Law Practice Management Asked and Answered Blog

Category: Governance

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Jan 31, 2017


Law Firm Administrator Competencies – Searching for a First-Time Legal Administrator

Question:

Our firm is a twelve attorney business litigation firm in Springfield, Illinois. I am a member of our three member management committee and I have been charged with helping the firm find and hire our first legal administrator. This will be our first experience. While we have a bookkeeper that handles our billing and accounting the rest of the firm’s management matters are handled by the management committee. We believe that we have reached a size where we need help with managing the day-to-day operations of the firm. What sort of skill set and type of person should we be looking for?

Response:

The starting point is to have some heart to heart discussions internally to make sure all the partners are on the same page regarding the role the firm is looking for an administrator to play? Is the firm willing to delegate authority with responsibility and let the administrator really manage the business side of the practice (a true administrator) or is the firm looking for more of a lower level office manager? This will dictate the skill set and type of person that you should be looking for. I suggest that you develop a job description for the position listing not only the duties but the authority levels as well and have every partner in the firm sign off on it.

An excellent resource in the Association of Legal Administrators (ALA) which is the professional trade association for legal administrators. They have published a document listing 56 competencies in the following five categories:

Click here to download the above document.

ALA also has some helpful areas on their website for a law firm looking for an administrator including articles on evaluating your firm’s needs, the candidate search process, and defining the role of the administrator.

Many firms burn through their first administrator quickly and end up having to try again with another person or two. First time failure if often the result of not determining up front and having the partners agree regarding the role, expectations, and authority level of the administrator.

Do your homework and you will increase the change of success with your first administrator.

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

Oct 25, 2016


Law Firm Management – Excessive Collaboration

Question:

I am a partner in a twelve attorney general practice firm in Upstate New York. There are eight partners and four associates in the firm. Our firm was formed five years ago when we broke off from another firm in the area. That firm was led and managed by a dictatorial founder and other attorneys in the firm including partners had no say in management matters whatsoever. When we formed this firm we decided that all attorneys including associates would be included in the decision-making process. All management decisions must be passed by all attorneys in the firm. When we were smaller this worked okay but not that we are larger we are having problems. I would appreciate your thoughts on the matter.

Response:

I concur that a collaborative culture should be a desirable goal. However, your approach takes too much time, wastes attorney time, takes too long for routine decisions to be made, and can lead to less than optimal results. I suggest that you separate management decisions into the following three categories:

All partners will still have control of the major issues and be spared from the day-to-day management and administrative decisions. A managing partner or three member management committee can be elected to handle the management decisions and an office manager/administrator can be hired or promoted from within to handle the day-to-day administrative decisions. Associates can attend periodic firm meetings, service on ad hoc committees, etc.

An approach such as this can still preserve the collaborative culture and you have strived to develop and improve overall management of the firm.

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

Oct 19, 2016


Law Firm Governance – Executive Committee – Non-Equity Member and Procedures

Question:

Our firm is a fourteen attorney firm in Orlando, Florida. We have Two equity members, five non-equity members, and seven associates. We are currently managed by the managing member. In order to be more inclusive we are thinking about eliminating the managing member position and moving to a three member executive committee with one of the three members being a non-equity member. I would appreciate your thoughts?

Response:

I have several client law firms that have taken this approach. Here are a few suggestions:

  1. Draft a charter (position descriptions) for the equity membership and the executive committee outlining the specific responsibility and authority for each.
  2. If the firm has a firm administrator draft a job description for that position outlining his/her responsibilities and authority.
  3. Since there are only two equity members there will be no election for those members on the executive committee until such time in the future when there are more equity members. At that time the two equity members should stand for election by the equity membership for staggered three year terms.
  4. Have the non-equity members elect a representative non-equity member annually for a one-year term on the executive committee. 
  5. Suggest that each member have one vote including the non-equity member. The goal of the executive committee should be to manage by consensus but when they can't a vote should be taken.
  6. Have the non-equity member sign a non-disclosure agreement and advise him/her as to the content that can be shared with the non-equity members and content that cannot be shared.
  7. Elect a chair of the executive committee.
  8. Have regularly scheduled meetings.
  9. Use agendas and prepare minutes or notes after each meeting.

