Question:
I am the managing partner of a twelve-lawyer business litigation firm in Toledo, Ohio. There are four equity partners, six non-equity partners, and two associates in the firm. Until three years ago I handled all of the administrative matters in the firm and was assisted by the firm’s bookkeeper. My practice and clients were suffering due to the amount of time I was spending handling the administrative concerns of the firm. So, the firm hired a professional legal administrator. Three years later it seems as if I am spending more time than before on administration and my practice is still suffering. Based on my readings it appears that our administrator is functioning more as a glorified office manager rather than an administrator. What are the characteristics of an effective (real administrator)? We are paying our administrator more than some of our non-equity partners and I don’t think we are receiving the value that we should be receiving. You comments and thoughts are welcomed. Thanks.
Response:
Being the first administrator for a law firm is tough. In additional to proving themselves to the partners the new administrator will have the additional task of justifying the position itself. After a few months when the honeymoon is over some partners will start questioning whether the position is necessary and worth the expense. Often law firms have not really thought through what their expectations were for the position prior to hiring the administrator. Successful administrators don’t wait for the firm to manage them – they take a proactive role – initiate discussions regarding expectations and identify priorities, projects, etc. They look for low hanging fruit where they can enhance revenue or reduce costs in the short term and track any results achieved.
It sounds like you have not clarified the role and documented role, responsibility, and authority in a well documented job description, don’t have agreement among the partners as to the administrators role and authority, or you hired the wrong person.
Skills and competencies are important but so are results. In order to maximize their value to their law firms, administrators must help their firms implement changes and improvements and improve performance. This requires selling ideas to partners in the firm and having them be accepted and actually implemented. To succeed administrators must:
– Provide innovative solutions or methods
– The firm must achieve measurable improvement in its results by adopting the solutions
– The firm must be able to sustain the improvements over time.
Based upon my experience working with firm administrators over the years and my discussions with managing partners, the following characteristics define successful firm administrators:
An administrator’s success with a given law firm will have a direct correlation to his or her level of acceptance by the partners. The firm’s culture will determine the value that the managing partner and members of executive committees place on their administrator. An administrator whose personal style may be characterized by partners as “too laid back” may be inappropriate for a fast-pace entrepreneur firm and an administrator with a “Type A” personality may not succeed in a firm characterized by partners as “low key” or “laid back.”
In today’s law firms, partners place a much higher value on those administrators who understand, and are able to relate to the firms’ immediate and longer-term priorities. They seek to retain those administrators who perceive the firm from a “partner’s” perspective, not from an “employees’ point of view.” Partners’ value those administrators who are innovative and willing to question the status quo, and suggest changes for improving productivity and profitability.
The more effective administrators relieve partners of managing day-to-day administrative matters and save the firm’s lawyers time that can be directed to client billable work. These administrators have the ability to communicate with the managing partner and members of executive committees about management issues that should be brought to the partners’ attention. They have the ability to handle and resolve most administrative problems with minimal guidance from their managing partners or members of executive committees.
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John W. Olmstead, MBA, Ph.D., CMC
Question:
I am the sole owner of a general practice firm in Indianapolis, Indiana. I have been in practice for 45 years and I am the only lawyer in the firm. I have a receptionist and a paralegal that also serves as my office manager and bookkeeper. I have tried hiring associates over the years, several times, but after spending time training them they eventually go elsewhere. I would like to reduce my workload and eventually retire. How should I approach finding and keeping an associate differently? Thank you for any ideas that you may have.
Response:
This is a common and a major challenge for sole practitioners and small-firm owners. The mistake many owners make is viewing the associate primarily as someone who will help the owner get the work done. If you are approaching retirement, I would encourage you to look at the issue differently. Your next associate may not simply be an employee. He or she may be your future successor. This changes the recruiting, compensation, training, management, and retention equation.
