Evolving a practice group structure for long-term growth

By Thomas Berman, Principal, Berman & Associates 

There is a point in firm growth at which it becomes impossible to manage a law practice in the same way that it has been handled in the past. In fact, for most law firms, the transition between 20 to 60 lawyers, for example, is the single roughest patch one might find. Many – if not most – law firms fail to make that transition.

A number of firms come up against the glass ceiling of larger firm size, find themselves unable to make the grade and fall back to 15 or 20 lawyers (sometimes more than once), because they can’t overcome this difficult changeover from a small ‘ma and pa’ entity into a more sophisticated and, one might say, less single personality-driven environment.

The reasons for these experiences are many. To begin with, some lawyers simply don’t want to grow the entity. Growth means that there is a certain amount of loss of influence and control over an individual lawyer’s practice.

To successfully manage larger firms, the most critical pulse-points – such as new business introduction, calendaring and conflicts determination – are centrally controlled. For some, this detachment is very difficult to accept. In many firms, I have seen a real battle-royal over who makes choices about new cases and how current cases are managed.

Some firms are able to overcome these individual predilections and some are not. As a side bar, this battlefield arena is often the exact point where professional liability claims occur in smaller law firms.

As is the case so often, answers to these issues really depend on the questions that are propounded:

• How does a law firm manage its practice with efficiency?

• What kinds of responsibilities should the managing lawyer or groups of lawyers maintain?

• What is the best structure for the entity itself, notwithstanding the benefits to the individual lawyers?

In a larger firm context, the only realistic manner in which to manage the practice of any but the smallest of entities is to create micro environments, with smaller and more intensively managed sections or practice groups, and to give them greater authority and responsibility in managing the practice.

Often, this means the development and utilisation of a managing partner, practice group leaders and others in order to emulate the kind of close-in management the firm experienced when it was much smaller in size.

An obvious place to begin is to view the actual steps that must be made to transition from a small lawyer environment to a larger firm architecture. The transition to a managing partner structure is the first step because it in effect institutionalises the realisation that the practice (business) is too large to manage efficiently without an individual whose responsibilities include a generalised focus upon the entity itself.

That, in itself, is a major obstacle to growth because a group of lawyers who cannot reconcile themselves to the idea that one individual should retain an acknowledged hegemony over other owners will not be able to make this transition. In many firms, this acknowledgement never happens and so they will stay pretty much the same size and, like a tree that is ‘topped’, their growth will almost always be irregular and based upon external factors.

The other side of the coin exists as well. These are firms begun by a handful of lawyers who are never able to give up the reins of power. Some of these circumstances may change as the lawyers age and the owners then wish for the continuation of the entity.

That’s generally not on the cards, however, because the basic hiring decisions made by the owners over the course of the years are made based upon their desire for control. They therefore employ lawyers who are of the same mindset and do not themselves wish for control either.

This type of management structure is likely to change only after the departure of one or more of the founders and the firm has begun to hire lawyers who want to have partner or shareholder status.

For those firms where there has been some accession to the idea of a more structured practice environment, there is usually a managing partner in place and, often, an executive committee to make more global decisions on strategy and finance. Generally, once a firm has reached that point, it is positioned to go further and the next step is the development of an informal grouping of lawyers into similar practice areas.

The second part of this article will take us further along that path to a formalised structure of practice sections and toward a more sophisticated practice environment. '¨

tberman@bermanassociates.net