EMPLOYING AN OFFICE ADMINISTRATOR
by Joel A. Rose
As consultants to the legal profession, a segment of our business is derived from recruiting office administrators. Many of the firms we work with raise the same points in regard to reasons for employing an office manager or a replacement, namely, to free the partners to practice law; to implement the day-to-day administrative policies; to assist in developing firm policy; to improve operations; to manage overhead; and to contribute to retained income.
Why then, do so many firms experience difficulty in implementing their ambitious plans? This is a key question, and the answer may best be described as an equation consisting of the personalities in the firm, the willingness of the partners to make the concept work, and the ability of the administrator to relate to the firm through its lawyer and administrative personnel.
The administrator usually has overall responsibility for implementing the day-to-day administrative, personnel and fiscal functions as agreed upon with the firm's lawyer management. The authority and responsibilities of the administrator may be classified into broad areas of work, namely: (1) overseeing the operations of nonlegal personnel and their support of the lawyer service; (2) financial management; (3) personnel administration; and (4) general administration.
One basic factor leading to an administrator's success concerns the firm's readiness to accept the concept of an administrator--both organizationally and psychologically. Typically, when partners consider employing an office administrator, most everyone verbalizes the benefits to be derived from someone who will function in this capacity.
However, the question that oftentimes remains unanswered is whether the attorneys are willing to share their individual combined authority and management prerogatives with "an outsider," who is oftentimes not even an authority.
We are of the opinion that a firm should consider employing a full-time office manager when it approaches approximately ten attorneys and an equal number of nonlawyer personnel. Up to this point, it is conceivable that a senior secretary can double as an office manager. However, once the suggested number is reached the complexities and administrative problems appear to be too difficult for the secretary to cope with, and at the same time serve an assigned attorney.
In some firms a partner serves as office manager in addition to handling a full client workload. While a firm is small, it is conceivable that the partner can adequately manage this double-duty. However, as the firm increases in size, the attorney/manager is frequently unable to handle client workload and control administrative activities in the desired manner.
Another basic factor directly related to an administrator's success or failure is the willingness of the partners to agree on firm policy. I am familiar with firms in New York City whose partners have indicated, "Yes, we are interested in having an office administrator; however, we are somewhat apprehensive that this individual is going to systematize us to a point where the creativity of our attorneys will be thwarted." It is not unusual for an attorney to say "Well, I think that an office manager would be a wonderful idea for this firm . . . my partners and their secretaries really need some administration." However, when it comes down to whether or not this individual would be willing to live under a set of policies, implemented by a third party, things tend to become a bit more intense. Another important factor directly related to an administrator's success is the willingness of partners to support the administrator in implementing firm policy. Are the partners willing to stand behind the administrator's decisions? Generally, during any confrontation between a partner and an administrator, the administrator cannot win. A partner may be persuaded to "give in on an issue," however, without the backing of a managing partner or members of an executive committee, the tenure of an office administrator is limited.
Prior to embarking on a search for an administrator, the duties, authority and reporting relationship of the administrator must be agreed upon. Once the partners agree on the administrator's role and reporting relationship, they must next decide what type of person the firm should recruit. Some firms experience administrative difficulties by attempting to pattern themselves after neighboring firms that are inherently different. It is essential for the firm to review the style of the office in terms of initial and long-term expectations prior to selecting an administrator. Much of this depends on the personality of the office, the individual partners, the management structure, etc. What works well for one firm can fail miserably in another. Some firms seek out retired military personnel, while others frown on this prospect. Some firms feel it is important for the administrator to be an attorney in order to understand and relate to the members of the firm. Other firms could care less whether the administrator has a legal degree, as long as the job gets done.
While working with a firm in Manhattan recently (concerning the employment of an administrator), it became readily apparent that during its first quarter the five member administrative committee had devoted a little over $100,000 in potentially billable time to administrative matters (including the day-to-day administration of the office). Only after expressing the time of partner involvement with the administrative function in terms of dollars did the costliness of firm management become apparent. In such cases, one must also determine whether the firm is receiving equal value in relation to dollars expended for firm management.
More frequently than not, attorneys may not have the time or inclination to handle many of the day-to-day administrative problems. These firms often refer to their management philosophy as being "crisis-oriented." This is simply a convenient way of saying "We really don't have set policies and deal with particular problems on an ad hoc basis." Firms that adhere to this management philosophy are not in control of their destiny. They are oftentimes backed into a corner and make decisions solely on the basis of the problem at hand. While expediency is not to be discouraged, the firm that anticipates problems can resolve them prudently and systematically, with minimum dissention.
