Asked and Answered

By John W. Olmstead, MBA, Ph.D, CMC

Q. Our firm has 25 attorneys. We are located in the greater Washington D.C. area. I am one of three members on the Executive Committee. While we try hard to effectively manage the firm too many people are trying to make decisions on behalf of the firm, therefore nothing is getting done. All of the partners continually second guess everything that our committee tries to do. I have been told that we need a governance plan. What is a governance plan?

A. Sounds like your practicing attorneys are spending too much time on administrivia and there is not a definitive outline of roles and responsibilities in the firm. Everyone is dabbling in the day-to-day maintenance and administration of the office, leading to decreased profitability and billable hours. Not only are each of you practicing law, you are also involved in the everyday management of the firm as it relates to finance, staff and systems. Clearly these are roles within the office that could be delegated to a trained and professional administrator. It just takes a little push of encouragement and trust on behalf of the partners to let go of the day to day details of running the firm.

You might want to develop a three tiered governance plan to help draw a line in the sand regarding responsibilities. 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 a 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, executive committee 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.

In essence a governance plan are job descriptions specific to management, administration and leadership and spells out roles, responsibilities, and accountabilities for each. Once established these establish the boundaries and help prevent backsliding.

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John W. Olmstead, MBA, Ph.D, CMC,(www.olmsteadassoc.com) is a past chair and member of the ISBA Standing Committee on Law Office Management and Economics. For more information on law office management please direct questions to the ISBA listserver, which John and other committee members review, or view archived copies of The Bottom Line Newsletters. Contact John at jolmstead@olmsteadassoc.com.