I am sure that the turnover that you have experienced has been frustrating. Your reaction may be “Why should I spend the time and money training another associate if he or she is just going to leave?” Your problem may not be that you have failed to find good associates. You may have failed to give good associates a compelling reason to stay.
I suggest that you think about and ask yourself the following questions:
Question 1: Why are your associates leaving?
Determine why lawyers are leaving. Do not assume the answer is compensation. It may be. But associates also leave because they don’t see a future with the firm. After two or three years, the associate may be asking:
If the associate cannot answer these questions, the lawyer may reasonably begin looking elsewhere. You need to stop thinking about retention as how do you keep this associate from leaving and think in terms of what kind of future you can offer this associate?
Question 2: Should you Pay Higher Salaries?
You should pay competitively. You cannot expect to retain talented lawyers if your compensation is substantially below the market. But simply increasing compensation every time an associate receives an outside offer is not a retention strategy. You should develop a total compensation and career advancement program. Such a program might include:
The last item may be particularly important. Since you eventually want to retire, the opportunity to become a partner—and potentially the owner of the practice—may be worth considerably more to the right lawyer than another few thousand dollars of annual salary.
Question 3: Does the Associate Even Want to Become a Partner?
Thirty years ago, I would never have to ask an associate during an interview if they wanted to become a partner or own a law firm as everyone would have said yes. This is no longer the case. Not every good associate wants to become an owner. Some lawyers want a long-term professional position without ownership responsibilities. Others may want partnership but not equity ownership. The important thing is to find out. Ask, what does your ideal career look like five years from now? You may discover that the associate’s goals and the firm’s goals are highly compatible. Or you may discover that they aren’t.
Question 4: Should You Tell the Associate That You Eventually Want to Retire to retire?
If retirement is reasonably foreseeable, I believe you should begin discussing the firm’s future. You don’t necessarily need to say that you are retiring in three years if you haven’t made that decision. However, you should be able to say that you are building this firm for the long term, and you want to develop lawyers who can assume increasing responsibility and potentially participate in ownership. This discussion can be extremely important. Associates are more likely to invest themselves in the firm if they understand that there is a future opportunity.
Question 5: Should you Involve the Associate in Management?
Yes—but progressively. An associate who may eventually become a partner or successor needs to understand that a law firm is a business as well as a professional practice. Over time, expose the associate to:
You don’t need to give an associate full access to everything immediately. But if you expect the lawyer eventually to help run the firm, you need to begin developing management capability well before the transition.
Final Thoughts
If you are a sole owner approaching retirement, I would encourage you to look at recruiting and retention differently. Don’t ask only how can you find a good associate – ask – how can you find, develop, and retain the lawyer who could eventually become the next leader of your firm? The answer to this question changes the entire strategy and you will begin thinking about succession much earlier. The ultimate objective isn’t simply to retain an associate for another year. It is to create a professional environment in which a talented lawyer can say – I can see my future here.
If you don’t develop a successor, you may eventually find yourself with:
The solution isn’t to avoid developing people, it is to develop them within a deliberate succession strategy. One of the biggest mistakes I see is sole owners waiting too long. A successful succession often requires several years. The owner must have time to:
In todays competitive market for talent you may find that you are unsuccessful in finding, hiring, and retaining an associate that is able or willing to be your successor. I am finding this to be the case with many sole-owner firms. In these situations, an external strategy such as merger or an Of Counsel relationship with another lawyer or firm is the course taken.
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John W. Olmstead, MBA, Ph.D, CMC
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:
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:
Better options for your firm:
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John W. Olmstead, MBA, Ph.D, CMC
Question:
Our firm is a 14 lawyer firm in St. Louis, Missouri that focuses on small businesses – both transactional and litigation matters. There are eight equity partners, two non-equity partners, and four associates in the firm. We are managed by a three member management committee and a firm administrator.
While we have been successful over the past fifteen years since the formation of the firm, we are experiencing numerous issues including:
We would appreciate any suggestions that you might be able to offer.
