Law Practice Management Asked and Answered Blog

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August 2026

Aug 25, 2026

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Law Firm Governance and Management Structure for 14 Lawyer Firm

Question: 

I am a partner in a fourteen lawyer firm in Des Moines, Iowa with seven equity partners (shareholders) and seven associates. We are a business litigation firm exclusively. The seven equity partners (shareholders) have all been practicing law for fifteen years. We formed the firm five years ago when we all left a large law firm in area. The firm is structured as a professional corporation (PC). For the past five years we have managed the firm as a group with the seven of us making all of the management decisions. This requires us coming together at least once a week and often even more frequently. While this worked for us when we were smaller the amount of non-billable time it taking a toll on all of us. We have come to the realization that we have outgrown our management structure and are looking for a better approach to managing our firm. We are looking for ideas and would appreciate any ideas that you may have.

Response:

I understand your frustration and your experience is typical what I see in newly started law firms. While the approach you have taken to managing the firm made sense and worked when you started the firm five years ago, you have simply outgrown this approach and need to move to a governance/management structure more appropriate for a fourteen lawyer law firm. For a fourteen lawyer firm with seven equity partners, you have enough partners to benefit from more formal governance, but you don’t need the bureaucracy of a large-firm model. The key is separating day-to-day management from major ownership decisions.

Most smaller to medium sized law firms choose one of three fundamental varieties of management structure. These systems may be characterized as management by:

• Democracy
• Managing partner
• An executive or management committee

Democratic

This is the method that you have been operating under. Under a democracy each member of the firm has an equal voice in management. Any decision must be agreed to by all partners. Administrative tasks may be assigned or rotated among partners. Democratic firms traditionally progress more slowly and are less profitable than firms governed under one of the other structural models.

Managing Partner

This approach with a strong managing partner is probably the most efficient form of managing a law firm. Under this approach the administrative responsibilities for other partners in the firm may simplified as the result of the managing partner’s role, however this type of structure has many shortcomings and issues. Egos of the partners is a major issue is many firms. Also the managing partner came become overloaded with firm decisions and his or her law practice, as well as the firm, may suffer financially. The managing partner may not be able to devote the time or follow-through required to handle organizational and financial matters. Since no other partner may be trained in managing the firm, this partner may not feel comfortable in relinquishing power to anyone else. This is a problem which may be especially troublesome if the managing partner dies, becomes ill or disabled.

Some attorneys may be dismayed at the prospect of having their firm dominated by an individual or group of partners. However, if properly handled, this form of structure can be productive, and economically and professionally rewarding. To be effective, the managing partner should maintain communication with other partners. The managing partner should seek advice from other partners (and associates) on matters that will affect them. The managing partner should obtain other partners’ input on decisions, appoint individuals or committees of partners to perform particular functions and require a report of their achievements.

Executive or Management Committee 

The executive or management committee structural concept is a representative form of governance typified by a committee of partners having defined authority, accountability and responsibility. In most smaller firms this committee, frequently consisting of three partners, may be responsible for recommending and implementing policy for the firm, planning for the future, appraising results and recommending corrective action, as required.

I believe that a three partner executive or management committee might be the best approach for your firm and would be the best way to avoid deadlocks or inaction and to spread the burden of firm management among appropriate partners. One of the partners should be designated to chair the committee. Each of the other members may be assigned authority, responsibility and accountability for coordinating and/or performing specific functions. For example, one partner may serve as the financial partner. This would involve responsibility for insuring the preparation and analysis of income and expense budgets and financial reporting. This partner would oversee attorney production, fees, collections, etc. A second partner may be responsible for the personnel functions including associate career development, i.e., employment, training, evaluation, etc., and implementation of policy for the administrative staff. A third partner may serve as the general administrative partner, and oversee the implementation of administrative policy, systems, automation, etc. These partners may be assisted by an office manager, bookkeeper, etc.

To preserve continuity in the management function, it is recommended that tenure of partners on the executive or management committee be staggered over a two or three year period. The executive committee should communicate with the partners regularly or as issues arise. The executive committee should meet weekly, or if that isn’t convenient, as frequently as required. To keep all of the partners apprised of issues before the executive committee meeting is held, it is recommended that the meeting agenda be distributed to all partners within 48 hours prior to the scheduled meeting. Partners should be encouraged to discuss, with members of the executive committee, any items listed on the agenda or recommend subjects for discussion. Following this meeting, minutes should be prepared and distributed to all of the partners for information purposes.

