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The Relationship Between Leadership and Management in More Successful Law Firms

Financial stability within a law firm practice does not guarantee harmony within the partnership itself — far from it. Law firm management that does not acknowledge or reflect the importance of firm leadership and the contributions and needs of its members endangers a firm’s cohesiveness and its very existence, no matter how many clients come through the front door.

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Financial stability within a law firm practice does not guarantee harmony within the partnership itself — far from it. Law firm management that does not acknowledge or reflect the importance of firm leadership and the contributions and needs of its members endangers a firm’s cohesiveness and its very existence, no matter how many clients come through the front door.

By examining the lack of leadership in a hypothetical mid-size law firm, Baxter, Rice & Stern, some changes and solutions could suggest themselves to firms that may not know they have problems or wish to avoid certain problems.

Exercising Leadership

Hypothetical firm; real problems. Baxter, Rice & Stern is at a crossroads. It is no longer the firm founded 18 years ago by three partners, Ed, Tom and George, who left a larger firm because of their dissatisfaction with a big-firm setting.

Today, their own firm is run by a management committee comprised of the three senior (and founding) partners. The committee determines policy, makes major decisions affecting the firm, and sets partner compensation. Partner meetings are held monthly. The firm agenda and summaries of financial reports are distributed to partners at the meetings.

During the last three years, Baxter Rice has acquired two smaller firms. While these acquisitions have been successful from an economic standpoint, the acquired partners and a few of the firm’s mid-level and junior partners have begun grumbling about the firm’s lack of leadership and direction going forward.

Although the firm’s overall client base appears to be solid, in light of the highly competitive market in which the firm practices, several partners believe that more innovative plans must be developed to address the internal and external trends that are most likely to affect the future of the firm generally. These changes include considering adding one or two other practice areas so the firm can provide better service to its key clients and planning for a smoother transition when some of the older partners step down by dint of age, health, etc.

Several of the younger and mid-level partners are familiar with many of the current trends for promoting the firm, developing new client business and investing in lawyer additions in growth-oriented practice areas. Also, they resent the negative responses given by several senior and mid-level partners concerning the investment of firm capital to upgrade the firm’s technology to facilitate the production of client work. These feelings of frustration are not unreasonable from the younger firm members’ point of view. They have not necessarily received the benefits of these long-term relationships and, more to the point, have not been invited to participate in their cultivation. Also, they resent the overly conservative attitude of senior partners to spend firm money to invest in the future of the firm.

While these factors might indicate that the crisis falls on the issue of age and the unwillingness of the older partners to spend money to progress the firm, these are not necessarily the crux of the actual problems. The problem of lack of firm leadership has been built into the system, layer by layer, over the years. In order to plan effectively for the future, firm management must delve within and undo the chain of events, issue by issue, that has led to its present crisis. The firm needs more and better leadership to conduct more strategic planning to determine what the partners would like the firm to become, going forward.

The scenario. Ed Baxter is the senior managing partner and a member of the executive committee. His contacts and reputation have been the firm’s mainstay since its inception. Tom Rice is the second member of the executive committee. His ancestors’ good works have kept many doors open to the firm. George Stern is the third member of the committee. He sits on a lot of boards and has toyed with the idea of running for political office in the city. These three partners are quite satisfied in the manner in which the firm has evolved and would like to keep it that way until they decide to reduce their active involvement in the firm.

Fred has been a partner for two years, and Sam will be a partner by the end of the year. There are many other such Freds and Sams at the firm. Imagine that the following exchange takes place between Ed Baxter and Tom Rice late one morning:

“Tom, have you seen Fred?”

“He was around earlier. Check with his secretary. Say, are we hiring that real estate guy?”

“I won’t be there, but George will announce it at tomorrow’s firm meeting. We’ll also probably want to see that labor specialist for a final wrap up. There’ll be some shifting around down there once he’s aboard but that area is flexible. Eileen, tell Fred I’m ready to those contracts.”

“I’m sorry Mr. Baxter, Fred is at a director’s meeting this afternoon.”

“Did they ask for him?”

“I didn’t take the call.”

“Sam, this is Ed Baxter. Could we get together about some contracts I need for a meeting in the morning?”

While this exchange is taking place, junior partner Fred is on the road, cultivating his own patch. Given the present state of affairs at the firm, he feels justified in setting his own strategy for success. While the client he is seeing is not yet the firm’s largest, it will be after Fred meets with the company’s directors this afternoon. Then at tomorrow’s firm meeting, he will make his own announcement.

Every partnership, no matter the size, needs leadership. Leadership and management need to exist in every law firm. A financially and professionally successful law firm does not simply evolve. It must be built in an orderly and systematic manner based upon five principle factors: 1) the values that are important to the partners of a firm; 2) the external changes affecting the firm over which the partners may exercise little or no control; 3) the internal changes within the firm over which the partners may exercise some or complete control; 4) the motivational needs and incentives required by the partners to satisfy their professional, personal and financial objectives; and 5) the competitive market(s) in which the firm practices.

The terms “leadership” and “management” of a law firm must go hand-in-hand, but they are not synonymous. In simplistic terms, the leadership role is the ability of an individual or group of partners to influence other attorneys (partners and associates) to follow in the achievement of common goals.  The management role, on the other hand, is the coordination by the managing partner and/or by the management committee of the cooperative activities of all or most of the attorneys for executing the functions of planning, controlling, organizing, staffing, directing and taking corrective actions, as required.