Response:
I understand your dilemma. You are at a difficult size. It sounds like you are facing many of the problems that firm leaders face at your stage of growth. Your leaders must be willing to:
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John W. Olmstead, MBA, Ph.D, CMC
Question:
I am the owner of a three attorney law firm in Rockford, Illinois. While we do a lot of business litigation we are primary a general practice firm that serves individual clients. There are two associates in the firm in addition to myself, two paralegals, and a receptionist. We outsource the bookkeeping work to an accounting firm. We have been having issues with the accounting firm and I am considering bringing the accounting in house and hiring a bookkeeper that can also handle office management responsibilities as well that I currently have to perform. I know that many law firms now days have law firm administrators. Should I consider hiring a professional firm administrator?
Response:
Generally a firm your size would have a office manager/bookkeeper as opposed to a firm administrator. A firm administrator is generally a higher level position with responsibilities and expectations such as the following:
A firm administrator usually has a strong financial background, higher level of education than a office manager/bookkeeper, and often a CPA or MBA in larger firms that facilitates the candidate’s acceptance by other attorneys in the firm as a peer professional as well as provide the candidate with the academic tools needed to carry out the expectations of the position.
A firm administrator is rare in a firm your size and for firms under 10-15 attorneys. Many firms your size have office managers/bookkeepers. The downside to establishing an administrator such a position in your firm will be the salary that you will have to pay – more than some of your attorneys – and turnover in the position when an opportunity from a much larger firm comes along.
I have a few client firms your size that do have firm administrators. Sometimes for the first year or two there is a lot of administrative work – employees handbooks and procedural manuals to be written, new billing systems to implement, office space renovations and relocations, etc. But after major projects are completed there is not enough work to keep them busy. These firms have made the position work by adding client billable functions to their role. For example:
There is no magic size. We just completed an engagement recruiting an administrator for a seven attorney firm. We also have law firm clients with over 40 attorneys that don’t have an administrator. I believe that an administrator, or office manager, is appropriate in firms of all sizes. It is a matter of attitude and commitment on the part of the partners and whether they are willing to delegate responsibility and authority to an administrator to run the day-to-day operations of the firm. The firm should start with a job description and then decide whether the firm is willing to delegate responsibility and authority. If not, the firm should not hire an administrator.
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John W. Olmstead, MBA, Ph.D, CMC
Question:
Our firm is a four attorney estate planning firm in Orlando, Florida. I am the owner of the firm and the other three attorneys are associates. We have three paralegals, a bookkeeper, and two administrative assistants. Approximately sixty percent of our practice is estate planning, thirty percent probate and trust administration, and ten percent elder law and special needs planning.
Our major challenge is finding and retaining paralegals. Over the years it has been our practice to hire experienced paralegals with three to five years experience. While this worked for us in the past we are currently experiencing high turnover, poor quality of work and performance, and high compensation cost resulting in our overhead getting totally out of control. What are other firms doing? Any suggestions and recommendation that you may have will be most appreciated.
Response:
These are tough times for finding, attracting and retaining paralegal and lawyer talent. Law firms are having difficulty hiring experienced paralegals at an affordable salary and then retaining them. You may want to consider growing your own and begin hiring recent graduates from paralegal programs at colleges, junior colleges, and paralegal schools. These schools offer bachelor degrees in legal/paralegal studies, two year associate degrees, and post bachelor graduate programs.
Small law firms generally do not have effective training programs and the training resources needed to do effective on the job training. This is the primary reason that small law firms hire experienced paralegals rather than growing their own. Larger firms have training resources such as paralegal supervisors, trainers, written procedural manuals, and other training tools. While a small firm such as yours can’t have all of these resources maybe it is time to begin to develop some of the following tools so you can grow your own.
Homegrown employees often prove to not only be less costly but in the long more committed to your culture and processes, more dedicated and loyal, and more likely to stay with your firm for many years.
