John W. Olmstead, MBA, Ph.D, CMC
More and more law firms are becoming frustrated at their inability to achieve a consensus and make timely decisions on matters of firm policy, strategy, marketing, and management. Missed opportunities and false starts on firm management and marketing projects are often rampant. Many lawyers are leaving their law firms to go into solo practice in order to avoid the hassle of group practice and the resulting stagnation that frequently exists. Clients are leaving law firms as well. Consider the following statements often expressed to us by some of our law firm clients:
The root cause of these problems is ineffective law firm leadership. Law firms that fail to address leadership issues may find themselves unprepared for the future and unable to acquire new clients and retain existing clients. As the profit squeeze, competition, and the maturing marketplace for legal services continues, law firms must be on top of every opportunity and aware of every threat to survival in the changing 1990s and beyond. As markets change; approaches to the delivery of legal services must change as well. This will require strong and effective leadership.
Unfortunately, both past studies and surveys as well as day-to-day experience in the trenches indicates that effective leadership practices is non-existent in many law firms. A recent study conducted by the Young Lawyers Division of the American Bar Association reported that both male and female lawyers do not have enough time for themselves and their families and their jobs are tense and pressure-filled. The Young Lawyers Division also reported the following causes of lawyer discontent: Poor communications Failure to set and communicate standards for evaluations Failure to communicate
plans and goals Lack of training and poor mentoring A precipitous decline in collegiality Failure to provide equal opportunities for women and minorities Failure to properly delegate client work The study concluded with the observation that the primary cause of lawyer discontent was the existence of widespread, unsound management practices.
Clients are also unhappy with law firms. A study conducted by the American Bar Foundation found that clients are unhappy with their attorneys for the following reasons:
Recently I conducted a preliminary study to establish an approach for addressing leadership interpersonal characteristics using the case of attorney members of a mid-western voluntary bar association. A systematic random sample from a population of 40,000 attorneys of a mid-western voluntary state bar association was conducted by mailed questionnaire in which subjects completed the FIRO-B (Fundamental Interpersonal Relationship Orientation) instrument and a demographic questionnaire designed by the author. It focused on perceived behavior in leadership to determine whether attorneys express general interpersonal preferences for leadership roles. Based upon low wanted and expressed control scores on the FIRO-B, results indicated that a majority of attorney respondents may avoid leadership roles and being led by others. This author believes that improvements in law firm leadership will only come about as a result of improved leadership selection and action orientated leadership development programs. Attorneysmust begin to shift their attention from a transaction orientation to a firm-first client orientation. Attorneys must begin to make investments in non-billable time and consider such as investments for the future. Attorneys must begin to formulate a balance between accountability and autonomy and begin to embrace change.
The first premise that we must consider is that leadership and management are not the same thing. In fact, in the law firm setting, it is appropriate to distinguish between administration, management, and leadership. Administration is concerned with the day-to-day business and practice support activities of the firm that should be the responsibility of the firm administrator, office manager or other assigned staff member. Specific functional areas of responsibility include supervision of staff personnel, accounting and billing, collections of accounts receivable, financial management and profitability analysis, budgeting, information systems, purchasing, and facilities management. Management is concerned with the production and delivery of professional services to clients. Specific areas of responsibility include committee management, planning and oversight of information systems, development and enhancement of client relationships and communications and development and maintenance of practice support system. These functional areas are often the responsibility of the managing partner or chairpersons of firm practice groups. Leadership is concerned with the executive functions of the firm. These functions involve the long-term policy activities of the firm and are often performed by a board of directors, the partnership at large, or committee. Specific areas of responsibility include long-range strategic planning, practice development, marketing, lawyer recruiting and development, lawyer performance management, mergers and acquisitions, service quality management, and partner compensation.
While leadership skills are crucial at the leadership or executive level, basic leadership skills are needed in administration, management, and executive leadership levels. These skills must exist at numerous levels within the organization. Leadership skills need to be practiced by members on the executive board, the executive director, managing partner, practice group chairpersons, firm administrators and any other law firm professionals charged with leading teams, managing projects, and managing administrative functions.
