee or from the same subdivision of a specialty group.

To a reasonable extent, a further purpose of the firm's committees and other management assignments is to spread overall operational knowledge and responsibility among qualified and committed partners regarding all matters, both legal and otherwise.

For such purpose, appointments to particular committees or assignments are generally to be limited in tenure. Committees should meet and choose meeting times, as appropriate. All periodic (regular) meetings should be preceded by an agenda and followed by abbreviated minutes (chairperson's responsibility, even if the committee has a designated secretary), eliminating only such items as the committee may deem proper. Distribution of the agenda and minutes shall be to the members of the related committee(s).

Management of Practice Areas

Each head of a substantive practice area should be responsible and accountable for planning and appraising the proper and profitable handling of work within his or her jurisdiction.

While individual leaders will inevitably emerge from certain subdivisions of client work or areas of law, these division leaders are expected to work in concert with their chairperson.

All department heads are responsible for overseeing the system for allocation of work and quality control within their area of law. If the number of partners, associates, paralegals or others assigned to the area of law is not sufficient, the department head should request assistance from the chairperson of the professional personnel committee (for legal personnel or law clerks), or the administrator (for non-legal personnel).

The department heads should review and recommend to the financial partner a policy for fees and billing in their jurisdiction, within the framework established for the firm. They should be responsible for planning for business development (or contraction) and for anticipating new developments within their area of law.

The heads should oversee collecting, retaining and indexing legal forms, memoranda, opinion letters and important legal efforts for their department, within the system of the firm and in coordination with the librarian. They should be consulted on continuing legal education efforts for the area of law under their jurisdiction. They should advise on department policy within guidelines developed by the firm for signature authority for legal matters, letters and opinions, and attend monthly meetings of department heads and provide, at least quarterly, data for the executive committee's evaluation of the economics of professional services rendered by their departments.

During the course of firm business, all department heads should provide advice, when requested or if appropriate, on the acceptance of new business. They should consider conflict of interest, ethics, merits and strength of case. Other factors are the time required, nature of the client, ability to handle the work, basic expertise available, “one-shot deals,” and availability of lawyers.

The policies of the firm on desirable or undesirable work, economics of the case and value of the firm are additional considerations. If the department head is uncertain whether to accept a case, he or she should consult with the executive committee chairperson. Where questions arise on new directions or policies on business acceptance, the executive committee chairperson should present the case to the executive committee.

Conclusion

The management abilities and leadership skills of lawyer managers include a willingness to spot the unusual and to consider a new point of view. If the managers of administrative and substantive practice areas possess unusual skills, they can add to the capability of all of the lawyers and remarkable gains accrue from their efforts.

Joel A. Rose, a member of this newsletter's Board of Editors, is a certified management consultant and president of Joel A. Rose & Associates, Inc., Management Consultants to Law Offices, in Cherry Hill, NJ. He has extensive experience consulting with private law firms, and performs and directs consulting assignments in law firm management and organization, strategic and financial planning, lawyer compensation, mergers and acquisitions, and legal services marketing. He has extensive experience planning and conducting retreats, and special expertise resolving problems within firms. Rose may be contacted at 856-427-0050 and [email protected].

Democracy has such a nice ring to it. But when it becomes the dominant management structure in a law firm ' especially a large law firm ' the freedom gained may well be freedom to watch the firm become slow to respond to problems and opportunities, with resulting hits to the bottom line.

A total democracy in many firms has been exemplified by virtually every non-routine administrative matter, many which could be considered routine, having to be brought before a partners' meeting. The result very well may be delayed decisions, uninformed partners voting on matters on which others should do their own homework and decision-making, and partnership meetings weighed down with trivia. Everybody's business becomes nobody's problem.

Better managed firms assign and recognize administrative responsibility and accountability. They select attorneys with available time, management skill and motivation to carry out these responsibilities. This article describes some approaches for selecting partners to manage administrative and substantive areas of the practice.

Management of legal specialties and management of financial and administrative matters develop as a firm grows in size. Organizational policies need to be communicated to, and accepted by, the lawyer. Accountability to the firm needs to be understood by the individual. If not, the firm can develop an inability to function effectively. And such resultant ineffectiveness can yield to lessened esprit de corps, and ultimately create reduced economic circumstances.

Larger firms frequently develop a representative government for administrative matters.

Major Management Functions

The management committee is entrusted with the responsibility of general management of the firm. As a firm continues to grow, it is important that this committee have confidence in the ability of the organization of the firm to follow its policies and to manage profitability, client matters, human resources and technology.

Among the management committee's major organizational concerns are: lawyer direction of administration; financial and professional personnel management; specialty and client management; forward planning and appraisal of results; and partnership affairs.

It is an important function of the partnership to ensure a good management committee and of the management committee to ensure competent managers. In some situations, the talent for the principal management posts may be on the management committee. If so, and these people are selected, they should have time available and the will to accomplish the best possible results in their assignment.

Some management activities are likely to require significant time commitments of certain partners. An attempt is made in Chart 1, below, to estimate the management hours per year that may be consumed by those who head certain functions.

[IMGCAP(1)]

Other management function positions that may also have substantial time commitments include the hiring partner, or a partner selected to assist or share the burden of managing a large specialty group.

It is possible for a managing partner to handle a combined responsibility for finance, professional personnel and administration. However, all of the talents required for top-level thinking in these areas may not be possessed by a single individual. Thus, as an example, it is likely that a human-resources-oriented individual may wisely select a partner to assist in finance.

It is also sound management policy for firms with growth expectations to ensure a competent and appropriately compensated staff in support of their lawyer management. The staff should be of sufficient intelligence; schooling; training; and experience to complement and supplement lawyer management.