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

Jun 07, 2016


Law Firm Executive Committee – Setting it Up

Question:

I am a partner in a twelve attorney firm in Downers Grove, Illinois. We have 8 partners and four associates. We are managed by committee of the hole – all partners are involved in all decisions. We have been considering moving to an executive committee. How do we set it up?

Response:

How you setup your executive committee will be key to the success of the management plan. How you setup and constitute your executive will be crucial. Selecting the right partners is paramount. How the partners are selected, who serves on the committee, how the committee operates, and other matters must be spelled out and communicated to all partners. Here are a few ideas:

  1. Consider a three member executive committee.
  2. Elect members to staggered three-year terms. On the initial election elect the individual with the most votes to a three- year term, the individual with the second most votes to a two-year term, and the individual with the least votes to a one- year term.
  3. Hold elections annually to fill vacancies for the upcoming year.
  4. Consider adopting a policy of requiring a partner whose term has expired to remain off the committee for one year before being able to run for another term.
  5. Incorporate procedures for removal of members by majority vote of the partners. Specify the voting requirements.
  6. Outline the decisions that are reserved for full partnership vote, decisions to be made by the executive committee, and decisions to be made by the office administrator.
  7. Develop a job description for the partnership, the executive committee, and the office administrator incorporating the above. 
  8. The committee should elect a chair annually, meet monthly with a prepared agenda, and have written published minutes or notes of what transpired at the meeting, action items to be taken, and who is responsible.
  9. The firm administrator should attend all meetings except when his or her performance is being discussed.

The key ingredient of a successful executive committee is that partners perceive the committee as competent, fair and without personal agendas, and that it gets things done in a timely and efficient manner. The process is as important as the outcome.

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

May 03, 2016


Law Firm Management Structure – Firm Administrator and Marketing Director

Question: 

I am the founder and managing partner of a 27 attorney firm in Dallas Texas. I own 90% of the stock in the firm. I have a three member management committee that serves as a sounding board, a firm administrator, and several people in accounting that work for the firm administrator. We are anticipating hiring a marketing director and are trying to think our way through how to structure this new position as well as future management positions down the road. I would appreciate any thoughts that you may have.

Response:

It will depend on the depth of experience of the marketing candidate that you hire and the level that you want them to perform. If you hire a heavy weight, they will be expected to have "director" in their title" and you will want them to have the respect of other attorneys in your firm, your clients and prospective clients. Therefore, they may carry a title such as Director of Marketing, Director of Client Development and Marketing, etc. If this is the case this position should report to either you, the managing partner, or the management committee, not the firm administrator. Depending on the level of your administrator it may be appropriate to retitle the position as Director of Administration and have it also report to you, the managing partner, or the management committee. Before long you may need a Human Resources Director and when that time occurs that position also could report to the you, the managing partner, or the management committee. Accounting and administrative staff would report to the Director of Administration, marketing staff would report to the Director of Marketing, etc. I would develop job descriptions for each position as well as your position and the management committee.


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

Jun 23, 2014


Law Firm Decision-Making and Governance – Two Partner Firm

Question:

Another attorney and I are planning on starting a law practice together. He has a larger book of business and he has ten years more experience that I have. Initially he will have a 60% ownership interest and I will have 40%. Compensation will be determined based upon these ownership percentages. How do you suggested that we structure our decision-making and governance?

Response:

I would not recommend using ownership percentages for decision-making and governance. I suggest that you be equal partners in this regard – one head – one vote. Of course this would mean that if you actually took a formal vote you could be deadlocked. Hopefully, the two of you have similar goals and a common desired sense of direction for the firm. If so, you should be able to come together most of the time using a consensus approach. When you can't – some give and take will be required. If you can't the firm may not last.