In general, the foundation of leadership is built upon exhibited behaviors illustrating a proven track record of trust, respect, and accountability. These are the building blocks required for the development of leadership practices. Without these building blocks leadership cannot exist or be developed. The law firm culture must be nourished in such a way as to support these behaviors. These behaviors must become a part of everyday practice in dealing with clients as well as partners and others within and outside of the law firm. Law firm leaders must develop and practice the following behaviors:
Potential roadblocks are many. J. Edwin Dietel points out in his book Leaders Digest (1996, American Bar Association) that the culture of the legal profession stresses individualism and independence and is antithetical to basic leadership concepts. Lawyers are trained under a paradigm that is foreign to effective leadership. Lawyers are trained and conditioned to be aggressive, combative, and independent and that lawyers only win or lose. Dedication and commitment are fundamental components of effective leadership. However, many professionals such as accountants, engineers and lawyers tend to look for what’s wrong rather than what’s right. Effective leaders are able to overcome their negative orientation. Although many lawyers are now attentive to the management aspects of their practices, most have yet to examine what makes extraordinary lawyer leaders.
The organizational structures, practices and procedures that exist in many law firms also discourage the development of leadership behaviors and practices. Many firms have a short-term production orientation focused upon individual lawyer productivity and production based upon billable hours and dollars billed and collected. A “me first” attitude rather than “firm first” “client first” attitude is frequently prevalent. Many lawyers hoard clients and consider them their clients as opposed to firm clients. These lawyers use individualistic approaches to client problems as opposed to team approaches. Compensation and other reward systems are not well suited to fostering leadership and developing teamwork in law firms. Firm governance, practice management, and performance management systems in law firms are also ill-suited to foster a climate encouraging and supporting leadership.
Law firms are finding that developing effective leadership skills can be a very difficult task. Dealing with leadership is a very emotional issue for most law firms due to the independent nature of most lawyers and the general unwillingness of firm lawyers to put aside their personal interests for the good of the firm. In fact, in many cases existing law firm partnership structures reinforce this tendency. What is needed is a balance between partner autonomy and partner accountability. Leader will either have to be recruited externally (ie lateral partners) or skills will need to be developed internally.
The firm can begin by conducting a self-assessment using the following 10 point checklist:
While professional non-lawyer executive directors, administrators, and office managers can provide some relief, the lawyer owners of the firm must still develop appropriate leadership skills and perform upper-level leadership roles. In some firms these skills are simply latent and need to be identified and appropriately reinforced. In other firms such skills are nowhere to be found. Such firms will have to either recruit partners with requisite skills from the outside or develop leadership skills internally. This will take time and will require dedication, focus, patience, and hard work.
This author believes that improvements in law firm leadership will only come about as a result of improved leadership selection and action orientated leadership development programs. Attorneys must begin to shift their attention from a transaction orientation to a firm-first client orientation. Attorneys must begin to make investments in non-billable time and consider such as investments for the future. Attorneys must begin to formulate a balance between accountability and autonomy and begin to embrace change. Only then will an environment be created that supports leadership development that fosters an organization that can facilitate ongoing new client acquisition and retention in the future.
Dr. John W. Olmstead, MBA, Ph.D., CMC, is a Certified Management Consultant and the president of Olmstead & Associates, Legal Management Consultants, based in St. Louis, Missouri. The firm helps law and other professional service firms improve the operations and management of their practices and the lives of their practitioners. The firm, founded in 1984 serves clients across the Globe assisting them with implementing change and improving operational and financial performance, management, leadership, client development and marketing.
Dr. Olmstead’s assignments have covered the spectrum of management issues. However, in recent years most of his time is focused on engagements helping firms with: Partner Compensation, Governance, Succession/Exit Planning, Strategy & Competitive Business Models, Profit Improvement programs, and Client Service Programs.
Dr. Olmstead is the Editor-in-Chief of “The Lawyers Competitive Edge: The Journal of Law Office Economics and Management,” published by Thomson West. He is currently serving as Past Chair, Illinois State Bar Association Standing Committee on Law Office Management and Economics and as a member of the Legal Marketing Association (LMA) Research Committee. Dr. Olmstead may be contacted via e-mail at email@example.com.
Additional articles and information is available at the firm’s web site: www.olmsteadassoc.com.
© Olmstead & Associates, 2010. All rights reserved.