Meetings with all of the partners (shareholders) should be scheduled at least quarterly and possibly even monthly.

You did not indicate whether your firm has a firm administrator on your staff. I believe that this may be a good time to consider hiring a firm administrator and that role should be incorporated into the firm’s management/governance plan. The firm administrator should handle all administrative matters and the the management committee should focus on higher level management matters. The full equity shareholder membership should weight in only on matters reserved for their vote and approval.

You should document your governance/management structure in your shareholder agreement. For example:

Specific policy matters that might be reserved for full equity shareholder vote might include:

• Non-equity partner/member and equity partner/member admission
• Practice composition
• Type of practice
• Size of firm
• Long range planning
• Firm goals, mission, and vision
• Merger or dissolution

Specific policy matters that might be the domain of the management/executive committee might include:

• Equity partner compensation
• Non-Equity partner compensation
• Associate compensation
• Lawyer and paralegal recruiting
• Legal staff compensation
• Budget approval
• Practice management
• Billing practices

Your shareholder agreement should clarify who decides what, by what vote, and within what financial/authority limits. It should address management, voting thresholds, partner rights/duties, compensation, and partner withdrawals.

Click here for our blog on management

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Click here for out articles on various management topics

John W. Olmstead, MBA, Ph.D, CMC

Aug 19, 2026

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Law Firm Acquisition – Acquiring a Founder’s Practice

Question: 

I am an associate working in a small family law practice located in Chicago. There are two attorneys in the firm – the owner/founder who is 74 and me. I have been out of law school for seven years and have worked with the firm since I graduated. Virtually all of the business that comes into the firm is originated by the owner. The owner of the firm has advised me that he wants to retire and would like me to take over his practice. I am interested. What are the potential issues and how should I proceed?

Response:

I assume that the owner plans on selling you the practice and has or will be providing you with a proposal outlining the purchase price or earnout arrangement, terms, etc. However, sometimes owners ask the potential successors/buyers such as yourself to provide the initial proposal. You have probably never seen the financial statements of the firm. This would be your next step:

I would initially ask the owner for the following:

1. Five years profit and loss statements and balance sheets and tax returns.
2. Current hourly and flat rate fee schedule if you are unaware of rate and fees charged.
3. Copy of leases (space and equipment).
4. Copy of malpractice insurance policy and last application.
5. Salaries and benefits for attorneys and staff members.
6. List of the matters that he is handling, status of the matters, and fee arrangements.

This will give you a good idea of what you are dealing with and whether the opportunity is worth pursuing further. If you decide you want to pursue this opportunity you can ask for additional information as the discussions unfold.

Since you have been working in the firm for seven years you are aware of the nature of the clientele that you would be acquiring.  Since your practice is a family law practice you need to give some thoughts as to how the firm get’s it’s clients. Internet and other forms of marketing, word of mouth referrals, or from other referral sources. Owner dependency can be a real problem if after the owner retires past clients no longer come to your firm, no longer refer clients, or referral sources no longer refer new clients to the firm since the owner who had the relationships is no longer there. If the owner has relationships with referral sources and you do not, you need to determine how much business comes in from those referral sources. You need to determine whether the owner is interested in remaining with the firm for a period of at least one year so you can get plugged into his referral sources, acclimated to his clients and files, and trained on office management and administration. If the owner’s  clientele are older, what will their reaction be if they were represented by a younger attorney? People chemistry is very important. It has often been said that clients hire the lawyer and not the firm. While this is not totally true – there is some truth in this statement. A successful client and referral source transition and retention is crucial, and the value of the firm is dependent upon such.

Some form of an earnout or combination of a fixed price with earnout would be in your best interest. What you would be buying are the future cash flows from future clients if they materialize. Another approach might be a fixed price with a reduction of price if certain revenue targets don’t materialize. If the owner is interested in selling out and leaving the area, then you may consider proceeding with the transaction with payments which would be based upon subsequent collections during a period of three to five years after the acquisition. In other words, the more the owner participates during the first year to retain certain clients, the more he should receive.