Many of my law firm clients are telling me that finding clients is no longer their primary concern – their top strategic concern is now finding, hiring, and retaining lawyer and staff talent. During these times it is imperative that law firms get creative and think outside of the box. Flexibility is key. Here are a few things that some of my small law firm clients have done that has resulted in successful experienced paralegal and attorney hires:
Successful law firms must attract both clients and talent in order to be successful. All law firms are suffering and having a hard time attracting and retaining attorneys and staff. This also means that other law firms are desperate and may try to steal you lawyers and staff with better pay or other incentives. You need to review all of your benefits and policies as well as compensation to make sure that you are more that just competitive – you need to be on the cutting edge and ahead of the pack. Employees now expect more flexibility, remote work, etc. than ever before.
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John W. Olmstead, MBA, Ph.D, CMC
Question
I am the sole owner of an estate planning firm in the San Francisco Bay Area. We have one branch office and are contemplating acquiring another practice that would give us a third office. We have a total of four lawyers plus myself working in the firm, 5 paralegals, and five administrative members including the firm administrator.
We acquired the office office via an acquisition five years ago. At first we had a paralegal that we inherited from the prior firm as the only permanent employee at the office and we would send up lawyers from the main office for client appointments on an as needed basis. (The two offices are a 45 minute car commute from each other) This worked reasonably well for a little while but after a year I decided that we needed more permanency in the office and we hired a full-time experienced lawyer that was assigned to that office. A year later the paralegal retired and we hired another paralegal for that office as well as an administrative staff member. All went well for a couple of years but now we are having the following personnel issues:
I am having second thoughts as to whether I should have acquired this practice and whether I should go forward with another acquisition. Any thoughts that you have would be appreciated.
Response:
While opening a branch office can be tempting there can also be pitfalls. Typically reasons for opening a branch office include:
A branch can bring prospective additional clients and access to a wider talent pool but money has to be spent on office space, salaries, and other operating expenses which can negatively impact the profits and earnings of the firm if the branch office does not generate sufficient business and revenues. Even if the branch office is successful in terms of revenues and profits there are the additional management challenges that can arise such you are experiencing. Often the most difficult challenge is replicating your philosophy, norms, and practices – culture if you will – in the branch office.
In larger branch office plants the office is usually staffed by at least one attorney – usually partner level – that is transferred from the main office. As the office grows additional attorneys and staff are hired for the local area. This helps in transplanting the main office culture to the branch office.
In your situation due to your small size you options may have been more limited but you might have considered:
You must take a strong hand on this or the situation will only get worse. Your firm administrator should also play a key role in this.
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John W. Olmstead, MBA, Ph.D, CMC
Question:
Our firm is an estate planning practice in the suburbs of Washington D.C. We have five attorneys and six support staff working at the firm. During the COVID lockdowns in 2020, and to some extent in 2021, our attorneys and staff worked remotely. At first we all felt that productivity actually increased. However, after a month or two working remotely we began to change our minds. Communications with each other, review of work, etc. took much longer and once the lockdowns were lifted all of us were anxious to return to the office. We have been working almost exclusively at the office since the lockdowns were lifted. During the last several months we had to hire an additional attorney and a couple of paralegals. During the hiring process we found that prospective employees are demanding some form of remote work option. In order to hire these employees we had to provide them with a partial remote work option as well as signing bonuses. Is remote work here to stay?
Response:
I believe it is, especially in large metropolitan areas with heavy traffic congestion and long commute time. Law firms of all sizes are finding that hiring and retaining talent – attorneys and staff – is becoming increasingly difficult and is their number one strategic challenge and even more concerning than development of business. Large and small law firms are implementing permanent remote work policies in various forms.
Post-COVID-19, one of the innovations of the pandemic, the adoption of remote work, is set to attract the best talent to law firms. This was seen in a recent survey from legal recruiter Major, Lindsey & Africa, which found that most lawyers from the incoming generation are looking for an opportunity to work remotely, even if it’s just some of the time.
