The Flaws of the Typical Law Firm Management Model

Often to their own detriment, most small to mid sized law firms follow some variation of two basic management models. Under the first model, one lawyer serves as Managing Partner and under the second model the management is run by a small committee of lawyers. Both systems are flawed but yet these models still account for a majority of firms.

The flaw in the first model is that the Managing Partner often tends to be the most or one of the most successful lawyers in the firm. Rather than keeping this lawyer actively engaged in the practice of law and the development of new clients, this model drags the Managing Partner into the administration of the firm. The Managing Partner must manage employee turnover, training, compensation, benefits and retention, associate recruitment and mentorship, partnership mergers and strategic referral relationships, partnership compensation, accounting and tax returns, the firm’s trust account, 401k and profit sharing plans, succession planning, budgeting and spending, firm functions, billing practices, malpractice lawsuits, filing systems, new software evaluation and implementation, the firm’s IT provider, website, marketing initiatives, sponsorships, charitable giving in addition to presiding over partnership meetings, employee meetings and firm meetings. Too often, the Managing Partner’s involvement in these matters can consume 50% or more of the Managing Partner’s time leaving the Managing Partner with little time for client representation and client development.

Often this model will include support staff beyond merely secretarial support. Firms often have an office manager who assists with a variety of management tasks but rare is the office manager who can attend to a meaningful amount of this work without the in-depth involvement of the Managing Partner. In addition, the office manager has to be a Jack-of-all-Trades, a generalist who is not afforded the ability to concentrate most or all of the office manager’s time in areas of greatest strength.

The Managing Partner may also employ various ad hoc or standing committees to assist with the workload. IT Committees, Marketing Committees, Holiday and Summer Party Committees and similar committees are commonly seen.
Even through the employment of such committees however, the Managing Partner must still spend time overseeing the committees and often the net drain on the firm’s economic engine can be greater than if the Managing Partner performed these functions independently.

Compounding the flaws of this system, the Managing Partner is often not compensated at a level that makes up for the sacrificed time. The Managing Partner’s book of business often declines during his or her term of office and can take years to build back up. The overall negative financial impact of this system on the firm is astounding. Yet it is the model that many, if not most, firms choose.

The second firm management model is that of a Management Committee. Instead of one attorney dedicating time to the management of the firm, the task is divided up between a small committee of lawyers. This model brings with it a tremendous amount of overlap as members of the Management Committee attend many of the same meetings and spend significant amounts of time conferring on various firm issues on an ad hoc basis throughout each day. In the end, it carries the same negative consequences as the Managing Partner model but spreads the negatives across three lawyers instead of one.

Increasingly, law firms are seeing the wisdom in hiring a non-lawyer business person to manage or consultants to assist in the management of the firm. Turning to those whose education and experience qualifies them to run or manage a business makes sense. There exist enough non-lawyer management solutions that a better managed law firm with higher net profits is achievable for a firm of any size. Allowing those who may have otherwise been managing the firm to concentrate on serving existing clients, mentoring younger lawyers and developing new clients is the better choice.