The worst scenario is if the owner dies unexpectedly after signing the agreement. This recently happened to one of our clients, and he had to spend a great deal of time and effort trying to retain clients that he never had contact with.

You must also review the financial records to determine the profitability of the practice. Many owners of small law firms do not keep adequate time records, don’t have automated practice management systems, and are not paperless. What is the shape of his client files and how well are they organized? Certain data is stored in their heads. In many cases, the hourly rates or flat fees are low and could be raised during the first year to make the practice more profitable. However, this increase must be one that will be accepted by the client. The next question would be whether family members are involved in the practice, if they are, there may be problems in the future. The clients know the family, and if there are any remaining family members working in the firm, they may leave your firm empty-handed. For example, if a paralegal who is a family member leaves the firm after the acquisition is consummated, several clients could follow the paralegal to their new place of employment. In such situations I have had client law firms that have had such persons execute non-compete agreements. In one situation the deal was aborted by the acquiring firm due to the paralegal not willing to sign a non-compete agreement. This was a situation where the paralegal in the firm actually had the client contact relationship. The owner’s contact with the client was limited. The paralegal had the relationship.

Finally, there should be other safety valves for the purchaser in acquisition of this nature. On a positive note, the situation could present a fine opportunity for growth. Just ensure that the  buy sell and other legal agreements provide the appropriate safeguards.

The above issues such as non-compete and practice sale agreements should be addressed with your business attorney.

Click here for our blog on practice sale

Click here for our blog on succession

Click here for out articles on various management topics

John W. Olmstead, MBA, Ph.D, CMC

 

Aug 12, 2026

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Estate Planning Firm Needs Help – Should we Hire an Experienced Lateral Associate

Question:

I am the managing partner of a three lawyer estate planning practice in Bloomington, Illinois. I am the sole owner with no partners. The other two lawyers are associates that have been with the firm for several years. (One three years and the other seven years.) In addition to the attorneys we have a receptionist, a bookkeeper/office manager, and three paralegals.

We have recently gone through some lawyer and paralegal turnover and we are way behind in servicing client work and are experiencing client complaints. We are in the process of trying to staff up and hire another lawyer for the firm. We do not have the time to train up a new lawyer right out of law school and we need a seasoned associate with three to five years estate planning and administration experience – especially probate and trust administration. We have only received a couple of candidates and we are finding:

• They have no book of business or referral sources that they can bring with them.
• They are demanding salaries of $150,000 – $200,000.
• They are asking to work remotely for much of the work week.
• We had one candidate ask for a sabbatical after seven years.

We are at wits end and would like your thoughts on whether hiring an experienced lateral associate lawyer even makes sense for our firm or should we hire a new graduate and try to grow our own. In the past we have hired associates with a few years experience? Any suggestions that you might have will be appreciated.

Response: 

Small firms such as yours often have not invested the time in developing procedural manuals and other training tools that makes onboarding new lawyers and staff easier nor does anyone have the time to train newly hired lawyers and staff. While you don’t have the time or resources to develop such tools now this is something you should consider in the future. Such tools enable law firms to onboard both new and inexperienced lawyers as well as experienced lawyers much quicker that the trial and error method that occurs without such tools.

Keep in mind there is still a learning curve and spin time even for experienced laterals who have to learn jurisdictional ways of doing things, your internal office systems and procedures, etc. There is also a work in progress billing lag that occurs. A small estate planning/administration firms such as yours should generally avoid hiring lateral associates unless the firm has steady excess work and clear profit margins and a need for a senior associate. Laterals often demand high salaries, benefits, remote work options, bring along bad practices and cultural experiences, and may not bring in sufficient fees to cover their overhead. It usually takes at least a year before you begin to make a profit from a new lateral – sometimes longer.

Adding an expensive lateral lawyers to your existing team will be a major financial risk for the firm. In addition to the new lawyers salary and other expenses a new lawyer will likely need additional paralegal support and a paralegal may need to be hired as well.  As a result the firm could experience:

• Cash flow problems
• Strain on firm profits
• Firm may operate at a net loss for a year or more
  
• Problems working the new lateral hire into your existing associate compensation structure.

Better options for your firm:

Aug 05, 2026

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Law Firm Sole Owner Succession and Exit – Top Challenges

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