16 Characteristics Present in Most Financially and Professionally Successful Law Firms
by Joel A. Rose
As a student of law firm management, for the many years that I have been a management consultant to law offices, I have always been intrigued by those characteristics that are present in the more financially and professionally successful law firms that are wholly or partially lacking in under-achieving firms. As the result of management consultations with hundreds of managing partners and members of executive committees, below are 16 characteristics that are usually found in most financially and professionally successful law firms.
1. Development, Recognition and Articulation of Shared Values.
In most financially and professionally successful law firms, one can identify a handful of partners who are central to the success of the organization. The attitudes and shared values of these partners become critically important to maintaining the desired environment. These firms have leaders who represent a model of performance and talk about firm's values other than money. If the ties that bind are only economic, the organization will be highly unstable and vulnerable. Most unstable environments sooner or later become decidedly non-collegial and partners in such organizations frequently become disrespectful of each other.
2. Establishing/Reinforcing /A Sense of Professionalism Leaders in the more successful law firms establish/reinforce among their attorneys and staff a sense of professionalism regarding client service and the role of their lawyers in the resolution of disputes, the conduct of business, and the overall order of our society. Simply put, lawyers who cannot behave in a professional manner destroy collegiality and those other factors usually found in successful firms.
3. The Vision Thing
Most successful law firms possess an organizational vision or mission that is important to a sense of well being, and is the essence of a sense of purpose. Attorneys in firms in which there is no agreed purpose, or have dramatically different visions of the firm in constant unresolvable tension, frequently become less than successful, at various levels.
4. Defining Expectations
Partners in most successful law firms have established and can articulate a criteria of what it means to be a partner in that firm, i.e., what overall time commitment is expected? What general billable hour commitment is expected? What time commitment for business development is expected? Whether there is a minimum expectation for all partners, or whether there are tailored expectations, is less important than having communications about and agreements over the general expectations. A criteria is also important in regulating the selection of partners laterally or from the associate ranks. An example of a criteria would be: a partner in the law firm is expected to be make a strong contribution in at least three of the four areas--business origination, management of work, working attorney production, and firm administration or community service. Expectations are also defined for associates on a total firm commitment basis.
5. Paying Attention to Partnership Structure/Firm Ownership
Some firms utilize contract arrangements with attorneys (e.g. equity partners, senior counsel, contract attorney, contract partner, etc.) to slot lawyers in arrangements where there is a base salary plus a bonus tied to performance. These arrangements may permit a firm to retain a valuable lawyer who has been trained by the firm, without diluting or overexpanding the partnership. These contractual arrangements, if fairly administered, can be used to permit greater flexibility in life style choices by lawyers.
6. Paying Attention to Gender and Diversity Issues
Partners in the most successful law firms focus their attention on how the firm deals with issues of gender and diversity. Successful firms are committed to equal opportunity hiring and opportunities for career advancement without regard to race and gender. Moreover, in today’s practice environment which stresses diversity, a firm which has women and minorities in important positions will have significant advantages in attracting and retaining business.
How the firm defines and determines productivity can contribute to, or be destructive of, a successful environment. Lawyers tend to be remarkably attuned to "score-keeping" issues.
Many questions should be considered, i.e., how the firm tracks business development effort and success; whether the tracking process should be numeric or on some other basis ( narratives in year end compensation memos). If the firm does not track business development efforts, how will it be able to reward this aspect of performance? How does the firm handle billing, i.e., is the partner managing the case handling the billing functions, or is the billing function retained by the lawyer who originated or controls the client? Is the environment one in which work is passed to the lawyer best able to handle the matter, or is work being hoarded? Is the firm composed of individual lawyers who are in reality competing with each other, or is it composed of lawyers acting as a team each trying to maximize firm profitability and trying to provide the best service possible to the client? At the very least the score-keeping practices should be clearly articulated and understood, and at least open for discussion.
Two distinct aspects of compensation impact on a firm’s success: one is the profitability of the firm and the other is how profits are distributed. If a firm cannot achieve reasonable profitability on a per partner basis, great pressure is placed on the distribution process. Management's role is not only to encourage the steps which produce reasonable profitability, but also to manage expectations so that they will be in line with profitability.
