August 31, 2005
Challenge Number 2: Management
The 2005 Survey of Law Firm Managing Partners conducted by Juris, Inc. and the Managing Partner Forum identified three key challenges that firms face to achieve their growth objectives. The second of those challenges involved Management. Management is a Discipline and a Learned Skill – Management Must Be a Priority.
- 65% of firms indicated that management and strategic decisions involve all the partners.
- 75% of managing partners indicated that they spent 25% or less of their time fulfilling the role of managing partner.
- 87% of surveyed firms said there was no formal job description for the role of managing partner.
- 56% of managing partners look internally to other lawyers for business and management advice.
- 50% of managing partners have been in the role for less than 5 years.
In today’s marketplace, we believe that the need for dedicated management personnel and a more traditional management structure will be necessary to execute firm strategy effectively. In their “Why Law Firms Fail” report, the Brand Research Company found a very high correlation between long-term success and the existence of dedicated “C-level” executives or partners in areas such as IT, marketing, operations and knowledge. Our survey indicated that to some degree firms dedicated personnel to these areas, but even the highest incidence was only 52% for IT closely followed by 51% for recruiting.
Timeliness of decision making is also an issue as nearly half the respondents’ partners met only on a quarterly basis. As expected, partners tend to act more like a board of directors than either a governing democracy or a dedicated management team. Only half of the firms had a formal management committee or executive committee to bridge the gap.
Even though firms typically do have a managing partner, 75% of managing partners indicated that they spent 25% or less of their time fulfilling the role of managing partner. Understandably, these individuals want to continue to practice law and stay connected with their clients; but in any other business, a CEO who could only dedicate ¼ of their time to leading the business would have greatly diminished effectiveness. And not surprisingly, 87% of surveyed firms said there was no formal job description for the role of managing partner. Based on our conversations with managing partners, there is a high degree of variation in how the role is defined.
The bottom line is that law firms are recognizing the need for dedicated management; however, this transition is in its early stages. We believe it will accelerate as competition for clients and talent intensifies along with ever increasing demands from clients to reduce rates and increase service levels.
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Filed under Management by Tom Collins