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Richard G. Stock*

This article was previously published in Lexpert, June 2003.

Law firm management comes in all shapes and sizes. Its configuration and effectiveness depend on the scale, the culture and the evolution of the firm. For many partners, management is easily confounded with leadership and administration. Law firms need all three, and require it in many different ways.

The first significant wave of change to hit law firms in the last 5 years was increased centralization of leadership and management responsibilities with individuals rather than groups. Standing committees dealing with administrative functions are not as apparent in today’s firms. Committees responsible for finance, technology, human resources, space planning, and even marketing have been supplemented by experienced professionals in all but the smallest firms. Only major resource decisions and policy questions are typically referred to executive committees.

Professional matters, such as student recruitment, professional development, knowledge management, precedent and opinion banks, are handled by permanent work groups or referred to standing committees. Firms with more resources are investing in professional positions, usually given to individuals with legal training, to lead programs and initiatives in those areas. There is good evidence that such investments in professional positions are yielding dividends in two ways. Firstly, they reduce the amount of time other lawyers must spend in meetings that are unproductive (read non-billable), even if they are interesting. Non-billable time is best spent on getting client work and on building competencies in others and in oneself. Secondly, performance can be better managed for results when an individual rather than a group is held accountable.

Practice Groups

Firms with as few as 25 lawyers can have viable practice groups. These can be organized by competency (area of law), industry sector (type of client), or geography. Law firms are opting for a matrix arrangement, because several goals can be achieved at the same time. The classic organizational design is by competency, since it is the most easily controllable and lends itself well to local and regional markets and to individual business development. Specialized teams, such as tax, immigration, labour and employment, and intellectual property, tend to operate as service groups to other practice areas in full-service firms. This is in marked contrast with specialty (boutique) firms, which must have clients of their own and will organize along industry lines.

Firms with an institutional client base are beginning to map along market/industry sector, as well as along competency lines. Membership in these industry groupings is typically multi-specialty and cuts across the line of classic competency-based practice groups. Clients populating these industry sectors often have multiple legal requirements, and do not pay particular attention to provincial and national borders. Law firms struggle to find partners who can lead and manage practice groups and industry/market sector groups. It is even more difficult to find office managing partners with the skill to balance professional and market imperatives, such that the firm can move from peaceful co-existence to strategic business results.

The Managing Partner

Law firms have Managing Partners, Chairpersons, Chief Executive Officers, and Chief Operating Officers, depending on their affinity for corporatization. Regardless of the name given to the positions, there remain an irreducible number of functions most Managing Partners should carry out by virtue of office, and can do well with the right focus and training. These include spending half of their non-billable time meeting with significant clients of the firm, acquiring senior legal talent for the firm, and ensuring that the firm’s strategic business priorities are clear and understood by everyone in the firm. Add to this the alignment of compensation systems for partners, other lawyers and staff with the firm’s business strategy, and the work order becomes more complex. And underpin all of this with values and operating principles that must be demonstrated everyday to produce a mission that is nearly impossible. It should come as no surprise that management is hard to find and hard to keep.

You Don’t Know What You’ve Got ’til It’s Gone

Few partners want to make a career as Practice Group Leaders or Managing Partners. Accountability for resources and for the performance of others appeals to too few individuals with law degrees. Almost everyone will consent to a tour of duty in such positions – 3 to 5 years is usual. But the price in political capital and in personal life mounts up. Romancing the Stone was only a two-hour movie.

Firms would do well to keep the management and leadership they have and then find new combinations of projects and responsibilities to keep them interested in their portfolios. Partners should be better compensated for taking on these positions than if they practiced full-time. Still, every firm should be more demanding than ever by insisting that 4 to 5 measurable goals each year be assigned to every department head, group leader, or managing partner. As the adage goes, “You get what you measure and you get what you pay for.”

* Richard G. Stock, MA, FCIS, CAdm, CMC, is a partner with Catalyst Consulting. The firm has been designated the Preferred Supplier for Legal Services Consulting by the Canadian Corporate Counsel Association. Richard can be contacted at (416) 367-4447 or through the website at http://www.catalystlegal.com.