A compensation system should (a) motivate partners to perform in ways that maximize firm profits and to cause the firm to achieve its other objectives; (b) reward performance and contribution; and (c) solidify the ties with partners who are critical to the ongoing success of the institution.
Those partners with the economic horsepower to threaten or destroy the firm view the firm as insiders with a proprietary interest--not as claimants seeking to extract as much as possible from the organization. Firm's confronted by a claimant mentality tend to try appeasement which is frequently unsatisfying to the claimant and others in the organization. (I use appeasement to reflect what Churchill described as feeding the crocodile in the hope that it would eat you last.)
The vast majority of partners in most successful law firms are hard working, ethical, competent and honest. There is an atmosphere of trust among partners and between the management of the firm and its partners. The necessity of rules and procedures should be carefully examined, and there is usually a distinct bias against controls on partner behavior.
In a milieu of trust, however, there must be the capacity to sanction behavior amounting to a lack of trust. Moreover, a trusting firm must have the capability to identify and deal with those partners who are not worthy of trust.
10. Practice Area Leadership
Most successful law firms have established and implemented sound leadership in their practice areas. How these groups are lead is extremely important to the success of the firm, and to the general sense of well being among its participants.
11. Selection Process
Compatibility factors are taken very seriously in the more successful firms. These include whether the individual is a team player, are considered in virtually every decision involving lawyers--of new associates, in lateral hires, in decisions to make associates partners, in the decision to make non-equity partners equity partners, and in the selection of leaders of the firm.
If the firm values collegiality and mutual respect, it seems basic and sensible to consider whether individuals being brought into the firm as lawyers are considerate of others, respect others, treat subordinates fairly and with dignity, are thoughtful and caring, and are capable of unselfish behavior.
In most successful law firms, partners and associates are out to help each other, as opposed to out to get each other, tend to be happy and productive. Recognition of helpfulness by firm management--through compensation and other forms of recognition--is extremely important. Punishing behavior which is antithetical to helpfulness is extremely important.
13. Balance of Power
Most successful law firms consciously seek balances of economic power within the firm. It is healthier to have a firm built on many sources of business generation, rather than on one or a few. It may be beneficial to have balance among practice areas, and balance between or among offices in a multi office environment.
14. Partner Evaluations
In many successful law firms, critical self analysis, done in a constructive and positive spirit, can be useful and affirming. Partner evaluations deliver otherwise hard to deliver messages, and to communicate praise and appreciation; they can also serve as a legitimate channel by the law firm's leadership to receive information, complaint and suggestion. Firms which neither have evaluations nor open communications of the type which would occur in evaluations, risk smoldering unhappiness and may lack the information to know what is going wrong.
15. Problem Partners
Most successful law firms have established an approach to deal with problem partners. It is demoralizing where leadership of the firm lacks capacity to act. Some firms can be unmerciful in culling the herd. Those firms tend to be driven to maximize profits, and everyone gets the message that his or her value to the firm is dependent on continuous high performance. Such environments tend to produce significant profits and significant stress; loyalty of partners to the firm may be diminished in reflection of diminished loyalty of the firm to the partners. Other firms consciously decide not to act quickly to give the partner a real chance, or they simply lack the will to deal with problem partners. In these firms the problem partners hang around, draining valuable dollars through compensation and cause productive partners to snipe (and sometimes even to leave).
16. Business Development
The overwhelming majority of successful law firms continually emphasize the importance of establishing and maintaining an environment that is conducive to having team marketing focusing on particular industries or clients and developing strategies to insure the orderly succession of clients from senior partners to other partners.
Attorneys in most successful firms are well focused on specific practices where they are economically competitive, even against the intense competition from larger national and regional firms. While individual attorneys may have free rein to excel, collectively they are keeper's of the firm's future. Successful law firms will grow insofar as they permit attorneys to perform for their individual benefit and the firm's. Lawyer management's function is to provide an environment in which the synergism between the lawyers and the firm encourages that to happen.
©1999-2015 Joel A. Rose & Associates