Management Committee Duties

The management committee should meet periodically at a regular time. It should maintain an overview of the major organizational areas of the firm ' whether of specialty groups or their subdivisions, client teams, branch offices, administration and others.

The management committee should approve the appointment of chairpersons of major committees or the designee for a major administrative post or project. When beyond the power of those appointed, and those occasions should be rare, the management committee should settle administrative differences between those involved.

The management committee should exercise overall policy guidance for the firm and decide on major issues concerning client acceptance and client responsibility that cannot be resolved by those directly concerned.

It should review the monthly financial and economic reports, and provide an annual and continuing review of budget, strategic planning and major administrative activities.

The management committee should decide on conflicts of interest, directors' positions, ethics questions and matters of professional liability that cannot be otherwise resolved. It should review recommendations on partnership admission and advancement toward percentage partnership.

Further, it should review the costs of the entire compensation package for employed lawyers and non-lawyers.

The committee should prepare or review income distribution recommendations for the firm. It should maintain the partnership agreement and matters pertaining to the withdrawal, retirement, death or disability of a partner. It should designate “partners-in-charge” of branch offices, and plan and manage directly or indirectly all other functions and activities relating to the firm.

Key Manager Qualifications

The management organization supporting the legal effort should be effectively managed to enhance the efforts of attorneys in providing services for clients in a cost-effective manner. Management posts must be covered by those best qualified to handle these duties with relative ease and optimum results. Management responsibilities should be recognized as an extra commitment undertaken by some lawyers, usually in addition to their legal work.

Attorneys who are gifted managers as well as talented lawyers are in a position to perform a unique service. Conversely, attorneys who are not talented in administration for key management aspects of the firm can be a disservice and impede progress.

Those selected must also be willing to serve in the assigned management capacity, and be in a position to manage their time and availability so that the expected performance is provided. Those lawyers or non-lawyers selected for management positions are expected to engender the respect of all partners and associates. Their support of the firm's management is essential.

Managing Partner Qualifications

Should the firm decide to establish the position of managing partner, the qualifications include:

• Leadership ability;
• Business sense and a good sense of timing;
• Breadth of experience and view;
• Creativity;
• Ability to plan and organize;
• Background in law firm management, economics, finance and accounting;
• Ability to be a good and judicious delegator;
• Capacity to review results;
• Ability to identify with the entity concept for a law firm;
• Ability to interpret or develop policy; and
• Ability to handle crisis.

Committee

If an assignment can be handled by an individual rather than a committee, then this course should be followed. Other than the management committee, the respective committee chairpersons should select their own committee members. In larger firms, members of a committee are normally chosen from lawyers who are not members of the management committee or from the same subdivision of a specialty group.

To a reasonable extent, a further purpose of the firm's committees and other management assignments is to spread overall operational knowledge and responsibility among qualified and committed partners regarding all matters, both legal and otherwise.

For such purpose, appointments to particular committees or assignments are generally to be limited in tenure. Committees should meet and choose meeting times, as appropriate. All periodic (regular) meetings should be preceded by an agenda and followed by abbreviated minutes (chairperson's responsibility, even if the committee has a designated secretary), eliminating only such items as the committee may deem proper. Distribution of the agenda and minutes shall be to the members of the related committee(s).

Management of Practice Areas

Each head of a substantive practice area should be responsible and accountable for planning and appraising the proper and profitable handling of work within his or her jurisdiction.

While individual leaders will inevitably emerge from certain subdivisions of client work or areas of law, these division leaders are expected to work in concert with their chairperson.

All department heads are responsible for overseeing the system for allocation of work and quality control within their area of law. If the number of partners, associates, paralegals or others assigned to the area of law is not sufficient, the department head should request assistance from the chairperson of the professional personnel committee (for legal personnel or law clerks), or the administrator (for non-legal personnel).

The department heads should review and recommend to the financial partner a policy for fees and billing in their jurisdiction, within the framework established for the firm. They should be responsible for planning for business development (or contraction) and for anticipating new developments within their area of law.

The heads should oversee collecting, retaining and indexing legal forms, memoranda, opinion letters and important legal efforts for their department, within the system of the firm and in coordination with the librarian. They should be consulted on continuing legal education efforts for the area of law under their jurisdiction. They should advise on department policy within guidelines developed by the firm for signature authority for legal matters, letters and opinions, and attend monthly meetings of department heads and provide, at least quarterly, data for the executive committee's evaluation of the economics of professional services rendered by their departments.

During the course of firm business, all department heads should provide advice, when requested or if appropriate, on the acceptance of new business. They should consider conflict of interest, ethics, merits and strength of case. Other factors are the time required, nature of the client, ability to handle the work, basic expertise available, “one-shot deals,” and availability of lawyers.

The policies of the firm on desirable or undesirable work, economics of the case and value of the firm are additional considerations. If the department head is uncertain whether to accept a case, he or she should consult with the executive committee chairperson. Where questions arise on new directions or policies on business acceptance, the executive committee chairperson should present the case to the executive committee.

Conclusion

The management abilities and leadership skills of lawyer managers include a willingness to spot the unusual and to consider a new point of view. If the managers of administrative and substantive practice areas possess unusual skills, they can add to the capability of all of the lawyers and remarkable gains accrue from their efforts.

Joel A. Rose, a member of this newsletter's Board of Editors, is a certified management consultant and president of Joel A. Rose & Associates, Inc., Management Consultants to Law Offices, in Cherry Hill, NJ. He has extensive experience consulting with private law firms, and performs and directs consulting assignments in law firm management and organization, strategic and financial planning, lawyer compensation, mergers and acquisitions, and legal services marketing. He has extensive experience planning and conducting retreats, and special expertise resolving problems within firms. Rose may be contacted at 856-427-0050 and [email protected].