Leaders are innovative and focus more on ideas and the abilities and talents of other members of the firm to achieve the firm’s immediate and longer term objectives. Managers focus on process and concentrate more on how things get done.

Clearly, in any law firm there may be leaders who are not managers and managers who are not leaders. In the ideal situation, there are individual partners or a committee of partners whose members possess the appropriate balance of leadership and management skills for the firm to be professionally and financially successful.

Partners Must be Willing

Leadership and management are essential for a professionally and financially successful law firm, and they both call for all of the partners to agree to subordinate some degree of their independence and autonomy to a managing partner or a management committee. As the result, those partners who are perceived to be firm leaders and other members of the firm are typically connected by a formal or informal understanding that bind them morally, intellectually and emotionally in their desire to achieve common goals.

All of the attorneys in the firm need to recognize that the impetus for successful leadership is derived from the willingness of all firm members to “follow” and “be governed.” In other words, the partners must strike a balance between their rights as owners and their responsibilities as citizens of the firm. They must relinquish some personal prerogatives in order to achieve the overall results that they would not be able to attain on their own.

In theory, all partners are created equal. By dint of partnership status, they are accorded the same rights and privileges. As many firms discover, though, this is not the case in practice. Invariably, each partner has his or her own idea about how to perform the job, and partners exercise their authority accordingly.

In some firms, the leadership role is assumed easily and naturally, because the partner serving as the managing partner may be either a founding partner or a partner who controls a significant client base. In firms in which the partners are relatively young and inexperienced, the process of “natural selection,” as it were, may be somewhat more difficult, if not virtually impossible. In situations in which no partner surfaces as a natural leader or no one wants the job, the firm must take aggressive action if it wishes to obtain leadership in order to grow and satisfy the professional, economic and personal objectives of its members.

What Partners Expect from their Firm’s Leaders

What kind of person makes a good leader? Generally, lawyers are not recruited to a law firm on the basis of their leadership skills.  Consequently, lawyers’ leadership skills are greatly varied.

The requisites for leadership are, in this day and age, well known. The leader must garner respect and support, have clout and wield it when necessary. The leader’s skills must combine judgment, timing and vision.

Those partners who are successful leaders must keep the objectives of the firm in proper perspective. They must be able to rise above the “self” and understand that the good of their firms must come first.

One significant problem in many of today’s law firms is the paucity of partners who are true firm leaders. There are plenty of partners who are capable of managing, but, in the eyes of the majority of partners, most lack the leadership component.

During the 48 years that I have been retained by partners as a management consultant to assess and make recommendations to improve their firm’s financial position and its management processes, many mid-level and younger partners have referred to certain senior partners as the “heart and soul of their firms.” It is curious that in a great many cases, most of these mid-level and younger partners are hard pressed to identify other members of the firm who they perceive as possessing the appropriate leadership component. Below is a list of what the significant majority of the above mid-level and younger partners said they expect from the leaders of their firms:

It is my opinion that collaboration is the best way to generate ideas and options for leading the firm. In the more professionally and financially successful firms, much gets done by teams of partners pulling together. The firm, not the leader, becomes the star. The leader serves primarily as the one who articulates/recommends the firm’s goals and plans for accomplishing its objectives.

Hints for Effective Communications

Communication is essential for collaboration, and the latter is essential to try to gain proper partner “buy-in” to implement new and innovative initiatives to progress the firm.

To insure that the firm’s leaders have enough time to communicate properly with the attorneys, the managing partner should attempt to delegate as much of the day-to-day administrative work as possible to the firm’s Director of Administration or Office Administrator. The managing partner should:

Conclusion

There are some leadership functions, however, that should be performed by the managing partner or members of the management committee that should not be delegated. There are other management tasks that may be performed by either the committee or the partner, but also may be performed by individual members of the management committee or other lawyers in the firm. These firm leaders should be charged with performing those leadership functions that require their specific talents and energy. In placing responsibility for other tasks, it is important to make certain that they have the time to perform the functions that only they can perform.

In assessing his or her leadership function, the managing partner should realize that today’s attorneys’ expectations regarding the practice of law may well be different from the expectations that attorneys held 10 years ago and longer. These expectations may have changed in regard to hours of work, specialization, income, risk, independence and ethics.

A firm’s leader needs to consider how the social, educational and economic backgrounds of the new crop of attorneys have changed, and how these changes may be reflected in their attitudes, needs and expectations. Ultimately, these changes will be reflected in the firm’s recruiting activities, turnover, work product and fields of specialization.

In the final analysis, it is the work that binds and unifies the various components of the firm — that is, the attorneys. The prudent leader will recognize the need to chart a course that mediates between the requirements of the practice of law and the needs of those who perform the work.

***** Joel A. Rose is President of Joel A. Rose & Associates, Inc., a firm of management consultants based in Cherry Hill, NJ. A member of the Board of Editors of this newsletter, he may be contacted at 856-427-0050 or jrose63827@aol.com.

The views expressed in the article are those of the authors and not necessarily the views of their clients or other attorneys in their firm.

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