According to a recent survey conducted by FlexJobs survey, 97 percent of workers want some form of remote work post-pandemic, with 58 percent preferring to be full-time remote and 39 percent opting for a hybrid work environment. To provide insight into the broad interest in remote career opportunities amid an uncertain and fast-changing work landscape, FlexJobs has released a report: FlexJobs has released a report: Remote Work Statistics: Navigating the New Normal, which offers a by-the-numbers look at the current impact of remote work on the workplace.
“The data outlined in this report suggests that even during the most challenging of circumstances, remote work provides important benefits across the board,” said Sara Sutton, Founder and CEO of FlexJobs. “From improved mental health and better work-life balance to increased job satisfaction, the majority of employees have responded very favorably to remote work, with many now strongly inclined to pursue a permanent remote career. As we consider the future of work, it’s clear remote work policies will be critical in shaping the modern workplace,” Sutton concluded.
Visit https://www.flexjobs.com/blog/post/remote-work-statistics/ for more information.
I believe you should at least consider a partial remote work option going forward.
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John W. Olmstead, MBA, Ph.D, CMC
Question:
I am the sole owner of an estate planning firm in Chicago Suburbs. I have three other associates in the firm. Our volume of business has expanded rapidly during the last six months and we desperately need one to two more associates on board. I have been looking for three months and have been unsuccessful. I have had some leads but when I made offers they were not accepted. Your thoughts would be appreciated.
Response:
These are tough times for attracting and retaining talent in all businesses. Law firms are having difficulty hiring lawyers as well as staff. Many of my law firm clients are telling me that finding clients is no longer their primary concern – their top strategic concern is now finding, hiring, and retaining lawyer and staff talent.
During these times it is imperative that law firms get creative and think outside of the box. Flexibility is key. Here are a few things that some of my clients have done that has resulted in successful attorney hires:
Successful law firms must attract both clients and talent in order to be successful. All businesses are suffering and having a hard time attracting and retaining attorneys and staff. This also means that other law firms are desperate and may try to steal you lawyers and staff with better pay or other incentives. You need to review all of your benefits and policies as well as compensation to make sure that you are more that just competitive – you need to be on the cutting edge and ahead of the pack. Employees now expect more flexibility, remote work, etc. than ever before.
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John W. Olmstead, MBA, Ph.D, CMC
Question:
Our firm is a litigation defense firm in the Chicago suburbs. Four of us started the firm twenty years ago and we have since grown to a sixteen attorney firm consisting of eight equity partners and eight associates. The other four partners were initially associates and later admitted after they had been here for five to seven years. The other four partners bring in very little business and their production is dismal compared to the four founders. Our associates working attorney receipts are larger than a couple of our equity partners. Our compensation is a equal salary for all partners with remaining profits allocated to each partner based upon their ownership percentage which are 15% for each of the four founding equity partners and 10% for each of the other equity partners. They was no buy-in for the newer partners. Profits have been flat for several years and partner compensation as well. We would like to hear any thoughts that you may have.
Response:
It sounds like partners are left to their own and are not accountable to other partners in the firm. Successful firms your size have performance expectations and guidelines for all attorneys in the firm with consequences for non compliance.
Many firms your size use a compensation committee to determine partner compensation and performance peer reviews – – both written and face to face interviews are conducted with each partner in the firm. Partner performance reviews are often avoided like the plague by many firms. They are time consuming and it is hard to give candid feedback to colleagues. However, without partner performance reviews neither the partners nor the firm will reach full potential. When partner performance reviews are used not only to review performance but to set measurable goals this data can be incorporated into the compensation system and provide additional hard data for providing a true measure of partner contribution and value.
You may have to consider changing your partner compensation system or changing nonperforming partners status to non-equity partners or associates.
You must muster up the courage to confront underperforming partners but before you do that you have to determine what the baseline performance expectations are for the firm, communicate them, and put in place consequences for non-compliance.
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John W. Olmstead, MBA, Ph.D, CMC