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

Apr 01, 2014


Law Firm Governance – Firm Administrator With Managing Partner or Management Committee

Question:

I am a partner in a 9 attorney firm in Topeka, Kansas. There are three active partners in the firm. For years day to day management has been the responsibility of a managing partner that we appoint from time to time. We have just hired our first firm administrator - starts in two weeks – who is experienced and has worked in other law firms. Should we continue to have a managing partner or consider a different structure?

Response:

Typically firms your size that have professional firm administrators empower the firm administrator to manage the business side of the law firm and have either a managing partner, management/executive committee, or all partners manage the client service side of the practice. The firm administrator typically reports to the managing partner, management/executive committee, or all partners. In essence there are three levels of management – the partnership which services like a board of directors, the managing partner or management/executive committee that oversees the professional side of the practice, and the firm administrator that manages the business side of the firm.

I find that in firms your size with firm administrators a three member management/executive committee is more common. Since your firm only has three partners – initially your management/executive committee would be all three partners. As you add more partners you would move toward electing your management/executive committee.

While either form would work in your situation – I suggest you consider eliminating the managing partner position and having the three partners serve as the management committee and have the firm administrator report to that group.

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

Jan 14, 2014


Law Firm Administrator/Business Manager – Essential Skill Sets

Question:

Our firm is an eight attorney firm located in Minneapolis. We have 5 partners and three associates. I serve as the managing partner and frankly I do not have the time or the skills to do an effective job. My performance as managing partner is marginal at best. We have recently been discussing hiring a professional legal administrator to manage the firm. What are the essential skill sets that we should be looking for?

Response:

Larger firms that have several administrators/managers can have the luxury of having specialists – for example a HR manager, a IT manager, a Marketing Manger,  a Finance/Accounting Manager, Executive Director, etc. In a firm your size you need a hands-on generalists that can perform all of these roles. The top three skill sets that you should look for are:

  1. Accounting/Bookkeeping/Financial Analysis Skills
  2. Human Resources – especially leadership and strong interpersonal skills
  3. Marketing

I would look for someone with 5 years or more experience in managing a law, CPA, or other professional services firm and a B.S or B.A. degree in business, management, or accounting.

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

 

Sep 24, 2013


Law Firm Administrator/Business Manager – Establishing Presence & Earning Respect

Question:

Our firm is a 8 attorney firm located in downtown Chicago. We have just hired our first administrator/business manager and he starts in two weeks. We are concerned that we get started on the right foot so our experience is successful. Any thoughts?

Response:

Relationship With Partners

On the first day of employment with the firm, the administrator must begin to develop a relationship with the firm’s partners that is based upon need, understanding, credibility and trust.

Governance Plan

Business management in many law firms suffers from decision-making paralysis — in other
words, helpless inactivity and the inability to act decisively. Lack of effective implementation of decisions is also evident. The result: missed opportunities and a deteriorating competitive position in the legal marketplace. Administrators who can be proactive and turn this situation around will be off
to a good start to solidifying their positions in their firms.

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

 

Jul 30, 2013


Impact Of Law Firm Growth Upon Management and Organizational Structure

Question:

Our firm is a five attorney firm in Peoria, Illinois – three partners and two associates with four staff members. One of our legal assistants wears two hats – she serves as our office manager and also performs legal assistant duties for clients. Three years ago we had two attorneys and two staff members. We are feeling the consequences of our growth – our caseload has increased by 200%, our overhead is much higher and even though we have greater revenues – our take home earnings is less. We are overwhelmed. I would appreciate your thoughts?

Response:

It sounds like your firm has outgrown your management (organizational) structure. A firm with nine people is a different firm than a firm with four people. You are at a difficult size – large enough to feel the pains and challenges of being larger than two attorneys and two staff members but not large enough to reap the organizational benefits of a larger firm such as a full-time firm administrator, accounting manager, HR manager, etc. (I believe that as a law firm grows – management gets harder until a firm gets to around 12 attorneys – then as the firm begins to put in place a management team – it gets easier.)

In the meantime you might want to consider the following:

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

 

 

 

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