The key issues for new managing partners to tackle

On a recent trip to Los Angeles to visit a client, I sat next to a lawyer who was reading Law.com on his iPad. We got to talking and it turned out that he had just been elected by his executive committee to be the new managing partner of the firm. I identified myself and my work and we agreed to meet that evening at my hotel to talk about his new role.

That evening, I started by asking him how he felt about the firm. Were the revenues adequate and were the principals generally satisfied with things as they stood? His answer was that they were, but the concern was the ability of his firm of 60+ lawyers to continue to compete effectively. We batted some questions and answers back and forth and, in so doing, developed a David Letterman-style list of issues and questions to address in his first few months as managing partner.

Not surprisingly, the list began with finances. Here, we talked about not just the need for financial reporting but for meaningful financial reports and, perhaps more importantly, the ability to project and extrapolate from those reports as a means of attending to the firm’s strategic requirements.

His strong feeling was that some of the financial reports he and the committee received had very little meaning in 2012 and failed miserably at the idea of projections allowing for the incorporation of elements to the strategic plan. They were developed many years ago when the firm was much smaller and issues were quite a lot simpler to grasp.

The question was really whether the financial reporting that was currently developed – not just for the executive committee and managing partner but also for the other principals – was indeed adequate and appropriate to the task of running a medium-sized law firm in 2013.

If the reports were not sufficiently accurate and informative, then his priority was to ensure that those which were created and utilised added value to his ability to understand the firm’s financial position and to inform others as needed.

The second issue, which we decided was most important, was obtaining an accurate appraisal and objective evaluation of his non-attorney managerial staff. As has happened so many times before, individuals at his firm had been promoted beyond their level of ability.

The current director of administration, for example, had begun her career with the firm as a legal secretary to one of the partners some 22 years ago. She was well-liked, but was clearly over her head when it came to managing a firm of this size.

On the other hand, in the case of a controller who had only been hired about two years ago, virtually everyone in the firm agreed that this was the individual who they wanted to manage the non-lawyer operations of the firm.

During the course of our discussion, it became clear that the third issue which was of most concern to him was the leadership of the firm’s practice sections. Of course, in every firm, there will be those who have management capacity as well as those who simply do not have the knack for it (for lack of a better term).

It turned out that there were six sections of his firm. Two sections were by far the most dynamic and most remunerative in the firm and were extraordinarily well managed by all accounts. Two other sections were reasonably well managed (one of which had been his section). One section was managed in an acceptable way and, because of its standing in the firm (as a ‘loss leader’, if you will) there was no crying need to take immediate action.

One section, however, was badly managed and, unfortunately, was managed by the second-most senior principal in the firm, who had also accounted for a serious professional liability claim. This was also a section that the firm had earmarked for great things in the future and was very much a part of the firm’s strategy for competitiveness and economic expansion. Indeed, it appeared to be the impression of most partners that, with new management, the section would ‘take off’.

At that point in our conversation, the question of adding another seven issues became moot. We both agreed that handling these three matters should be his priority and his ‘issues budget’ for the year. Indeed, it was clear that accomplishing these three objectives would make him a hero and the firm a much better organisation.

Tom Berman has been advising law firms on practice management and professional liability issues for over 20 years ?(www.bermanassociates.net)