Administrators for law firms come in various packages. The need for an administrator may become apparent as the firm increases in size and complexity, and as the attorneys see the need to conserve much more highly paid lawyer time which is increasingly devoted to administration. Somewhat larger offices may frequently seek an administrator who may or may not have a background in law office management. For the most part, this individual is generally not an attorney. There are some firms who feel that they can only accept a lawyer. This type of organization has to be prepared to have someone who is willing to devote an excess of $80,000+ in billable time to the post of administrative partner. In addition to the amount of billable time that is lost, they have to consider the partner's role and compensation, as well as the compensation of the person who will be functioning as an assistant to this administrative partner. In the very large firms the administrator is generally a nonlawyer professional supported by other staff and supervisory personnel. A position description for the administrator, prepared by the partners, should identify the level of authority to equal his or her level of responsibility for implementing the day-to-day policies as agreed upon with the firm's lawyer management for: (1) overseeing the operations of all administrative and financial personnel; (2) supervising the bookkeeping and accounting controls and management reporting procedures; (3) recommending and implementing automation; and (4) managing all of the firm's administrative activities.
Issue of Acceptance
One of the major questions raised by both administrators and partners is how to improve the acceptance of the office administrator. In part, the answer depends on the manner in which the administrator is brought into the firm. If the administrator's presence in any way suggests entrance through the "back door" so to speak, the likelihood of this individual ever having complete respect is questionable. However, if the administrator upon joining the firm is given the full support of the members of the executive committee and managing partner, that administrator is placed in a more advantageous position at the onset. A potential problem that any new administrator has to overcome is gaining acceptance among the lawyer and nonlawyer personnel.
One way to accomplish this is for the firm to establish a reporting relationship that signifies the level of the position. For example, having the administrator report to the chairman of the executive committee is much different from having the individual report to the administrative committee (which then reports to the executive committee).
By reinforcing the administrator's role and position in the management hierarchy, the firm is providing a strong indicator of the level of respect and acceptance that the individual will have. Another way is to have the administrator act as an administrative secretary at partnership meetings, or better yet, at the executive committee meetings, so that this individual is able to provide input from an administrative and financial perspective. This aspect of an administrator's ability to provide the firm with an informed opinion and to function as a catalyst will reinforce the level of respect due an individual operating in this capacity. There are some administrators who are able to gain respect and acceptance by virtue of their administrative or financial expertise through investing firm money, arranging for lower interest rates, negotiating with banks, relieving key attorneys of routine chores their committees have to perform, etc. Other items influencing acceptance relate to the sense of maturity in terms of personal relationships with members of the professional and administrative staff, the ability to present ideas, and prepare reports to provide detailed analyses of firm operations, etc.
In terms of reporting relationships, there should be at least one or more partners who the administrator can use as a sounding board. Unless this personal and direct reporting relationship exists, the administrator may not be aware of problem areas until it is too late. We have been called into firms where partners were very upset about specific administrative and financial issues, yet the administrator had little or no idea that there was any trouble. We urge partners and administrators to establish a closer working relationship (if one does not already exist). It is essential for an administrator to understand, and for the partners to communicate, exactly what the firm desires based upon its immediate and long-term priorities and plans. We have found that the "expectation gap" between the anticipated and actual performance is worlds apart. Oftentimes the administrator has one thing in mind, and the firm has an altogether different concept.
Cash compensation should be directly related to the administrator's responsibility and the firm's expectations. Goals or plateaus of achievement should be established for the administrator (similar to management by objectives), i.e., in the financial area, how has the presence of the administrator affected interest income; investments; collections of billed fees and costs; recapture of out-of-pocket costs through the introduction of cost recovery systems; reduction in unbilled time and costs; reduction in accounts receivable; reduction in lawyers' time devoted to firm administration, etc.
Assuming that these established goals are achieved, the administrator's total cash compensation (salary and bonus) may be based upon:
An administrator should possess the sensitivity and the ability to communicate with and for the partners, be a voice for the business side of the law practice, and be capable of implementing the administrative policies of the firm. An administrator operating at a high level should have a beneficial impact on retained income, with related contributions to increased gross income, improved cash flow, more effective utilization of personnel, space and equipment.